Global Payments (GPN) 10-K risk factor changes: FY2018 vs FY2017

Some of this information is also processed and stored by our third-party service providers [removed: to whom we outsource certain functions] and other agents (which we refer to collectively as our "associated third parties") as well as merchants and ISOs.

We have responsibility to the card networks, their member financial institutions, and in some instances, our merchants, ISOs and/or individuals, for our failure or the failure of our associated third parties [added: or merchants (as applicable)] to protect this information.

The techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and are often difficult to [removed: detect.][added: detect and continually evolve and become more sophisticated.]

Threats to our systems and our associated third parties’ systems can derive from human error, fraud or malice on the part of employees or third parties, [removed: or may result from accidental] [added: including state-sponsored organizations with significant financial and] technological [removed: failure.][added: resources.]

[removed: Any] [added: Further, our third-party relationships are subject to our vendor management program and governed by written contracts; however, we do not control the actions of our associated third parties, and any] problems experienced by these third parties, including those resulting from breakdowns or other disruptions in the services provided by such parties or cyberattacks and security breaches, could adversely affect our ability to service our merchant customers or otherwise conduct our business.

Any type of security breach, attack or misuse of data described above or otherwise, whether experienced by us or an associated third party, could harm our reputation and deter existing and prospective customers from using our services or from making electronic payments generally, increase our operating expenses in order to contain and remediate the incident, expose us to unanticipated or uninsured liability, disrupt our operations (including potential service interruptions), distract our management, [added: increase our risk of litigation or regulatory scrutiny, result in the imposition of penalties and fines under state, federal and foreign laws or by the card networks, and adversely affect our continued card network registration or membership and financial institution sponsorship.]

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

We operate in the [removed: electronic payments market,] [added: payment technology services industry,] which is highly competitive.

In this [removed: market,] [added: industry,] our primary competitors include other independent payment processors, as well as financial institutions, ISOs and, potentially, card networks.

The [removed: electronic payments markets] [added: payment technology services industry] in which we compete are characterized by rapid technological change, new product introductions, evolving industry standards and changing customer needs.

In order to remain competitive, we are continually involved in a number of projects, including the development of a new authorization platform, mobile payment applications, ecommerce services and other new offerings emerging in the [removed: electronic payments] [added: payment technology services] industry.

In the [removed: electronic payments] [added: payment technology services] markets, these risks are even more acute.

In addition, the services we deliver to the [removed: electronic payments] [added: payment technology services] markets are designed to process very complex transactions and deliver reports and other information on those transactions, all at very high volumes and processing speeds.

As a result of these factors, our development efforts could result in higher costs that could reduce our earnings in addition to a loss of revenues and earnings if promised new services are not delivered [removed: timely to our customers or do not perform as anticipated.]

[added: Registration as a merchant processor] or service provider is dependent upon our being sponsored by Members of each organization in certain jurisdictions.

The termination of our registrations or our membership or our status as a service provider or a merchant processor, or any changes in card association or other network rules or standards, including interpretation and implementation of the rules or standards, that increase the cost of doing business or limit our ability to provide transaction processing services to our customers, could have a material adverse effect on our business, [removed: operating results,] financial [removed: condition] [added: condition, results of operations] and cash flows.

Our services are based on [removed: sophisticated] software and computing systems that often encounter development delays, and the underlying software may contain undetected errors, viruses or defects.

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

Our future growth and profitability depend upon our continued expansion within the markets in which we currently operate, the further expansion of these markets, the emergence of other markets for [removed: electronic transaction] payment [removed: processing] [added: technology] and [added: software solutions and] our ability to penetrate these markets.

If we fail to expand into new and existing [removed: electronic payments markets,] [added: markets for payment technology and software solutions,] we may not be able to continue to grow our revenues and earnings.

Any increase in chargebacks not paid by our merchants may adversely affect our [added: business, financial condition,] results of [removed: operations, financial condition] [added: operations] and cash flows.

[added: 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.

Fraud by merchants or others could have an adverse effect on our [removed: operating results,] financial [removed: condition] [added: condition, results of operations] and cash flows.

Increases in chargebacks or other liabilities could have a material adverse effect on our [removed: operating results,] financial [removed: condition] [added: condition, results of operations] and cash flows.

The global [removed: electronic payments] [added: payment technology services] industry depends heavily on the overall level of consumer, business and government spending.

The Dodd-Frank Act also created the [removed: Consumer Financial Protection Bureau (the "CFPB"),] [added: CFPB,] which has assumed responsibility for enforcing federal consumer protection laws, and the Financial Stability Oversight Council, which has the authority to determine whether any nonbank financial company, such as us, should be supervised by the Board of Governors of the Federal Reserve System (the "Federal Reserve") on the ground that it is "systemically important "to the U.S. financial system.

In some countries, we are directly subject to these requirements; in other countries, we have contractually agreed to assist our sponsor financial institutions with their obligation to comply with [removed: anti-money laundering requirements that apply to them.]

In addition, we and our sponsor financial institutions are subject to the laws and regulations enforced by [removed: the Office of Foreign Assets Control ("OFAC"),] [added: OFAC,] which prohibit U.S. persons from engaging in transactions with certain prohibited persons or entities.

We are also subject to a variety of foreign and domestic laws, and their implementing regulations, [removed: including, without limitation, Directive 95/46/EC, as implemented in each member state of the European Union and its successor, the General Data Protection Regulation,] which [removed: becomes effective in May 2018, that govern] [added: establish requirements for] the collection, processing, storage, use and disclosure of personal information, require notice to individuals of privacy practices, and provide individuals with certain rights to prevent use and disclosure of protected information.

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 [removed: operating results,] financial [removed: condition] [added: condition, results of operations] and cash flows.

Some of the countries in which we operate, such as the Russian [removed: Federation] [added: Federation, India] and the United Kingdom, have undergone significant political, economic and [added: 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; [added: inflation;] changes in laws or regulations or in the interpretation of existing laws or regulations, whether caused by a change in government or otherwise; increased difficulty of conducting business in a country or region due to actual or potential political or military conflict; or action by the European Union or the United States, Canada or other governments that may restrict our ability to transact business in a foreign country or with certain foreign individuals or entities, such as sanctions by or against the Russian Federation.

[removed: Nevertheless, the referendum] [added: Brexit] has caused, and may continue to cause, [added: economic uncertainty, including] volatility in global stock markets and currency exchange rate fluctuations, [removed: resulting in a decline in] [added: which may adversely affect] the [removed: value] [added: profitability] of [removed: the British pound relative to the U.S. dollar.][added: our U.K. operations.]

In addition, Brexit could lead to increased regulatory complexities, [removed: including] [added: including,] without [removed: limitation] [added: limitation,] regulation relating to data security, [removed: privacy,] [added: privacy] and taxation.

[removed: These changes may] [added: Changes in the method for determining LIBOR and the potential replacement of the LIBOR benchmark interest rate could] adversely affect our [removed: operations,] [added: business,] financial [added: condition,] results [added: of operations] and cash flows.

Core risks are in the area of valuation (negotiating a fair price for the business based on inherently limited diligence) and integration and conversion (managing the complex process of integrating the acquired company's people, services, [added: information security and] technology and other assets to realize the projected value of the acquired company and the synergies projected to be realized in connection with the acquisition).

In addition, international acquisitions [added: and alliances] often involve additional or increased risks including, for example: managing geographically separated organizations, systems, and facilities; integrating personnel with diverse business backgrounds and organizational cultures; complying with foreign regulatory requirements; fluctuations in currency exchange rates; enforcement of intellectual property rights in some foreign countries; difficulty entering new foreign markets due to, among other things, customer acceptance and business knowledge of those new markets; and general economic and political conditions.

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

| • | 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 [removed: electronic] [added: markets for] payments [removed: markets;] [added: technology] and [added: software solutions; and] |

Furthermore, there is no guarantee that we will be successful in defending ourselves in pending or future litigation or similar matters under [added: various laws.]

Companies we acquire may require post-closing implementation of additional cyber defense methods to align with our standards and, as a result, there may be a period of increased risk between the closing of an acquisition and the completion of such implementation.

In addition, as the regulatory environment related to information security, data collection and use and privacy becomes increasingly

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

timely to our customers or do not perform as anticipated.

anti-money laundering requirements that apply to them.

Outside the United States, these laws include, without limitation, the EU General Data Protection Regulation.

As a result of our acquisition of AdvancedMD, we are also subject to laws and regulations affecting the healthcare industry, including but not limited to false or fraudulent claim laws; HIPAA and other health privacy regulations; prescribing laws; electronic health record laws; claims and transmission laws; and prompt pay laws.

Under HIPAA, covered entities and business associates must establish administrative, physical and technical safeguards to protect the confidentiality, integrity and availability of electronic protected health information maintained or transmitted by them or by others on their behalf.

A substantial portion of our indebtedness bears interest at a variable rate based on LIBOR.

Furthermore, we have entered into hedging instruments to manage our exposure to fluctuations in the LIBOR benchmark interest rate.

In July 2017, the United Kingdom’s Financial Conduct Authority ("FCA"), a regulator of financial services firms and financial markets in the United Kingdom, stated that they will plan for a phase out of regulatory oversight of LIBOR interest rates indices.

The FCA has indicated they will support the LIBOR indices through 2021, to allow for an orderly transition to an alternative reference rate.

The Alternative Reference Rates Committee has proposed the Secured Overnight Financing Rate ("SOFR") as its recommended alternative to LIBOR, and the Federal Reserve Bank of New York began publishing SOFR rates in April 2018.

SOFR is intended to be a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities.

We are evaluating the potential impact of the eventual replacement of the LIBOR benchmark interest rate, including the possibility of SOFR as the dominant replacement.

The market transition away from LIBOR and towards SOFR is expected to be gradual and complicated, including the development of term and credit adjustments to accommodate differences between LIBOR and SOFR.

Introduction of an alternative rate also may introduce additional basis risk for market participants as an alternative index is utilized along with LIBOR.

There can be no guarantee that SOFR will become widely used and that alternatives may or may not be developed with additional complications.

We are not able to predict whether LIBOR will cease to be available after 2021, whether SOFR will become a widely accepted benchmark in place of LIBOR, or what the impact of such a possible transition to SOFR may be on our business, financial condition, and results of operations.

A possible slowdown in global trade caused by increasing tariffs or other restrictions could decrease consumer or corporate confidence and reduce consumer, government and corporate spending in countries outside the United States, which could adversely affect our foreign operations.

In March 2018, the parties agreed to a transition period of 21 months - from March 29, 2019 until the end of 2020 - before the United Kingdom leaves the European Union completely, assuming approval of the negotiated withdrawal agreement.

The terms of the withdrawal are subject to ongoing negotiation that has created uncertainty about the future relationship between the United Kingdom and the European Union.

With a range of outcomes still possible, the full effect of Brexit is uncertain and depends on any agreements the United Kingdom may make to retain access to European Union markets.

Consequently, no assurance can be given about the effect of the outcome on our U.K. business and its financial conditions, results of operations and cash flows may be adversely affected.

The acquisition, integration, and conversion of businesses (such as, but not limited to, the recent acquisitions of AdvancedMD and SICOM) and the formation or operation of alliances, such as joint ventures and other partnering arrangements involve a number of risks.

Any such claims and any resulting

The U.S. Tax Cuts and Jobs Act of 2017 (the "2017 U.S. Tax Act") significantly changed the taxation of U.S.-based multinational corporations.

The legislation could be subject to potential amendments and technical corrections, any of which could materially change certain effects of the legislation.

As regulations and guidance evolve with respect to the 2017 U.S. Tax Act, and as we gather information and perform more analysis, our results may differ from previous estimates and may materially affect our financial position.

Our Credit Facility may prohibit

Further, while we select our associated third parties carefully, we do not control their actions.

increase our risk of litigation or regulatory scrutiny, result in the imposition of penalties and fines under state, federal and foreign laws or by the card networks, and adversely affect our continued card network registration or membership and financial institution sponsorship.

Registration as a merchant processor

If we are unable to collect

On July 26, 2011, the Financial Crimes Enforcement Network of the U.S. Department of the Treasury, or FinCEN, issued a final rule regarding the applicability of the Bank Secrecy Act’s regulations to "prepaid access" products and services.

This rulemaking clarifies the anti-money laundering obligations for entities engaged in the provision and sale of prepaid services such as prepaid cards.

This rule increases our regulatory risks and, as with other regulatory requirements, violations of the rule could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Finally, our interest rate and currency exchange rate risk management activities could expose us to substantial losses if such rates move materially differently from our expectations.

social change in recent years, and the risk of new, unforeseen changes in these countries remains greater than in the United States.

The terms of the withdrawal are subject to a negotiation period that could last at least two years from the withdrawal notification date.

The acquisition, integration, and conversion of businesses (such as the acquisition of ACTIVE Network) involve a number of risks.

various laws.

As a result of the recently enacted U.S. Tax Cuts and Jobs Act of 2017 (the "2017 U.S. Tax Act"), we remeasured our U.S. deferred tax assets and liabilities based on the rates at which they are now expected to reverse due to the change in the U.S. federal income tax rate.

We also recorded a "transition tax" payable on our previously deferred foreign earnings as a result of a new one-time tax established by the 2017 U.S. Tax Act.

To address the application of U.S. generally accepted accounting principles ("GAAP") in situations in which a registrant does not have the necessary information available, prepared or analyzed in reasonable detail to complete the accounting under the 2017 U.S. Tax Act, the SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118") that provides for the reporting of provisional amounts that may change during a measurement period and the deferral of recognition of any amounts in other instances until a reasonable estimate can be made.

Changes in the provisional amounts that we recorded could negatively affect our results of operations.

taxing authorities have not yet all adopted uniform regulations on certain of these topics.

As of December 31, 2017, the outstanding balance under our Credit Facility was $4.7 billion.

Such actions by those lenders could cause cross defaults under certain of our other indebtedness.

In order to mitigate this risk, we have implemented internal controls over financial reporting to monitor the accuracy of the financial data being provided by our member sponsors.

The following discussion and analysis [added: of our financial condition and results of operations should be read in conjunction with "Item 6 - Selected Financial Data" and "Item 8 - Financial Statements and Supplementary Data." This discussion and analysis] contains forward-looking statements about our plans and expectations of what may happen in the future.

We are a leading worldwide provider of payment technology [removed: services] and software solutions delivering innovative services to our customers globally.

We distribute our services across a variety of channels [removed: to customers] in [removed: 30] [added: 32] countries throughout North America, Europe, the Asia-Pacific region and Brazil and operate in three reportable segments: North America, Europe and Asia-Pacific.

Our payment [added: technology] solutions are similar around the world in that we enable our customers to accept card, electronic, check and digital-based payments.

Our comprehensive offerings [removed: include terminal sales and deployment,] [added: include, but are not limited to,] authorization [removed: processing,] [added: services,] settlement and funding [removed: processing,] [added: services,] customer support and help-desk functions, chargeback resolution, [removed: industry compliance,] [added: terminal rental, sales and deployment,] payment security services, consolidated billing and statements and on-line reporting.

We also earn software [removed: licensing and] subscription [removed: fees] and [added: licensing fees, as well as] other fees based on specific value-added services that may be unrelated to the number or value of transactions.

We offer [removed: high touch] [added: high-touch] services that provide our customers with reliable and secure solutions coupled with high quality and responsive support services.

Through our direct sales force worldwide, as well as bank partnerships, [added: which] we [added: generally refer to as "direct distribution," we] offer our payment technology services, software and other value-added solutions directly to customers in the markets we serve.

We experienced strong business and financial performance around the world during the year ended December 31, [removed: 2017.][added: 2018.]

Highlights related to our financial condition and results of operations as of December 31, [removed: 2017] [added: 2018] and for the year then ended include the following:

| • | Consolidated operating income was [added: $737.1 million and] $558.9 million for the [removed: year] [added: years] ended December 31, [removed: 2017 compared to $356.3 million for 2016.] [added: 2018 and 2017, respectively.] Our operating margin for the year ended December 31, [removed: 2017] [added: 2018] was [removed: 14.1%] [added: 21.9%. Without the effect of the new revenue accounting standard, our operating margin for the year ended December 31, 2018 was 15.6%] compared to [removed: 10.6%] [added: 14.1%] for [removed: 2016.] [added: 2017.] The increase in operating income and operating margin [added: without the effect of the new revenue accounting standard] was primarily due to the contribution of revenue growth and a decrease in costs associated with acquisition and integration expenses of [removed: $47.5] [added: $38.5] million. |

| • | Net income attributable to Global Payments was [removed: $468.4] [added: $452.1] million for the year ended December 31, [removed: 2017] [added: 2018] compared to [removed: $201.8] [added: $468.4] million for [removed: 2016,] [added: 2017,] and diluted earnings per share was [removed: $3.01] [added: $2.84] for the year ended December 31, [removed: 2017] [added: 2018] compared to [removed: $1.37] [added: $3.01] for [removed: 2016.] [added: 2017.] |

The payments [added: technology] industry continues to grow worldwide and as a result, certain large payment technology companies, including us, have expanded operations globally by pursuing acquisitions and creating alliances and joint ventures.

We expect to continue to expand into new markets internationally [removed: or] [added: and] increase our scale and improve our competitiveness in existing markets by pursuing further acquisitions and joint ventures.

We expect industries such as education, government and healthcare, as well as [removed: payment types such as] recurring payments and business-to-business payments, to continue to see transactions migrate to electronic-based solutions.

[added: Recent] Acquisitions

On September 1, 2017, we acquired [removed: ACTIVE Network] [added: the communities and sports divisions of Athlaction Topco, LLC ("ACTIVE Network")] for total purchase consideration of $1.2 billion, consisting of approximately $600 million in cash and 6.4 million shares of our common stock.

[removed: This acquisition aligns] [added: These acquisitions align] with our technology-enabled, software driven strategy and [removed: adds an] [added: add] enterprise software [removed: business] [added: businesses] operating in [removed: two] [added: existing vertical markets that we serve and] additional vertical markets that we believe offer attractive growth fundamentals.

[removed: The merger] [added: In April 2016, we merged with Heartland Payment Systems, Inc. ("Heartland"), which] significantly expanded our small and medium-sized enterprise distribution, merchant base and vertical reach in the United States.

[removed: On June 21, 2016, Visa acquired all of] [added: Interest and other income decreased by $38.1 million for] the [removed: membership interests in Visa Europe, including ours, upon] [added: year ended December 31, 2017 compared to the prior year,] which [removed: we recorded] [added: included] a gain of $41.2 million [removed: included] in [removed: interest and other income in our consolidated statement of income for] [added: connection with] the [removed: seven months ended December 31, 2016.][added: sale of our membership interests in Visa Europe.]

We provide payment technology [removed: services] and software solutions to customers and fund settlement either directly, in markets where we have direct membership with the payment networks, or through our relationship with a member financial institution in markets where we are sponsored.

Revenues are recognized in the amount of customer billing net of interchange [added: fees and, beginning in 2018, payment network] fees.

We market our services through a variety of sales channels, including a direct sales force, trade associations, agent and enterprise software providers and referral arrangements with value-added [removed: resellers,] [added: resellers ("VARs"),] which we generally refer to as "direct distribution." We also sell services through our ISO channel, where the ISO receives a share of the customer profitability in the form of a monthly residual payment, which is reflected as a component of selling, general and administrative expenses in the consolidated statements of income.

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

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

The following table sets forth key selected financial data for the year ended December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] this data as a percentage of total revenues, and the changes between periods in dollars and as a percentage of the prior-period amount.

| [removed: Revenues(2):] [added: Revenues(2)(3):] | | | | | | | | | | | | | | | | | | | | |

| Consolidated operating [removed: expenses(2):] [added: expenses(2)(3):] | | | | | | | | | | | | | | | | | | | | |

| Operating income [removed: (loss)(2):] [added: (loss)(3):] | | | | | | | | | | | | | | | | | | | | |

| Operating [removed: margin:] [added: margin(2)(3):] | | | | | | | | | | | | | | | | | | | | |

[removed: (2)] [added: (3)] Revenues, operating expenses, operating income and operating margin reflect the effect of acquired businesses from the respective dates of acquisition.

For the year ended December 31, 2017, revenues from our North America segment increased by $454.2 million, or 18.3%, compared to the prior year, to $2,929.5 million primarily due to our merger with Heartland, the results of [removed: which were included in our consolidated statement of income for a full year during the year ended December 31, 2017 compared to]

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

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

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

As a percentage of revenues, cost of service increased to 48.5% for the year ended December 31, 2017 [removed: from] [added: compared to] 47.6% for the prior year.

These increases were driven primarily by an increase in the variable costs associated with our revenue growth, including [removed: the] incremental expenses associated with acquired businesses, as well as additional intangible asset amortization [added: associated with recently acquired businesses] of $78.6 million.

The increase in selling, general and administrative expenses was primarily due to additional costs to support the growth of our business, including incremental [removed: costs] [added: expenses] associated with acquired businesses.

As a percentage of revenues, selling, general and administrative expenses decreased to 37.4% for the year ended December 31, 2017 [removed: from] [added: compared to] 41.9% for the prior year.

The decrease in selling, general and administrative expenses as a percentage of revenues was [removed: due] primarily [added: due] to synergies achieved in general and administrative expenses from the merger with Heartland, as well as the decrease in acquisition and integration expenses during the year ended December 31, 2017 of $47.5 million.

Since our spin-off, we have expanded in existing markets and into new markets internationally by pursuing further acquisitions and joint ventures, including recent acquisitions of technology-enabled and software-driven businesses.

As we continue to grow and control our direct distribution by adding new channels and partners, including expanding our ownership of additional enterprise software solutions in select vertical markets, our wholesale distribution channel has become a smaller portion of our business.

In general, our business has not experienced pronounced seasonality.

Segment Information

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

This change in presentation affected our reported revenues and operating expenses during the year ended December 31, 2018 by the same amount and had no effect on operating income.

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

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

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

On October 17, 2018, we acquired SICOM Systems, Inc. ("SICOM") for total purchase consideration of approximately $409 million, which we funded with cash on hand and by drawing on our Revolving Credit Facility (described in "Note 8—Long-Term Debt and Lines of Credit" in the notes to the accompanying consolidated financial statements).

SICOM is a provider of end-to-end enterprise, cloud-based software solutions and other technologies to quick service restaurants and food service management companies.

On September 4, 2018, we acquired AdvancedMD, Inc. ("AdvancedMD") for total purchase consideration of approximately $707 million, which we funded with cash on hand and by drawing on our Revolving Credit Facility.

AdvancedMD is a provider of cloud-based enterprise software solutions to small-to-medium sized ambulatory care physician practices in the United States.

We funded the cash consideration primarily by drawing on our Revolving Credit Facility.

As more fully described in "Note 1—Basis of Presentation and Summary of Significant Accounting Policies" and "Note 3—Revenues" in the notes to the accompanying consolidated financial statements, we adopted a new revenue accounting standard on January 1, 2018 that results in revenue being presented net of certain fees that we pay to third parties, including payment networks.

This change in presentation affected our reported revenues and operating expenses during the year ended December 31, 2018 by the same amount and had no effect on operating income.

We also earn software subscription and licensing fees, as well as other fees based on specific value-added services that may be unrelated to the number or value of transactions.

For periods prior to 2018, payment network fees were included in cost of service.

Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

The income statement data for the year ended December 31, 2018 and 2017 are derived from the audited consolidated financial statements included in Item 8 - Financial Statements and Supplementary Data.

| North America | $ | 2,522,284 | | | 74.9 | % | | $ | 2,929,522 | | | 73.7 | % | | $ | (407,238 | ) | | (13.9 | )% |

| Europe | 610,930 | | | | 18.1 | % | | 767,524 | | | | 19.3 | % | | (156,594 | | ) | | (20.4 | )% |

| Asia-Pacific | 233,152 | | | | 6.9 | % | | 278,117 | | | | 7.0 | % | | (44,965 | | ) | | (16.2 | )% |

| Total revenues | $ | 3,366,366 | | | 100.0 | % | | $ | 3,975,163 | | | 100.0 | % | | $ | (608,797 | ) | | (15.3 | )% |

| Cost of service | $ | 1,095,014 | | | 32.5 | % | | $ | 1,928,037 | | | 48.5 | % | | $ | (833,023 | ) | | (43.2 | )% |

| Selling, general and administrative | 1,534,297 | | | | 45.6 | % | | 1,488,258 | | | | 37.4 | % | | 46,039 | | | | 3.1 | % |

| Operating expenses | $ | 2,629,311 | | | 78.1 | % | | $ | 3,416,295 | | | 85.9 | % | | $ | (786,984 | ) | | (23.0 | )% |

| North America | $ | 570,630 | | | 17.0 | % | | $ | 457,009 | | | 11.5 | % | | $ | 113,621 | | | 24.9 | % |

| Europe | 318,392 | | | | 9.5 | % | | 272,769 | | | | 6.9 | % | | 45,623 | | | | 16.7 | % |

| Asia-Pacific | 93,402 | | | | 2.8 | % | | 81,273 | | | | 2.0 | % | | 12,129 | | | | 14.9 | % |

| Corporate(4) | (245,369 | | ) | | (7.3 | )% | | (252,183 | | ) | | (6.3 | )% | | 6,814 | | | | (2.7 | )% |

| Operating income | $ | 737,055 | | | 21.9 | % | | $ | 558,868 | | | 14.1 | % | | $ | 178,187 | | | 31.9 | % |

| North America | 22.6 | | % | | | | | 15.6 | | % | | | | | 7.0 | | % | | | |

| Europe | 52.1 | | % | | | | | 35.5 | | % | | | | | 16.6 | | % | | | |

| Asia-Pacific | 40.1 | | % | | | | | 29.2 | | % | | | | | 10.9 | | % | | | |

(2) As more fully described in "Note 1—Basis of Presentation and Summary of Significant Accounting Policies" and "Note 3—Revenues" in the notes to the accompanying consolidated financial statements, we adopted a new revenue accounting standard on January 1, 2018 that results in revenue being presented net of certain fees that we pay to third parties, including payment networks.

This change in presentation affected our reported revenues and operating expenses during the year ended December 31, 2018 by the same amount and had no effect on operating income; however, the change in presentation did have the effect of increasing our operating margin, which is calculated by dividing operating income by revenue.

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

Effective January 1, 2018, our revenues are presented net of certain fees that we pay to third parties, including payment networks.

Consolidated revenues without the effect of the new revenue accounting standard increased by 12.6% to $4,475.6 million for the year ended December 31, 2018.

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

Since our spin-off, we have grown our annual revenues from $353 million for the year ended May 31, 2001 to $4.0 billion for the year ended December 31, 2017, through internal expansion of existing operations and through acquisitions.

Our business has not had pronounced seasonality in which more than 30% of our revenues occurred in one fiscal quarter.

| • | Consolidated revenues increased by 17.9% to $3,975.2 million for the year ended December 31, 2017 from $3,371.0 million for 2016, reflecting growth in each of our operating segments and additional revenues from acquired businesses. |

| • | On December 22, 2017, the United States enacted the 2017 U.S. Tax Act. As a result, we recorded a provisional net income tax benefit of $158.7 million, which increased diluted earnings per share by $1.02 for the year ended December 31, 2017. The 2017 U.S. Tax Act resulted in numerous changes, including a reduction in the U.S. federal tax rate from 35% to 21% effective January 1, 2018 and the transition of the U.S. federal tax system to a territorial regime. As part of this transition, the 2017 U.S. Tax Act imposed a one-time mandatory "transition" tax on foreign earnings not previously subjected to U.S. income tax, payable over eight years. We expect that the reduction in the U.S. federal income tax rate and the new territorial tax regime will have a favorable effect on our earnings and cash flows in future periods. A territorial tax regime rather than a worldwide system will generally allow companies to repatriate future foreign source earnings without incurring additional U.S. income taxes by providing a 100% exemption for the foreign source portion of dividends from certain foreign subsidiaries. |

On April 22, 2016, we merged with Heartland in a cash-and-stock transaction for total purchase consideration of $3.9 billion.

On June 1, 2015, we acquired certain assets of Certegy Check Services, Inc., a wholly-owned subsidiary of Fidelity National Information Services, Inc. ("FIS").

Under the purchase arrangement, we acquired substantially all of the assets of its gaming business related to licensed gaming operators (the "FIS Gaming Business"), including relationships with gaming clients in approximately 260 locations as of the acquisition date, for $237.5 million.

On March 25, 2015, we acquired Pay and Shop Limited, which does business as Realex Payments ("Realex"), for €110.2 million ($118.9 million equivalent as of the acquisition date).

Realex is a leading European online payment gateway technology provider based in Dublin, Ireland.

This transaction furthered our strategy to provide omnichannel solutions that combine gateway services, payment service provisioning and payment technology services across Europe.

On October 10, 2014, we completed the acquisition of Ezidebit for AUD302.6 million ($266.0 million equivalent as of the acquisition date).

Ezidebit is a leading integrated payments company focused on recurring payments verticals in Australia and New Zealand.

Ezidebit markets its services through a network of integrated software vendors and direct channels to numerous vertical markets.

We acquired Ezidebit to establish a direct distribution channel in Australia and New Zealand and to further enhance our existing integrated solutions offerings.

Visa Europe

Through certain of our subsidiaries in Europe, we were a member and shareholder of Visa Europe.

We received up-front consideration comprised of €33.5 million ($37.7 million equivalent at June 21, 2016) in cash and Series B and C convertible preferred shares whose initial conversion rate equates to Visa common shares valued at $22.9 million as of June 21, 2016.

However, the preferred shares were assigned a value of zero based on transfer restrictions, Visa's ability to adjust the conversion rate, and the estimation uncertainty associated with those factors.

The fair value of the preferred shares was determined using inputs classified as Level 3 within the fair value hierarchy due to the absence of quoted market prices, lack of liquidity and the fact that inputs used to measure fair value are unobservable and require management’s judgment.

The preferred shares will convert into Visa common shares at periodic intervals over a 12\-year period.

Based on the outcome of potential litigation involving Visa Europe in the United Kingdom and elsewhere in Europe, the conversion rate of the preferred shares could be adjusted down such that the number of Visa common shares we ultimately receive could be as low as zero, and approximately €25.6 million ($28.8 million equivalent at June 21, 2016) of the up-front cash consideration could be refundable.

On the third anniversary of the closing of the acquisition by Visa, we are contractually entitled to receive €3.1 million ($3.5 million at June 21, 2016) of deferred consideration (plus compounded interest at a rate of 4.0% per annum).

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

Year Ended May 31, 2016 Compared to Year Ended May 31, 2015

| North America | $ | 2,052,623 | | | 70.8 | % | | $ | 1,968,890 | | | 71.0 | % | | $ | 83,733 | | | 4.3 | % |

| Europe | 631,900 | | | | 21.8 | % | | 615,966 | | | | 22.2 | % | | 15,934 | | | | 2.6 | % |

| Asia-Pacific | 213,627 | | | | 7.4 | % | | 188,862 | | | | 6.8 | % | | 24,765 | | | | 13.1 | % |

| Total revenues | $ | 2,898,150 | | | 100.0 | % | | $ | 2,773,718 | | | 100.0 | % | | $ | 124,432 | | | 4.5 | % |

| Cost of service | $ | 1,147,639 | | | 39.6 | % | | $ | 1,022,107 | | | 36.8 | % | | $ | 125,532 | | | 12.3 | % |

| Selling, general and administrative | 1,325,567 | | | | 45.7 | % | | 1,295,014 | | | | 46.7 | % | | 30,553 | | | | 2.4 | % |

| Operating expenses | $ | 2,473,206 | | | 85.3 | % | | $ | 2,317,121 | | | 83.5 | % | | $ | 156,085 | | | 6.7 | % |

| North America | $ | 307,626 | | | | | | $ | 293,139 | | | | | | $ | 14,487 | | | 4.9 | % |

| Europe | 244,837 | | | | | | | 240,014 | | | | | | | 4,823 | | | | 2.0 | % |

| Asia-Pacific | 50,743 | | | | | | | 39,697 | | | | | | | 11,046 | | | | 27.8 | % |

| Corporate(3) | (178,262 | | ) | | | | | (116,253 | | ) | | | | | (62,009 | | ) | | 53.3 | % |

| Operating income | $ | 424,944 | | | 14.7 | % | | $ | 456,597 | | | 16.5 | % | | $ | (31,653 | ) | | (6.9 | )% |

| North America | 15.0 | | % | | | | | 14.9 | | % | | | | | 0.1 | | % | | | |

| Europe | 38.7 | | % | | | | | 39.0 | | % | | | | | (0.3 | | )% | | | |

| Asia-Pacific | 23.8 | | % | | | | | 21.0 | | % | | | | | 2.8 | | % | | | |

For the [removed: year] [added: years] ended December 31, [removed: 2017,] [added: 2018 and 2017 and the 2016 fiscal transition period,] currency rate fluctuations calculated by converting revenues and expenses for the [added: current] year [removed: ended December 31, 2017] in local currency using [added: the] prior-year period rates had an immaterial effect on our revenues and operating income.

For the [removed: year] [added: years] ended December 31, [added: 2018 and] 2017, the 2016 fiscal transition period and the [removed: years] [added: year] ended May 31, [removed: 2016 and 2015,] [added: 2016,] our transaction gains and losses were insignificant.

The resulting translation adjustment is recorded as a component of other comprehensive income and [added: is included in shareholders' equity.]

As of December 31, [removed: 2017, $4.7 billion was] [added: 2018, the amount] outstanding under these variable-rate debt arrangements and settlement lines of [removed: credit.][added: credit was $5.9 billion.]

We have interest rate swaps that reduce a portion of our exposure to market interest rate risk on our LIBOR-based debt as discussed in "Note [removed: 7—Long-Term] [added: 8—Long-Term] Debt and Lines of Credit" in the notes to our accompanying consolidated financial statements.

Based on balances outstanding under variable-rate debt agreements and invested cash balances at December 31, [removed: 2017,] [added: 2018,] a hypothetical increase of 50 basis points in applicable interest rates as of December 31, [removed: 2017] [added: 2018] would increase our annual interest expense by approximately [removed: $20.2] [added: $17.5] million and increase our annual interest income by approximately [removed: $3.5] [added: $3.3] million.

For the 2016 fiscal transition period, currency rate fluctuations reduced our revenues by $35.3 million and our operating income by $19.8 million as compared to the prior-year period, calculated by converting current period revenues and expenses in local currency using the prior-year period rates.

is included in shareholders' equity.

We distribute our services across a variety of channels [removed: to customers] in [removed: 30] [added: 32] countries throughout North America, Europe, the Asia-Pacific region and Brazil and operate in three reportable segments: North America, Europe and Asia-Pacific.

This acquisition aligns with our technology-enabled, software driven strategy and adds an enterprise software business operating in two [removed: additional] vertical markets that we believe offer attractive growth fundamentals.

[removed: The merger] [added: In 2016, we merged with Heartland Payment Systems, Inc. ("Heartland"), which] significantly expanded our small and medium-sized enterprise distribution, [removed: merchant] [added: customer] base and vertical reach in the United States.

Payment Technology [removed: Services] and Software Solutions Overview

Our payment [added: technology] solutions are similar around the world in that we enable our customers to accept card, electronic, check and digital-based payments.

We distribute our services through multiple channels and target customers in many vertical markets in [removed: 30] [added: 32] countries located throughout North America, Europe, the Asia-Pacific region and in Brazil.

We also earn software [removed: licensing and] subscription [removed: fees] and [added: licensing fees, as well as] other fees based on specific value-added services that may be unrelated to the number or value of transactions.

We offer [removed: high touch] [added: high-touch] services that provide our customers with reliable and secure solutions coupled with high quality and responsive support services.

| • | OpenEdge. Through OpenEdge, we offer integrated payment solutions through [removed: more than 2,000] technology partners across [removed: over 60 different verticals] [added: numerous vertical markets,] primarily in North America. OpenEdge enables third-party application developers to incorporate payment innovations into their enterprise business solutions. |

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

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

| • | [removed: Point-of-Sale Solutions. We] [added: Xenial and SICOM. Through Xenial and SICOM, we] offer leading-edge [removed: POS] [added: enterprise] software solutions, integrated with our payment services and other adjacent business service applications, [removed: which may be on-premise or cloud-based, targeted primarily at] [added: to] the [added: restaurant and] hospitality and retail [removed: verticals.] [added: vertical markets.] |

We offer ecommerce and omnichannel solutions to our customers that seamlessly blend payment gateway services, retail payment acceptance infrastructure and payment technology service capabilities [added: though a unified commerce platform] to allow merchants to accept various payment methods through any channel across our geographical footprint.

[removed: We sell ecommerce and omnichannel solutions to customers of all sizes, from small businesses accepting payments in a single] country, to enterprise and multinational businesses that have complex payment needs and operate retail and online businesses in multiple countries.

Under the sponsorship model, we are designated as [removed: a Merchant Service Provider by MasterCard and as] an ISO by [added: Mastercard and] Visa.

To be designated as a certified processor, member clearing financial institutions [removed: ("Member")] [added: ("Members")] sponsor us and require our adherence to the standards of the networks.

In a debit card transaction, we obtain authorization for the transaction from the card issuer through the payment network verifying that the cardholder has [added: access to] sufficient funds for the transaction amount.

Under some arrangements, we remit the net amount of [removed: $98.50] [added: $98.00] to the merchant, rather than funding the full $100.00 and subsequently billing the merchant at the end of the month.

Our profit on the transaction reflects the fee received less [added: payment network fees and] operating expenses, including [removed: payment network fees,] systems cost to process the transaction and commissions paid to our sales force or ISO.

Payment network fees are charged by the card [removed: brands] [added: brands, in part,] based on the value of transactions processed through their networks.

[removed: ][added: ]

See "Note [removed: 15—Segment] [added: 16—Segment] Information" in the notes to the accompanying consolidated financial statements for additional information about our segments, including revenues, operating income and depreciation and amortization by segment as well as financial information about geographic areas in which we operate.

Approximately [removed: 73.7%] [added: 74.9%] of our revenues for the year ended December 31, [removed: 2017] [added: 2018] were derived from our operations in North America, which include the United States and Canada.

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

[removed: In addition, our] [added: Our] technology-enabled solutions represented a substantial component of our revenues in North America for the year ended December 31, [removed: 2017.][added: 2018.]

Our technology-enabled distribution in North America [removed: primarily] includes integrated and vertical market [added: solutions, ecommerce and omnichannel] solutions [removed: as well as our] [added: and] gaming [removed: solutions business.][added: solutions.]

Approximately [removed: 19.3%] [added: 18.1%] of our revenues for the year ended December 31, [removed: 2017] [added: 2018] were derived from our operations in Europe, which includes the United Kingdom, the Republic of Ireland, Spain, the Republic of Malta, the Czech Republic, Hungary, Slovakia, Romania and the Russian Federation.

We have direct sales forces in these markets through which we sell our services [added: while also leveraging our bank referral relationships.]

Approximately [removed: 7.0%] [added: 6.9%] of our revenues for the year ended December 31, [removed: 2017] [added: 2018] were derived from our operations in the Asia-Pacific region, which includes the following countries and territories: Australia, China, Hong Kong, India, Macau, Malaysia, Maldives, New Zealand, the Philippines, Singapore, Sri Lanka and Taiwan.

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

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

In Europe and the Asia-Pacific region, financial institutions remain the primary providers of payment [added: technology] services to merchants, although the outsourcing of these services to third-party service providers is becoming more prevalent.

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

The payments [added: technology] industry continues to grow worldwide and as a result, certain large payment technology companies, including us, have expanded operations globally by pursuing acquisitions and creating alliances and joint ventures.

We expect to continue to expand into new markets internationally [removed: or] [added: and] increase our scale and improve our competitiveness in existing markets by pursuing further acquisitions and joint ventures.

We seek to leverage the adoption of, and transition to, card, electronic and digital-based payments by expanding share in our existing markets through our distribution channels and service innovation, as well as through acquisitions to improve our offerings and [removed: scale, while also seeking to enter new markets through acquisitions, alliances and joint ventures around the world.][added: scale.]

[removed: Our] [added: The] key [removed: objectives] [added: tenets of our strategy] include the following:

[removed: We] [added: Further, we] work with information security and forensics firms and employ advanced technologies to [added: help] prevent, investigate and address issues relating to processing system security and availability.

We also collaborate with industry third parties, regulators and law [removed: enforcement] [added: enforcement, when appropriate,] to resolve security incidents and assist in efforts to prevent unauthorized access to our processing systems.

As of December 31, [removed: 2017,] [added: 2018,] we had approximately [removed: 10,000] [added: 11,000] employees, many of whom are highly skilled in technical areas specific to payment technology [removed: services.][added: and software solutions.]

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.

Since our spin-off, we have expanded in existing markets and into new markets internationally by pursuing further acquisitions and joint ventures.

For the year ended December 31, 2018, our revenues were $3.4 billion.

Recent Acquisitions

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

SICOM is a provider of end-to-end enterprise, cloud-based software solutions and other technologies to quick service restaurants and food service management companies.

SICOM's technologies are complementary to our existing Xenial solutions, and we believe this acquisition will expand our software-driven payments strategy by enabling us to increase our capabilities and expand on our existing presence in the restaurant vertical market.

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

AdvancedMD is a provider of cloud-based enterprise software solutions to small-to-medium sized ambulatory care physician practices in the United States.

We believe this acquisition will expand our software-driven payments strategy by enabling us to enter the healthcare vertical market, a large and fragmented market with strong payment fundamentals and attractive growth opportunities.

On September 1, 2017, we acquired the communities and sports divisions of Athlaction Topco, LLC ("ACTIVE Network") for total purchase consideration of $1.2 billion.

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

We sell ecommerce and omnichannel solutions to customers of all sizes, from small businesses accepting payments in a single

As we continue to grow and control our direct distribution by adding new channels and partners, including expanding our ownership of additional enterprise software solutions in select vertical markets, our wholesale distribution channel has become a smaller portion of our business.

In general, our business has not experienced pronounced seasonality.

However, each geographic channel has somewhat higher and lower quarters given the nature of the merchant portfolio.

We also seek to enter new markets through acquisitions, alliances and joint ventures around the world.

In order to provide our services, we obtain and store sensitive business information and personal information about our merchants, merchants’ customers, merchants’ employees, vendors, partners and other parties, which may include credit and debit card numbers, bank account numbers, social security numbers, drivers' license numbers, names and addresses, and other types of personal information or sensitive business information.

Some of this information is also processed and stored by our third-party service providers and other agents (which we refer to collectively as our "associated third parties") as well as merchants and ISOs.

We have responsibility to the card networks, their member financial institutions, and in some instances, our merchants, ISOs and/or individuals, for our failure or the failure of our associated third parties or merchants (as applicable) to protect this information.

We are subject to cyber security and information theft risks in our operations, which we seek to manage through a cyber and information security programs, training and insurance coverage.

To strengthen our security and cyber defenses, we continue to deploy multiple methods at different layers to defend our systems against misuse, intrusions and cyberattacks and to protect the data we collect.

Intellectual Property

Our intellectual property is an important part of our strategy to be a leading provider of payment technology and software solutions.

We use a combination of internal policies, intellectual property laws, and contractual provisions to protect our proprietary technologies and brands.

In addition, to protect our various brands, we seek and maintain registration of U.S. and international trademarks, service marks and domain names that align with our brand strategy.

We also enforce our trademarks against potential sources of confusion that could harm our brand and ability to compete.

We provide services that may be subject to various state, federal and foreign privacy laws and regulations, and, as a result of our recent acquisition of AdvancedMD, certain healthcare technology laws, including the Health Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”) and the Health Information Technology for Economic and Clinical Health Act.

and the CCPA, which requires companies that process personal information of California residents to make new disclosures to consumers about their data collection and use, and will grant consumers specific access rights to their data.

Outside the United States, these laws include, without limitation, the EU General Data Protection Regulation, Canada’s Personal

Information Protection and Electronic Documents Act, Hong Kong’s Personal Data Privacy Ordinance (Cap.

486), the Taiwan Personal Data Protection Law, the Philippines’ Data Privacy Act of 2012, and Australia’s Federal Privacy Act of 1988.

See Item 1A.

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

| | |

| --- | --- |

Since our spin-off, we have grown our annual revenues from $353 million for the year ended May 31, 2001 to $4.0 billion for the year ended December 31, 2017, through internal expansion of existing operations and through acquisitions.

Recent Developments

On September 1, 2017, we acquired ACTIVE Network for total purchase consideration of $1.2 billion, consisting of approximately $600 million in cash and 6.4 million shares of our common stock.

On April 22, 2016, we merged with Heartland Payment Systems, Inc. ("Heartland") in a cash-and-stock transaction for total purchase consideration of $3.9 billion.

On May 2, 2017, we amended our existing corporate credit facility (the "Credit Facility") to increase the total financing capacity available under the Credit Facility to $5.2 billion.

As of December 31, 2017, the Credit Facility provided for secured financing compromised of (i) a $1.5 billion term loan (the "Term A Loan"), (ii) a $1.3 billion term loan (the "Term A-2 Loan"), (iii) a $1.2 billion term loan facility (the "Term B-2 Loan") and (iv) a $1.25 billion revolving credit facility (the "Revolving Credit Facility").

See "Management's Discussion and Analysis - Liquidity and Capital Resources - Long-Term Debt and Lines of Credit" below for further discussion of our credit facilities.

while also leveraging our bank referral relationships.

Our acquisition of eWay Limited in April 2016 has allowed us to further expand our ecommerce and omnichannel solutions offerings in this region.

Privacy and security are central to our services.

We provide services that may be subject to various state, federal and foreign privacy laws and regulations.

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 and its successor, the General Data Protection Regulation, which becomes effective in May 2018.

Among other things, these foreign and domestic laws, and their implementing regulations, in certain cases 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.

been unclaimed for a certain period of time.

We have procedures in place to comply with the requirements of these laws.

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.

SEC Public Reference Room

100 F Street, N.E.

Washington, DC 20549

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

NYSE Euronext

20 Broad Street

New York, NY 10005

For the fiscal year ended December 31, [removed: 2017][added: 2018]

[removed: ][added: ]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate web site, if any,] every Interactive Data File required to be submitted [removed: 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 [removed: and post] such files).

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 [removed: $13,694,503,028.][added: $17,478,395,120.]

The number of shares of the registrant's common stock outstanding at February 19, [removed: 2018] [added: 2019] was [removed: 159,205,866] [added: 157,603,304] shares.

Specifically identified portions of the registrant's proxy statement for the [removed: 2018] [added: 2019] annual meeting of shareholders are incorporated by reference in Part III.

[removed: 2017] [added: 2018] ANNUAL REPORT ON FORM 10-K

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| ITEM 7. | | [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS](#s3063F75763AF5E35B9CBE3A36B4752BB)] [added: OPERATIONS](#s21E9A8C92070599ABC91F5B633DE7E5D)] | [removed: [29](#s3063F75763AF5E35B9CBE3A36B4752BB)] [added: [31](#s21E9A8C92070599ABC91F5B633DE7E5D)] |

| ITEM 7A. | | [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET [removed: RISK](#s4BB9F39CD4ED5DAA9545EB9D3834F66E)] [added: RISK](#s9788E635BB48553CA5F9C9ACFD2891FB)] | [removed: [47](#s4BB9F39CD4ED5DAA9545EB9D3834F66E)] [added: [50](#s9788E635BB48553CA5F9C9ACFD2891FB)] |

| ITEM 8. | | [FINANCIAL STATEMENTS AND SUPPLEMENTARY [removed: DATA](#s10F30AEF9EF55ACB8D32B7DBA90AD031)] [added: DATA](#s36715DA394005BC7A6D52E8310726FF5)] | [removed: [49](#s10F30AEF9EF55ACB8D32B7DBA90AD031)] [added: [51](#s36715DA394005BC7A6D52E8310726FF5)] |

| ITEM 9. | | [CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL [removed: DISCLOSURE](#sB22EE711E18A505CA1F177AEF3425CE9)] [added: DISCLOSURE](#s5C5CB091E28155E18BF987F1111CE1C2)] | [removed: [96](#sB22EE711E18A505CA1F177AEF3425CE9)] [added: [99](#s5C5CB091E28155E18BF987F1111CE1C2)] |

| ITEM 9A. | | [CONTROLS AND [removed: PROCEDURES](#sB2D70FB5C07A54A79B31E1FE6614E749)] [added: PROCEDURES](#s6D2AC61EE5725A159A24E91A9BFBEB98)] | [removed: [96](#sB2D70FB5C07A54A79B31E1FE6614E749)] [added: [99](#s6D2AC61EE5725A159A24E91A9BFBEB98)] |

| ITEM 10. | | [DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE [removed: GOVERNANCE](#sA35B84A7A5C0572D88EB74CC783E7E7B)] [added: GOVERNANCE](#sE432108F9C3D56F59902B2888BA2C486)] | [removed: [97](#sA35B84A7A5C0572D88EB74CC783E7E7B)] [added: [101](#sE432108F9C3D56F59902B2888BA2C486)] |

| ITEM 11. | | [EXECUTIVE [removed: COMPENSATION](#s797AD72F7B205B0DB8C95B7E9E67AAB0)] [added: COMPENSATION](#s05A1B5F09E4F57C4BB55F802E8E2F3AA)] | [removed: [97](#s797AD72F7B205B0DB8C95B7E9E67AAB0)] [added: [101](#s05A1B5F09E4F57C4BB55F802E8E2F3AA)] |

| ITEM 12. | | [SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER [removed: MATTERS](#sFE28B79344185755A762142E0C91F272)] [added: MATTERS](#sC2CA914076685DA6B3411351E531C07E)] | [removed: [97](#sFE28B79344185755A762142E0C91F272)] [added: [101](#sC2CA914076685DA6B3411351E531C07E)] |

| ITEM 13. | | [CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR [removed: INDEPENDENCE](#s380F20761AEE5CD0B639C5F4EB9C9F1F)] [added: INDEPENDENCE](#s46E943CABD0C5A2CA47BFC992A46C0CD)] | [removed: [98](#s380F20761AEE5CD0B639C5F4EB9C9F1F)] [added: [101](#s46E943CABD0C5A2CA47BFC992A46C0CD)] |

| ITEM 14. | | [PRINCIPAL ACCOUNTING FEES AND [removed: SERVICES](#sE0ADA45D03375C05BE147BB7E8BCB182)] [added: SERVICES](#s46AD56D92CAA5C3B95FA25D74195F6A9)] | [removed: [98](#sE0ADA45D03375C05BE147BB7E8BCB182)] [added: [102](#s46AD56D92CAA5C3B95FA25D74195F6A9)] |

| ITEM 15. | | [EXHIBITS, FINANCIAL STATEMENT [removed: SCHEDULES](#sDED9BFABC40A5D47BB1188B1C177395E)] [added: SCHEDULES](#sD12C348418DA53719C357761BA71FC5A)] | [removed: [99](#sDED9BFABC40A5D47BB1188B1C177395E)] [added: [103](#sD12C348418DA53719C357761BA71FC5A)] |

[removed: As a result, we] [added: We] refer to the period consisting of the seven-months ended December 31, 2016 as the "2016 fiscal transition period."

Some of the statements we use in this report, and in some of the documents we incorporate by reference in this report, contain forward-looking statements concerning our business operations, economic performance and financial condition, including in particular: our business strategy and means to implement the strategy; measures of future results of operations, such as revenues, expenses, operating margins, income tax rates, and earnings per share; other operating metrics such as shares outstanding and capital expenditures; our success and timing in developing and introducing new services and expanding our business; statements about the benefits of our [removed: acquisition of the communities and sports divisions of Athlaction Topco, LLC ("ACTIVE Network"),] [added: acquisitions,] including future financial and operating results, the combined company’s plans, objectives, expectations and intentions, and the successful integration of [added: our] future acquisitions.

Important factors that may cause actual events or results to differ materially from those anticipated by our forward-looking statements include our ability to safeguard our data; increased competition from larger companies and non-traditional competitors; our ability to update our services in a timely manner; our ability to maintain Visa and [removed: MasterCard] [added: Mastercard] registration and financial institution sponsorship; our reliance on financial institutions to provide clearing services in connection with our settlement activities; our potential failure to comply with card network requirements; potential systems interruptions or failures; software defects or undetected errors; increased attrition of merchants, referral partners or independent sales organizations; our ability to increase our share of existing markets and expand into new markets; [added: development of market trends and technologies;] a decline in the use of cards for payment generally; unanticipated increases in chargeback liability; increases in credit card network fees; changes in laws, regulations or network rules or interpretations thereof; foreign currency exchange and interest rate risks; political, economic and regulatory changes in the foreign countries in which we operate; future performance, integration and conversion of acquired operations, including without limitation difficulties and delays in integrating or fully realizing cost savings and other benefits of our acquisitions at all or within the expected time period; fully realizing anticipated annual interest expense savings from refinancing our Credit [removed: Facility;] [added: Facility (described in "Note 8—Long-Term Debt and Lines of Credit" in the notes to the accompanying consolidated financial statements);] loss of key personnel; and other risk factors presented in Item "1A - Risk Factors of this Annual Report on Form 10‑K," which we advise you to review.

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 [removed: statements.][added: statements, except as required by law.]

10-K 1 gpn20181231-10k.htm 10-K

| | | [SIGNATURES](#s5F3D5D9D14D8571E8A269C4C8C695A74) | [107](#s5F3D5D9D14D8571E8A269C4C8C695A74) |

10-K 1 gpn20171231-10k.htm 10-K

(Do not check if a smaller reporting company)

| | | [SIGNATURES](#sE376C2FE5F105E17B7D8212654A1130C) | [102](#sE376C2FE5F105E17B7D8212654A1130C) |

We believe that it is important to communicate our plans for and expectations about the future to our shareholders and to the public.

Our principal facilities in North America are located in Atlanta, Georgia; Dallas, Texas; Jeffersonville, Indiana; [added: Lansdale, Pennsylvania,] Las Vegas, Nevada; [removed: Lindon,] [added: Oklahoma City, Oklahoma; Salt Lake City,] Utah; and Toronto, Canada.

We believe that all of our [removed: facilities and equipment] [added: properties] will be suitable and adequate for our business as presently conducted.

We have properties for operational, sales and administrative purposes.

At December 31, 2018, we leased approximately 70 properties in the United States and approximately 120 properties in countries outside the United States.

In addition, we owned four properties located outside the United States.

At December 31, 2017, we owned four international facilities and leased 51 domestic properties and 96 international properties, which we use for operational, sales and administrative purposes.

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 [removed: year] [added: years] ended December 31, [added: 2018 and] 2017, the 2016 fiscal transition [removed: period,] [added: period] and the years ended May 31, 2016, [removed: 2015, 2014] [added: 2015] and [removed: 2013.][added: 2014.]

The line graph assumes the investment of $100 in our common stock, the Standard & Poor's 500 Index and the Standard & Poor's Information Technology Index on May 31, [removed: 2012] [added: 2013] and assumes reinvestment of all dividends.

COMPARISON OF [removed: 5 YEAR] [added: 5-YEAR] CUMULATIVE TOTAL RETURN*

[removed: ][added: ]

*$100 invested on May 31, [removed: 2012] [added: 2013] in stock or index, including reinvestment of dividends.

Copyright© [removed: 2018] [added: 2019] Standard & Poor's, a division of S&P Global.

| May 31, [removed: 2012] [added: 2013] | | $ | 100.00 | | | $ | 100.00 | | | $ | 100.00 | |

[added: | (1) |] Our board of directors has authorized us to repurchase shares of our common stock through any combination of Rule 10b5-1 [removed: open market] [added: open-market] repurchase plans, accelerated share repurchase plans, discretionary open-market purchases or privately negotiated transactions. [added: |]

During the quarter ended December 31, [removed: 2017,] [added: 2018,] pursuant to our employee incentive plans, we withheld [removed: 81,889] [added: 2,028] shares at an average price [added: per share] of [removed: $96.82] [added: $107.99] in order to satisfy employees' tax withholding and payment obligations in connection with the vesting of awards of restricted stock, which we withheld at fair market value on the vesting date.

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

| May 31, 2014 | | 143.14 | | | | 120.45 | | | | 123.89 | | |

| May 31, 2015 | | 218.13 | | | | 134.67 | | | | 147.20 | | |

| May 31, 2016 | | 324.92 | | | | 136.98 | | | | 151.80 | | |

| December 31, 2016 | | 290.37 | | | | 148.08 | | | | 168.59 | | |

| December 31, 2017 | | 419.54 | | | | 180.41 | | | | 234.05 | | |

| December 31, 2018 | | 431.79 | | | | 172.50 | | | | 233.38 | | |

Recent Sales of Unregistered Securities

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

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

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | |

| Period | Total Number of Shares Purchased (1) | | | Approximate Average Price Paid per Share | | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2) | | |

| | | | | | | | | | | | (in millions) | | |

| October 2018 | 784 | | | $ | 114.94 | | | — | | | | | |

| November 2018 | 967 | | | 103.87 | | | | — | | | | | |

| December 2018 | 315,260 | | | 99.37 | | | | — | | | | | |

| Total | 317,011 | | | $ | 99.43 | | | — | | | $ | 387.8 | |

| | |

| --- | --- |

| | |

| --- | --- |

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

Our common stock trades on the New York Stock Exchange under the ticker symbol "GPN." The following table provides the intraday high and low prices of our common stock and dividends paid per share for each of the quarters during the year ended December 31, 2017, the 2016 fiscal transition period and the year ended May 31, 2016.

We expect to continue to pay our shareholders a dividend, 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, compliance with debt covenants and such other factors as the board of directors deems relevant.

Further, our Credit Facility may prohibit us from paying quarterly dividends in excess of $0.01 per share.

As of February 16, 2018, there were 2,384 shareholders of record.

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | High | | | | Low | | | | Dividend Per Share | | |

| Year Ended December 31, 2017: | | | | | | | | | | | |

| First Quarter (January 2017 - March 2017) | $ | 81.63 | | | $ | 69.04 | | | $ | 0.01 | |

| Second Quarter (April 2017 - June 2017) | 93.52 | | | | 76.47 | | | | 0.01 | | |

| Third Quarter (July 2017 - September 2017) | 98.14 | | | | 87.86 | | | | 0.01 | | |

| Fourth Quarter (October 2017 - December 2017) | 104.90 | | | | 95.01 | | | | 0.01 | | |

| 2016 Fiscal Transition Period: | | | | | | | | | | | |

| First Quarter (June 2016 - August 2016) | $ | 79.93 | | | $ | 67.04 | | | $ | 0.01 | |

| Second Quarter (September 2016 - November 2016) | 79.24 | | | | 64.63 | | | | 0.01 | | |

| June 1, 2016 through December 31, 2016 | 79.93 | | | | 64.63 | | | | 0.02 | | |

| Year Ended May 31, 2016 | | | | | | | | | | | |

| First Quarter (June 2015 - August 2015) | $ | 59.29 | | | $ | 50.69 | | | $ | 0.01 | |

| Second Quarter (September 2015 - November 2015) | 72.91 | | | | 54.03 | | | | 0.01 | | |

| Third Quarter (December 2015 - February 2016) | 74.64 | | | | 51.29 | | | | 0.01 | | |

| Fourth Quarter (March 2016 - May 2016) | 78.30 | | | | 58.11 | | | | 0.01 | | |

| May 31, 2013 | | 113.10 | | | | 127.28 | | | | 115.12 | | |

| May 31, 2014 | | 161.90 | | | | 153.30 | | | | 142.63 | | |

| May 31, 2015 | | 246.72 | | | | 171.40 | | | | 169.46 | | |

| May 31, 2016 | | 367.50 | | | | 174.34 | | | | 174.75 | | |

| December 31, 2016 | | 328.42 | | | | 188.47 | | | | 194.08 | | |

| December 31, 2017 | | 474.52 | | | | 229.61 | | | | 269.45 | | |

As of December 31, 2017, the approximate dollar value of shares that may yet be purchased under our share repurchase program was $264.9 million remaining available under the board's authorization announced on January 5, 2017.

On February 6, 2018, the board increased its authorization to repurchase shares of our common stock to $600 million.

The authorizations by the board of directors do not expire, but could be revoked at any time.

In addition, we are not required by any of the board's authorizations or otherwise to complete any repurchases by any specific time or at all.

We repurchased and retired 376,309 shares of our common stock at a cost of $34.8 million including commissions, or an average price of $92.51 per share, during the year ended December 31, 2017, as previously authorized; however, we did not repurchase any shares of our common stock during the quarter ended December 31, 2017.

| | Year Ended December 31, | | | | [added: | | | |] Seven Months Ended December 31, | | | | Year Ended May 31, | | | | | | | | | | | [removed: | | | |]

| | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | 2016 | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Revenues | $ | [removed: 3,975,163] [added: 3,366,366] | | | $ | [removed: 2,202,896] [added: 3,975,163] | | | $ | [removed: 2,898,150] [added: 2,202,896] | | | $ | [removed: 2,773,718] [added: 2,898,150] | | | $ | [removed: 2,554,236] [added: 2,773,718] | | | $ | [removed: 2,375,923] [added: 2,554,236] | |

| Operating income | [added: 737,055 | | | |] 558,868 | | | | 237,951 | | | | 424,944 | | | | 456,597 | | | | 405,499 | | | [removed: | 357,213 | | |]

| Net income | [added: 484,667 | | | |] 494,070 | | | | 137,683 | | | | 290,217 | | | | 309,115 | | | | 269,952 | | | [removed: | 238,713 | | |]

| Net income attributable to Global Payments | [added: 452,053 | | | |] 468,425 | | | | 124,931 | | | | 271,666 | | | | 278,040 | | | | 245,286 | | | [removed: | 216,125 | | |]

| Basic earnings per share | $ | [removed: 3.03] [added: 2.85] | | | $ | [removed: 0.81] [added: 3.03] | | | $ | [removed: 2.05] [added: 0.81] | | | $ | [removed: 2.07] [added: 2.05] | | | $ | [removed: 1.70] [added: 2.07] | | | $ | [removed: 1.39] [added: 1.70] | |

| Diluted earnings per share | [added: 2.84 | | | |] 3.01 | | | | 0.81 | | | | 2.04 | | | | 2.06 | | | | 1.69 | | | [removed: | 1.38 | | |]

| Dividends per share | 0.04 | | | | [removed: 0.02] [added: 0.04] | | | | [removed: 0.04] [added: 0.02] | | | | 0.04 | | | | 0.04 | | | | 0.04 | | |

| Total assets | $ | [removed: 12,998,069] [added: 13,230,774] | | | $ | [removed: 10,664,350] [added: 12,998,069] | | | $ | [removed: 10,509,952] [added: 10,664,350] | | | $ | [removed: 5,779,301] [added: 10,509,952] | | | $ | [removed: 4,002,527] [added: 5,779,301] | | | $ | [removed: 3,114,025] [added: 4,002,527] | |

| Settlement lines of credit | [added: 700,486 | | | |] 635,166 | | | | 392,072 | | | | 378,436 | | | | 592,629 | | | | 440,128 | | | [removed: | 187,461 | | |]

| Long-term debt | [added: 5,130,243 | | | |] 4,659,716 | | | | 4,438,612 | | | | 4,515,286 | | | | 1,740,067 | | | | 1,390,507 | | | [removed: | 960,749 | | |]

| Total equity | [added: 4,186,343 | | | |] 3,965,231 | | | | 2,779,342 | | | | 2,877,404 | | | | 863,553 | | | | 1,132,799 | | | [removed: | 1,286,607 | | |]

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

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

(a) [added: the effects of] a [added: net income tax benefit of $23.3 million in connection with adjustments made to accounting estimates associated with the 2017 U.S. Tax Act for the year ended December 31, 2018 and a] provisional net income tax benefit of $158.7 million recorded in connection with the 2017 U.S. Tax [removed: Act.][added: Act for the year ended December 31, 2017.]

See "Note [removed: 9—Income] [added: 10—Income] Tax" in the notes to the accompanying consolidated financial statements for further discussion; and,

As more fully described in "Note 1—Basis of Presentation and Summary of Significant Accounting Policies" and "Note 3—Revenues" in the notes to the accompanying consolidated financial statements, we adopted a new revenue accounting standard on January 1, 2018 that results in revenue being presented net of certain fees that we pay to third parties, including payment networks.

This change in presentation affected our reported revenues and operating expenses during the year ended December 31, 2018 by the same amount and had no effect on operating income.

See "Note 7—Other Assets" in the notes to the accompanying consolidated financial statements for further discussion.

The income statement data for the year ended December 31, 2017, the 2016 fiscal transition period and the years ended May 31, 2016 and 2015 and the balance sheet data as of December 31, 2017 and 2016 are derived from the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

The income statement data for the year ended May 31, 2014 and the balance sheet data as of May 31, 2016 and 2015 were derived from consolidated financial statements included in our Transition Report on Form 10-K for the fiscal transition period ended December 31, 2016.

The income statement data for the year ended May 31, 2013 and the balance sheet data as of May 31, 2014 were derived from audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended May 31, 2015.

The balance sheet data as of May 31, 2013 were derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended May 31, 2014.

(b) a credit of $7.0 million during the year ended May 31, 2014 and a charge of $36.8 million for the year ended May 31, 2013 related to a processing system intrusion that occurred in the year ended May 31, 2012.

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

We have audited the internal control over financial reporting of Global Payments Inc. and subsidiaries (the "Company") as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control [removed: -] [added: —] Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control [removed: -] [added: —] Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, [removed: 2017,] [added: 2018,] of the Company and our report dated February [removed: 22, 2018,] [added: 21, 2019,] expressed an unqualified opinion on those financial statements and included an [removed: explanatory] [added: emphasis of a matter] paragraph regarding the [removed: Company changing] [added: Company's change of] its fiscal year end from May 31 to December [removed: 31] [added: 31,] in [removed: 2016.][added: 2016, and an explanatory paragraph regarding the Company's change in its method of accounting for revenue from contracts with customers in fiscal year 2018, due to the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606).]

[removed: As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment a portion of the internal control over financial reporting at Athlaction Topco, LLC ("ACTIVE Network"), which was acquired on September 1, 2017,] [added: AdvancedMD] and [removed: whose] [added: SICOM's combined] financial statements constitute less than [removed: 1.5%] [added: 2%] of consolidated [removed: revenues,] [added: revenues] and [removed: 4.3%] [added: approximately 5%] of consolidated assets (excluding goodwill related to the [removed: ACTIVE Network transaction] [added: transactions] which [removed: was] [added: were] integrated into the Company's systems and control environment), as of and for the year ended December 31, [removed: 2017.][added: 2018.]

[removed: ACTIVE Network] [added: AdvancedMD and SICOM] did not contribute to net income for the year ended December 31, [removed: 2017.][added: 2018.]

Accordingly, our audit did not include the internal control over financial reporting at [removed: ACTIVE Network] [added: AdvancedMD and SICOM] that is excluded from management’s assessment.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because [added: of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.]

We have audited the accompanying consolidated balance sheets of Global Payments Inc. and subsidiaries (the "Company") as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the [removed: year] [added: years] ended December 31, [added: 2018 and] 2017, the seven months ended December 31, 2016, and the [removed: years] [added: year] ended May 31, [removed: 2016 and 2015,] [added: 2016,] and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and the results of its operations and its cash flows for the [removed: year] [added: years] ended December 31, [added: 2018 and] 2017, the seven months ended December 31, 2016, and the [removed: years] [added: year] ended May 31, [removed: 2016 and 2015,] [added: 2016,] in conformity with the applicable accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control [removed: -] [added: —] Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February [removed: 22, 2018] [added: 21, 2019] expressed an unqualified opinion on the Company's internal control over financial reporting.

| | Year Ended December 31, | | | | [added: | | | |] Seven Months Ended December 31, | | | | Year Ended May 31, | | | [removed: | | | |]

| | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | 2016 | | | | [removed: 2015] [added: 2016] | | |

| Revenues | $ | [removed: 3,975,163] [added: 3,366,366] | | | $ | [removed: 2,202,896] [added: 3,975,163] | | | $ | [removed: 2,898,150] [added: 2,202,896] | | | $ | [removed: 2,773,718] [added: 2,898,150] | |

| Cost of service | [removed: 1,928,037] [added: 1,095,014] | | | | [removed: 1,094,593] [added: 1,928,037] | | | | [removed: 1,147,639] [added: 1,094,593] | | | | [removed: 1,022,107] [added: 1,147,639] | | |

| Selling, general and administrative | [removed: 1,488,258] [added: 1,534,297] | | | | [removed: 870,352] [added: 1,488,258] | | | | [removed: 1,325,567] [added: 870,352] | | | | [removed: 1,295,014] [added: 1,325,567] | | |

| | [removed: 3,416,295] [added: 2,629,311] | | | | [removed: 1,964,945] [added: 3,416,295] | | | | [removed: 2,473,206] [added: 1,964,945] | | | | [removed: 2,317,121] [added: 2,473,206] | | |

| Operating income | [removed: 558,868] [added: 737,055] | | | | [removed: 237,951] [added: 558,868] | | | | [removed: 424,944] [added: 237,951] | | | | [removed: 456,597] [added: 424,944] | | |

| Interest and other income | [removed: 8,662] [added: 20,719] | | | | [removed: 44,382] [added: 8,662] | | | | [removed: 5,284] [added: 44,382] | | | | [removed: 4,949] [added: 5,284] | | |

| Interest and other expense | [removed: (174,847] [added: (195,619] | | ) | | [removed: (108,989] [added: (174,847] | | ) | | [removed: (69,316] [added: (108,989] | | ) | | [removed: (44,436] [added: (69,316] | | ) |

| | [removed: (166,185] [added: (174,900] | | ) | | [removed: (64,607] [added: (166,185] | | ) | | [removed: (64,032] [added: (64,607] | | ) | | [removed: (39,487] [added: (64,032] | | ) |

| Income before income taxes | [removed: 392,683] [added: 562,155] | | | | [removed: 173,344] [added: 392,683] | | | | [removed: 360,912] [added: 173,344] | | | | [removed: 417,110] [added: 360,912] | | |

| Income tax [removed: benefit] (provision) [added: benefit] | [removed: 101,387] [added: (77,488] | | [added: )] | | [removed: (35,661] [added: 101,387] | | [removed: )] | | [removed: (70,695] [added: (35,661] | | ) | | [removed: (107,995] [added: (70,695] | | ) |

| Net income | [removed: 494,070] [added: 484,667] | | | | [removed: 137,683] [added: 494,070] | | | | [removed: 290,217] [added: 137,683] | | | | [removed: 309,115] [added: 290,217] | | |

| Less: Net income attributable to noncontrolling interests | [removed: (25,645] [added: (32,614] | | ) | | [removed: (12,752] [added: (25,645] | | ) | | [removed: (18,551] [added: (12,752] | | ) | | [removed: (31,075] [added: (18,551] | | ) |

| Net income attributable to Global Payments | $ | [removed: 468,425] [added: 452,053] | | | $ | [removed: 124,931] [added: 468,425] | | | $ | [removed: 271,666] [added: 124,931] | | | $ | [removed: 278,040] [added: 271,666] | |

| Basic earnings per share | $ | [removed: 3.03] [added: 2.85] | | | $ | [removed: 0.81] [added: 3.03] | | | $ | [removed: 2.05] [added: 0.81] | | | $ | [removed: 2.07] [added: 2.05] | |

| Diluted earnings per share | $ | [removed: 3.01] [added: 2.84] | | | $ | [removed: 0.81] [added: 3.01] | | | $ | [removed: 2.04] [added: 0.81] | | | $ | [removed: 2.06] [added: 2.04] | |

| Net income | $ | [removed: 494,070] [added: 484,667] | | | $ | [removed: 137,683] [added: 494,070] | | | $ | [removed: 290,217] [added: 137,683] | | | $ | [removed: 309,115] [added: 290,217] | |

| Foreign currency translation adjustments | [removed: 146,401] [added: (118,439] | | [added: )] | | [removed: (92,229] [added: 146,401] | | [removed: )] | | [removed: (55,858] [added: (92,229] | | ) | | [removed: (220,641] [added: (55,858] | | ) |

| Income tax [removed: benefit] [added: provision] related to foreign currency translation adjustments | [removed: —] [added: (832] | | [added: )] | | — | | | | — | | | | [removed: 12,152] [added: —] | | |

| Net unrealized gains (losses) on hedging activities | [removed: 4,549] [added: (7,553] | | [added: )] | | [removed: 5,532] [added: 4,549] | | | | [removed: (12,859] [added: 5,532] | | [removed: )] | | [removed: (10,116] [added: (12,859] | | ) |

| Reclassification of net unrealized [added: (gains)] losses on hedging activities to interest expense | [removed: 5,673] [added: (4,792] | | [added: )] | | [removed: 4,222] [added: 5,673] | | | | [removed: 8,240] [added: 4,222] | | | | [removed: 3,958] [added: 8,240] | | |

| Income tax [removed: (provision)] benefit [added: (provision)] related to hedging activities | [removed: (2,583] [added: 2,972] | | [removed: )] | | [removed: (3,639] [added: (2,583] | | ) | | [removed: 1,738] [added: (3,639] | | [added: )] | | [removed: 2,284] [added: 1,738] | | |

| [removed: Other comprehensive income (loss),] [added: Other,] net of tax | [removed: (660] [added: 760] | | [removed: )] | | [removed: 1,030] [added: (660] | | [added: )] | | [removed: (848] [added: 1,030] | | [removed: )] | | [removed: (450] [added: (848] | | ) |

| Other comprehensive income (loss) | [removed: 153,380] [added: (127,884] | | [added: )] | | [removed: (85,084] [added: 153,380] | | [removed: )] | | [removed: (59,587] [added: (85,084] | | ) | | [removed: (212,813] [added: (59,587] | | ) |

| Comprehensive income | [removed: 647,450] [added: 356,783] | | | | [removed: 52,599] [added: 647,450] | | | | [removed: 230,630] [added: 52,599] | | | | [removed: 96,302] [added: 230,630] | | |

| Less: comprehensive income attributable to noncontrolling interests | [removed: (39,452] [added: (29,918] | | ) | | [removed: (4,335] [added: (39,452] | | ) | | [removed: (19,022] [added: (4,335] | | ) | | [removed: (2,478] [added: (19,022] | | ) |

| Comprehensive income attributable to Global Payments | $ | [removed: 607,998] [added: 326,865] | | | $ | [removed: 48,264] [added: 607,998] | | | $ | [removed: 211,608] [added: 48,264] | | | $ | [removed: 93,824] [added: 211,608] | |

| | December 31, [removed: 2017] [added: 2018] | | | | December 31, [removed: 2016] [added: 2017] | | |

| Cash and cash equivalents | $ | [removed: 1,335,855] [added: 1,210,878] | | | $ | [removed: 1,162,779] [added: 1,335,855] | |

As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment a portion of the internal control over financial reporting at AdvancedMD, Inc. ("AdvancedMD"), which was acquired on September 4, 2018, and SICOM Systems, Inc. ("SICOM"), which was acquired on October 17, 2018.

February 21, 2019

Change in Accounting Principle

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

February 21, 2019

| | Years Ended December 31, | | | | | | | | Seven Months Ended December 31, | | | | Year Ended May 31, | | |

| Net income | $ | 484,667 | | | $ | 494,070 | | | $ | 137,683 | | | $ | 290,217 | |

| Prepaid expenses and other assets | (160,800 | | ) | | (129,427 | | ) | | (44,164 | | ) | | (64,216 | | ) |

| Cumulative effect of adoption of new accounting standards | | | | | | | | 50,969 | | | | (1,843 | | ) | | 49,126 | | | | | | | | 49,126 | | |

| Net income | | | | | | | | 452,053 | | | | | | | | 452,053 | | | | 32,614 | | | | 484,667 | | |

| Other comprehensive loss | | | | | | | | | | | | (125,188 | | ) | | (125,188 | | ) | | (2,696 | | ) | | (127,884 | | ) |

| Repurchase of common stock | (1,927 | ) | | (184,024 | | ) | | (28,172 | | ) | | | | | | (212,196 | | ) | | | | | | (212,196 | | ) |

| Balance at December 31, 2018 | 157,962 | | | $ | 2,235,167 | | | $ | 2,066,415 | | | $ | (310,175 | ) | | $ | 3,991,407 | | | $ | 194,936 | | | $ | 4,186,343 | |

| Distributions to noncontrolling interests | | | | | | | | | | | | | | | | — | | | | (9,301 | | ) | | (9,301 | | ) |

| Balance at December 31, 2017 | 159,180 | | | $ | 2,379,774 | | | $ | 1,597,897 | | | $ | (183,144 | ) | | $ | 3,794,527 | | | $ | 170,704 | | | $ | 3,965,231 | |

Recently Adopted Accounting Pronouncements and Rules Issued by the U.S. Securities and Exchange Commission (the "SEC")—We adopted Accounting Standards Update ("ASU") 2014-09, "Revenues from Contracts with Customers (Topic 606)" as well as other clarifications and technical guidance issued by the Financial Accounting Standards Board ("FASB") related to this new revenue standard ("ASC 606") and ASC Subtopic 340-40: "Other Assets and Deferred Costs - Contracts with Customers" ("ASC 340-40") on January 1, 2018.

We elected the modified retrospective transition method, which resulted in a net increase to retained earnings of $51.0 million for the cumulative effect of applying the standard.

The primary components of the cumulative-effect adjustment were changes in the accounting for certain costs to obtain customer contracts and the related income tax effects, which resulted in increases to other noncurrent assets and deferred income tax liabilities of $64.6 million and $15.6 million, respectively.

Under the new standard, we also capitalized certain costs that were not previously capitalized, including certain commissions and the related payroll taxes and certain costs incurred to fulfill a contract before the performance obligation has been satisfied, primarily compensation and related payroll taxes for employees engaged in customer implementation activities in our technology-enabled businesses.

Prior to the adoption of ASC 606, we presented payments made to certain third parties, including payment networks, as a component of operating expenses.

For the year ended December 31, 2018, we presented revenue net of these third-party payments.

This change in presentation had the effect of reducing our revenues and operating expenses by the same amounts.

As a result, revenues, cost of service and selling, general and administrative expenses were lower than the amounts that would have been presented if not for the effect of the new revenue accounting standard by $1,110.8 million, $1,042.9 million and $67.9 million, respectively, for the year ended December 31, 2018.

The adoption of ASC 606 did not have a material effect on any other line items in our consolidated statement of income for year ended December 31, 2018 or on any other line items in our consolidated balance sheet as of December 31, 2018 and had no effect on our cash flows from operating activities, investing activities or financing activities included in our consolidated statement of cash flows for the year ended December 31, 2018.

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

In addition to the interest rates on direct Treasury obligations

of the U.S. government, the London Interbank Offered Rate ("LIBOR") Swap Rate, the OIS rate based on the Fed Funds Effective Rate and the Securities Industry and Financial Markets Association Municipal Swap Rate are also permitted.

In August 2018, the SEC issued a final rule that amends certain of its disclosure requirements.

The changes are generally intended to reduce or eliminate certain disclosures that have become redundant, duplicative, overlapping, outdated or superseded in light of other disclosures requirements or changes in the information environment.

The rule also requires SEC registrants to present changes in stockholders' equity and the amount of dividends per share for each class of shares on a quarterly basis for the current and prior-year periods.

The final rule was effective for SEC filings on Forms 10-Q and 10-K made on or after November 5, 2018.

As a result, we have reduced or eliminated certain disclosures in this Annual Report on Form 10-K for the year ended December 31, 2018, as permitted, and we will present the quarterly changes in 2019.

In February 2018, the FASB issued ASU 2018-02, "Income Statement-Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." ASU 2018-02 provides an option to reclassify stranded tax effects within accumulated other comprehensive income ("AOCI") to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the U.S. Tax Cuts and Jobs Act of 2017 (the "2017 U.S. Tax Act") is recorded.

We adopted this ASU during 2018 and elected the option to reclassify stranded tax effects within AOCI to retained earnings in the period of adoption with no material effect on our consolidated financial statements.

Under this transition method, we did not recast the prior-period financial statements presented.

We applied the clarified definition of a business to the business combinations we completed in 2018 with no effect on our consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which was further clarified in ASU 2018-03, issued by the FASB in February 2018.

We adopted ASU 2016-01 on January 1, 2018 using the modified retrospective transition

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

Revenue recognition— Our payment services customers contract with us for payment services, which we provide in exchange for consideration for completed transactions.

of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

February 22, 2018

| Prepaid expenses and other assets | (46,439 | | ) | | 13,997 | | | | (52,254 | | ) | | 5,426 | | |

| Capitalized customer acquisition costs | (82,988 | | ) | | (58,161 | | ) | | (11,962 | | ) | | — | | |

| Balance at May 31, 2015 | 130,558 | | | $ | 148,742 | | | $ | 795,226 | | | $ | (185,992 | ) | | $ | 757,976 | | | $ | 105,577 | | | $ | 863,553 | |

| Balance at May 31, 2014 | 137,692 | | | $ | 183,023 | | | $ | 815,980 | | | $ | (1,776 | ) | | $ | 997,227 | | | $ | 135,572 | | | $ | 1,132,799 | |

| Net income | | | | | | | | 278,040 | | | | | | | | 278,040 | | | | 31,075 | | | | 309,115 | | |

| Other comprehensive loss | | | | | | | | | | | | (184,216 | | ) | | (184,216 | | ) | | (28,597 | | ) | | (212,813 | | ) |

| Tax benefit from share-based compensation plans | | | | 5,176 | | | | | | | | | | | | 5,176 | | | | | | | | 5,176 | | |

| Distributions to noncontrolling interest | | | | | | | | | | | | | | | | | | | | (39,753 | | ) | | (39,753 | | ) |

| Noncontrolling interest from business combination | | | | | | | | | | | | | | | | | | | | 7,280 | | | | 7,280 | | |

| Repurchase of common stock | (9,002 | ) | | (75,628 | | ) | | (293,454 | | ) | | | | | | (369,082 | | ) | | | | | | (369,082 | | ) |

Revenue recognition— We provide payment technology services for credit cards, debit cards, electronic payments and check-related services.

Revenue is recognized when such services are performed.

Revenue for services provided directly to merchants is recorded net of interchange fees charged by card issuing banks.

Our primary business model is to provide our payment services, enterprise software solutions and other value-added services directly to our customers.

We also provide certain of our payment services through a wholesale distribution channel comprised of independent sales organizations ("ISOs").

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.

Certain of our integrated and vertical market solutions arrangements contain multiple elements, such as equipment, perpetual licenses, software-as-a-service, maintenance, installation and training.

We allocate consideration to each element based on the relative-selling-price method.

For certain arrangements, customers pay in advance, but revenue is recognized over the service period.

Merchant Reserves serve as collateral

If the estimated future net cash flows are lower than the recorded carrying amount, indicating an impairment of the value of the capitalized customer acquisition costs, the impairment loss would be charged to operations.

Based on our evaluation, we determined that no impairment of capitalized customer acquisition costs had occurred as of December 31, 2017.

Internal-use software is amortized over its estimated useful life, which is typically 2 to 10 years, in a manner that best reflects the pattern of economic use of the assets.

As a result of the change in our fiscal year end from May 31 to December 31, we elected to change our annual goodwill impairment test date from January 1 to October 1 to give us sufficient time to complete our assessment in conjunction with our year-end reporting.

We performed an annual goodwill impairment test on January 1, 2017 and on October 1, 2017.

During the first quarter of 2017, we revised our reporting unit structure within our North America segment to reflect changes made in connection with the integration of Heartland Payment Systems, Inc. ("Heartland").

Under the revised reporting unit structure, we operate two reporting units in our North America segment: (i) Payments and (ii) Integrated Solutions and Vertical Markets.

We reassigned the goodwill previously allocated to North America merchant services and Heartland to the two new reporting units using a relative fair value approach.

As a result of the change in reporting units, we performed goodwill impairment tests immediately before and after this change in reporting units and determined that there was no impairment.

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.

the asset and its eventual disposition.

The carrying amounts of our long-lived assets, including property and equipment and finite-life intangible assets, were not impaired at December 31, 2017 and 2016.

The accrued buyout liability is based on merchants under contract at the balance sheet date, the gross margin generated by those merchants over the prior 12 months, and the contractual buyout multiple.

The liability related to a new merchant is therefore zero when the merchant is installed, and increases over the 12 months following the installation date.

The same procedure is applied to unvested commissions over the expected vesting period, but is further adjusted to reflect our estimate of the percentage of unvested salespersons that will become vested.

| | |

| --- | --- |

As of December 31, [removed: 2017,] [added: 2018,] management carried out, under the supervision and with the participation of our principal executive officer and principal financial officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934).

Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, [removed: 2017,] [added: 2018,] our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and are designed to ensure that information required to be disclosed in those reports is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2017.][added: 2018.]

In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in the Internal Control [removed: -] [added: —] Integrated Framework (2013).

As permitted by the SEC rules and [removed: regulations] [added: regulations,] management's assessment did not include the internal control of the acquired operations of [removed: ACTIVE Network] [added: these acquired businesses] which are included in our consolidated financial statements as of December 31, [removed: 2017] [added: 2018] and for the [removed: period] [added: periods] from the acquisition [removed: date] [added: dates] through December 31, [removed: 2017.][added: 2018.]

In accordance with our integration efforts, we plan to incorporate [removed: ACTIVE Network's] [added: the] operations [added: of SICOM] into our internal control over financial reporting program within the time period provided by [added: the] applicable SEC rules and regulations.

The assets, excluding [removed: goodwill] [added: goodwill,] of [removed: ACTIVE Network,] [added: these acquired businesses] constituted approximately [removed: 4.3%] [added: 5%] of our total consolidated assets as of December 31, [removed: 2017.][added: 2018.]

[removed: ACTIVE Network's revenues were] [added: These acquired businesses comprised] less than [removed: 1.5%] [added: 2%] of our total consolidated [removed: revenues,] [added: revenues] and [removed: ACTIVE Network] did not contribute to our consolidated operating income for the year ended December 31, [removed: 2017.][added: 2018.]

Based on the results of its evaluation, which excluded [removed: an assessment] [added: assessments] of the internal control of the acquired operations of [removed: ACTIVE Network,] [added: AdvancedMD and SICOM,] management believes that as of December 31, [removed: 2017,] [added: 2018,] our internal control over financial reporting is effective based on those criteria.

[removed: Our independent registered public accounting firm] [added: Deloitte & Touche LLP] has issued an [removed: audit] [added: attestation] report on our internal control over financial reporting, which is included [removed: in this Annual Report.][added: herein as the Report of Independent Registered Public Accounting Firm under Item 8 - Financial Statements and Supplementary Data for the year ended December 31, 2018.]

On [removed: April 22, 2016,] [added: September 1, 2017,] we completed our [removed: merger with Heartland,] [added: acquisition of ACTIVE Network,] which we have since been integrating into our North America segment.

As part of our integration activities, we have completed the incorporation of [removed: Heartland's] [added: ACTIVE Network's] operations into our internal control over financial reporting program.

[removed: On September 1, 2017,] [added: In the fourth quarter of 2018,] we completed our acquisition of [removed: ACTIVE Network,] [added: SICOM,] which is being integrated into our North America segment.

[removed: We] [added: In the fourth quarter of 2018, we] also added internal controls over [removed: the disclosures] [added: disclosure] related to the expected accounting and reporting effects of the new [removed: revenue] [added: lease] accounting standard, which is effective for us [removed: as of] [added: on] January 1, [removed: 2018, as well as, the provisional effects on our accounting and disclosure for income taxes during the year ended December 31, 2017 as a result of the 2017 U.S. Tax Act and the related accounting guidance issued by the SEC.][added: 2019.]

We completed acquisitions of AdvancedMD and SICOM in the third and fourth quarters of 2018, respectively.

In accordance with our integration efforts, we plan to incorporate the operations of the acquired businesses into our internal control over financial reporting program within the time period provided by applicable SEC rules and regulations.

Attestation Report of Public Accounting Firm

We also implemented a new technology solution to assist with the necessary calculations to support the accounting and disclosure requirements of the new lease accounting standard.

We completed our acquisition of ACTIVE Network on September 1, 2017.

As part of our ongoing integration activities, we are continuing to apply our controls and procedures to the ACTIVE Network and to augment our company-wide controls to reflect the risks inherent in an acquisition of this magnitude.

There were no other changes in our internal control over financial reporting during the fourth quarter of calendar 2017 (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We incorporate by reference in this Item 10 information about our directors, executive officers and our corporate governance contained under the headings "Proposal 1: Election of Directors" and "Biographical Information About Our Executive Officers" and information about compliance with Section 16(a) of the Securities and Exchange Act of 1934 by our directors and executive officers under the heading "Additional Information-Section 16(a) Beneficial Ownership Reporting Compliance" from our proxy statement to be delivered in connection with our [removed: 2018] [added: 2019] Annual Meeting of Shareholders to be held on April [removed: 27, 2018 (the "2018] [added: 25, 2019 ("2019] Proxy Statement").

The code of ethics is available in the investor relations section of our website at [removed: www.globalpaymentsinc.com,] [added: www.globalpaymentsinc.com] and as indicated in the section entitled "Where To Find Additional Information" in Part I to this Annual Report.

We incorporate by reference in this Item 11 the information relating to executive and director compensation and the report of the Compensation Committee contained under the headings [removed: "Compensation, Discussion,] [added: "Compensation Discussion] and [removed: Analysis,"] [added: Analysis"] and [removed: "Corporate] [added: "Board and Corporate] Governance-Director Compensation" from our [removed: 2018] [added: 2019] Proxy Statement.

We incorporate by reference in this Item 12 the information relating to ownership of our common stock by certain persons contained under the headings "Common Stock Ownership-Common Stock Ownership [removed: of] [added: by] Management" and "Common Stock Ownership-Common Stock Ownership by [removed: Certain Other Persons"] [added: Non-Management Shareholders"] from our [removed: 2018] [added: 2019] Proxy Statement.

The following table provides certain information as of December 31, [removed: 2017] [added: 2018] concerning the shares of our common stock that may be issued under existing equity compensation plans.

For more information on these plans, see "Note [removed: 10—Shareholders' Equity"] [added: 12—Share-Based Awards and Options"] in the notes to the accompanying consolidated financial statements.

[removed: Also includes 50,462] [added: We do not intend to issue] shares [removed: authorized] under [added: either] the Amended and Restated 2005 Incentive Plan [removed: and 106,836 shares authorized under] [added: or] the 2000 [added: Non-Employee] Director [added: Stock] Option Plan.

| Equity compensation plans approved by security holders | 597,669 | | | $ | 59.16 | | | 12,883,324 | |

| Total | 597,669 | | | $ | 59.16 | | | 12,883,324 | |

The number of securities remaining available for future issuance under equity compensation plans reflected in column (c) above includes 10,610,164 shares authorized for issuance under our 2011 Amended and Restated Incentive Plan, all of which are available for issuance pursuant to grants of full-value stock awards, 2,173,140 shares authorized under our 2000 Employee Stock Purchase Plan, 33,684 shares authorized under our Amended and Restated 2005 Incentive Plan and 66,336 shares authorized under our 2000 Non-Employee Director Stock Option Plan.

| Equity compensation plans approved by security holders | 722,431 | | | $ | 47.79 | | | 11,810,191 | |

| Total | 722,431 | | | $ | 47.79 | | | 11,810,191 | |

Includes 11,046,846 shares authorized for issuance under the 2011 Incentive Plan, all of which are available for issuance pursuant to grants of full-value stock awards.

We do not intend to issue shares under either the Amended and Restated 2005 Incentive Plan or the 2000 Director Option Plan.

We incorporate by reference in this Item 13 the information regarding certain relationships and related transactions between us and our affiliates and the independence of our directors contained under the headings "Additional Information--Relationships and Related Party Transactions" and [removed: "Corporate Governance--Board] [added: "Board and Corporate Governance-Board] Independence" from our [removed: 2018] [added: 2019] Proxy Statement.

We incorporate by reference in this Item 14 the information regarding principal accounting fees and services contained under the heading "Proposal Three: Ratification of Reappointment of Auditors" from our [removed: 2018] [added: 2019] Proxy Statement.

| Reports of Independent Registered Public Accounting Firm | [removed: [49](#s81721693C1CF5CDE8B4235DBD1A91E69)] [added: [51](#s11601CECEB405F60BCAD1FF9A81BD831)] |

| Consolidated Statements of Income for the [removed: year] [added: years] ended December 31, [added: 2018 and] 2017, the seven months ended December 31, 2016 and the [removed: years] [added: year] ended May 31, 2016 [removed: and 2015] | [removed: [52](#sB4AA1773A747518D8DF7FE9981EB9C12)] [added: [54](#s7EEF90DF75DA5E90961A8296F7D19059)] |

| Consolidated Statements of Comprehensive Income for the [removed: year] [added: years] ended December 31, [added: 2018 and] 2017, the seven months ended December 31, 2016 and the [removed: years] [added: year] ended May 31, 2016 [removed: and 2015] | [removed: [53](#sB00BC4A6AD8A5064B592F3A203A1ACAF)] [added: [55](#sC98EA59B49925C4CABE58DCABC31464A)] |

| Consolidated Balance Sheets as of December 31, [removed: 2017] [added: 2018] and [removed: 2016] [added: 2017] | [removed: [54](#s01FB850D8AA25DEBBE115D5DDFB3ACEA)] [added: [56](#sC32E8210150A511396FBB514FBE284E7)] |

| Consolidated Statements of Cash Flows for the [removed: year] [added: years] ended December 31, [added: 2018 and] 2017, the seven months ended December 31, 2016 and the [removed: years] [added: year] ended May 31, 2016 [removed: and 2015] | [removed: [55](#s79570E34C29850C5995B600396D04ADD)] [added: [57](#sCC7790A6BE2F52D0A5129FC48736B176)] |

| Consolidated Statements of Changes in Equity for the [removed: year] [added: years] ended December 31, [added: 2018 and] 2017, the seven months ended December 31, 2016 and the [removed: years] [added: year] ended May 31, 2016 [removed: and 2015] | [removed: [56](#s89393BF8398F53D3A4F48C6B5E5D32C9)] [added: [58](#s00EAF7FDDC8658AB928C762802B91C1B)] |

| Notes to Consolidated Financial Statements | [removed: [58](#s6E0216BF0FA85E2A9855626CFCA219A8)] [added: [60](#s5D07821F4D6D5CB8A829F406D191D83B)] |

| Schedule II, Valuation and Qualifying Accounts | [removed: [95](#s3496D6E14F9F5770A4539C324AE36568)] [added: [98](#s92B6270FB9D253739479C94BDFD469CF)] |

| 2.3++ | [Stock Purchase and Merger Agreement, dated as [added: of] August 2, 2017, by and among Athlaction Topco, LLC, the Vista Blocker Sellers (as defined therein), Vista Equity Partners Management, LLC, as Sellers’ Representative, Global Payments Inc., Athens Merger Sub, LLC and the Vista AIVs and Vista GPs (as defined therein and solely for the limited purposes set forth therein), incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on August 8, 2017.](http://www.sec.gov/Archives/edgar/data/1123360/000112336017000037/ex21stockpurchaseandmerger.htm) |

| 10.1 | [removed: [Amended] [added: [First Amendment to the Second Amended] and Restated [removed: Debt Commitment Letter,] [added: Credit Agreement, First Amendment to the Second Amended and Restated Term Loan Agreement, First Amendment to the Company Guaranties and First Amendment to the Subsidiary Guaranties,] dated as of [removed: January 8,] [added: February 26,] 2016, by and among [added: the Company and] Global Payments [added: Direct,] Inc., [added: as borrowers,] Bank of America, N.A., [removed: Merrill, Lynch, Pierce, Fenner and Smith Incorporated] [added: as Administrative Agent,] and certain other lenders [removed: named therein,] [added: party thereto,] incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed [removed: January 14, 2016.](http://www.sec.gov/Archives/edgar/data/1123360/000112336016000054/ex101debtcommittmentletter.htm)] [added: March 1, 2016.](http://www.sec.gov/Archives/edgar/data/1123360/000112336016000066/ex101creditagreementfebrua.htm)] |

| 10.2 | [removed: [First] [added: [Second] Amendment to [removed: the] Second Amended and Restated Credit Agreement, [removed: First Amendment to the Second Amended and Restated Term Loan Agreement, First Amendment to the Company Guaranties and First Amendment to the Subsidiary Guaranties,] dated as of [removed: February 26,] [added: October 31,] 2016, by and among the [removed: Company] [added: Company, the other borrowers party thereto, the guarantors party thereto, the lenders party thereto] and [removed: Global Payments Direct, Inc., as borrowers,] Bank of America, N.A., as Administrative Agent, [removed: and certain other lenders party thereto,] incorporated by reference to Exhibit [removed: 10.1] [added: 10.4] to the Company’s [removed: Current] [added: Quarterly] Report on Form [removed: 8-K] [added: 10-Q] filed [removed: March 1, 2016.](http://www.sec.gov/Archives/edgar/data/1123360/000112336016000066/ex101creditagreementfebrua.htm)] [added: on January 9, 2017.](http://www.sec.gov/Archives/edgar/data/1123360/000112336017000006/ex104creditagreement.htm)] |

| 10.3 | [removed: [Second] [added: [Third] Amendment [added: dated March 30, 2017,] to Second Amended and Restated Credit Agreement, dated as of [removed: October] [added: July] 31, [removed: 2016, by and] [added: 2015] among the Company, the other borrowers party thereto, the [removed: guarantors] [added: Guarantors] party thereto, the [removed: lenders] [added: Lenders] party [removed: thereto] [added: thereto,] and Bank of America, N.A., as Administrative Agent, incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on [removed: January 9, 2017.](http://www.sec.gov/Archives/edgar/data/1123360/000112336017000006/ex104creditagreement.htm)] [added: May 4, 2017.](http://www.sec.gov/Archives/edgar/data/1123360/000112336017000024/ex104thirdamendmenttocredi.htm)] |

| 10.4 | [removed: [Third Amendment] [added: [Fourth Amendment,] dated [removed: March 30,] [added: May 2,] 2017, to Second Amended and Restated Credit Agreement, dated as of July 31, 2015 among the Company, the other borrowers party thereto, the Guarantors party thereto, the Lenders party thereto, and Bank of America, N.A., as Administrative Agent, incorporated by [removed: reference] [added: referenced] to Exhibit [removed: 10.4] [added: 10.1] to the Company’s Quarterly Report on Form 10-Q filed on [removed: May 4, 2017.](http://www.sec.gov/Archives/edgar/data/1123360/000112336017000024/ex104thirdamendmenttocredi.htm)] [added: August 3, 2017.](http://www.sec.gov/Archives/edgar/data/1123360/000112336017000034/ex101fourthamendmenttoseco.htm)] |

| 10.5 | [removed: [Fourth Amendment, dated May 2, 2017,] [added: [First Refinancing Facility Amendment] to Second Amended and Restated Credit Agreement, dated [removed: as of July 31, 2015] [added: March 20, 2018, by and] among the Company, the other borrowers party thereto, the [removed: Guarantors] [added: guarantors] party thereto, the [removed: Lenders] [added: lenders] party [removed: thereto,] [added: thereto] and Bank of America, [removed: N.A.,] [added: N.A.] as [removed: Administrative Agent,] [added: administrative agent,] incorporated by [removed: referenced] [added: reference] to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on [removed: August] [added: May] 3, [removed: 2017.](http://www.sec.gov/Archives/edgar/data/1123360/000112336017000034/ex101fourthamendmenttoseco.htm)] [added: 2018.](http://www.sec.gov/Archives/edgar/data/1123360/000112336018000016/ex101firstrefinancingfacil.htm)] |

| [removed: 10.6] [added: 10.8] | [First Amended and Restated Marketing Alliance Agreement with HSBC Bank plc, dated June 12, 2009, incorporated by reference to Exhibit 10.39 to the Company’s Annual Report on Form 10-K filed July 28, 2009, File No. 001-16111.](http://www.sec.gov/Archives/edgar/data/1123360/000119312509157024/dex1039.htm) |

| [removed: 10.7+] [added: 10.9+] | [Amended and Restated 2000 Employee Stock Purchase Plan, incorporated by reference to Exhibit 10.39 to the Company's Annual Report on Form 10-K filed July 28, 2010.](http://www.sec.gov/Archives/edgar/data/1123360/000119312510169025/dex1039.htm) |

| [removed: 10.8+] [added: 10.10+] | [Third Amended and Restated 2000 Non-Employee Director Stock Option Plan, dated June 1, 2004, incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K filed July 30, 2007, File No. 001-16111.](http://www.sec.gov/Archives/edgar/data/1123360/000119312507165419/dex1020.htm) |

| [removed: 10.9+] [added: 10.11+] | [Amendment to the Third Amended and Restated 2000 Non-Employee Director Stock Option Plan, dated March 28, 2007, incorporated by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K filed July 30, 2007, File No. 001-16111.](http://www.sec.gov/Archives/edgar/data/1123360/000119312507165419/dex1021.htm) |

| [removed: 10.10+] [added: 10.12+] | [Third Amended and Restated 2005 Incentive Plan, dated December 31, 2008, incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q filed April 6, 2009, File No. 001-16111.](http://www.sec.gov/Archives/edgar/data/1123360/000119312509073865/dex102.htm) |

| [removed: 10.11+] [added: 10.13+] | [Form of Non-Statutory Stock Option Award pursuant to the Amended and Restated 2005 Incentive Plan, incorporated by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q filed January 8, 2007, File No. 001-16111.](http://www.sec.gov/Archives/edgar/data/1123360/000119312507003002/dex105.htm) |

| [removed: 10.12+] [added: 10.14+] | [Non-Qualified Deferred Compensation Plan, incorporated by reference to Exhibit 99.1 to the Company's Registration Statement on Form S-8 filed September 16, 2010.](http://www.sec.gov/Archives/edgar/data/1123360/000119312510211480/dex991.htm) |

| [removed: 10.13+] [added: 10.15+] | [Amended and Restated 2011 Incentive Plan, incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-KT filed on February 28, 2017.](http://www.sec.gov/Archives/edgar/data/1123360/000112336017000013/ex10112011incentiveplan.htm) |

| [removed: 10.14+] [added: 10.19+] | [Form of Restricted Stock Award pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2017), incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed on May 4, 2017.](http://www.sec.gov/Archives/edgar/data/1123360/000112336017000024/ex101formofrestrictedstock.htm) |

| [removed: 10.15+] [added: 10.20+] | [Form of Performance Unit Award Agreement pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2017) incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q filed on May 4, 2017.](http://www.sec.gov/Archives/edgar/data/1123360/000112336017000024/ex102formofperformanceunit.htm) |

| [removed: 10.16+] [added: 10.21+] | [Form of Stock Option Award pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2017) incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed on May 4, 2017.](http://www.sec.gov/Archives/edgar/data/1123360/000112336017000024/ex103formofstockoptionawar.htm) |

| [removed: 10.17+] [added: 10.22+] | [Form of Restricted Stock Award pursuant to the 2011 Incentive Plan [removed: (2015 and 2016] [added: (2016] fiscal year), incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed April 8, 2015.](http://www.sec.gov/Archives/edgar/data/1123360/000112336015000017/ex101formofrsagrantfy15exe.htm) |

| [removed: 10.18+] [added: 10.24+] | [Form of Stock Option Award pursuant to the 2011 Incentive Plan (2015 fiscal year), incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed April 8, 2015.](http://www.sec.gov/Archives/edgar/data/1123360/000112336015000017/ex102formofoptionawardfy15.htm) |

| [removed: 10.19+] [added: 10.25+] | [Form of Performance Unit Award Certificate pursuant to the 2011 Incentive Plan (2015 fiscal year), incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed April 8, 2015.](http://www.sec.gov/Archives/edgar/data/1123360/000112336015000017/ex103formofperformanceunit.htm) |

| [removed: 10.20+] [added: 10.26+] | [Form of Performance Unit Award Certificate (Leveraged Performance Units) pursuant to the 2011 Incentive Plan (2015 fiscal year), incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed April 8, 2015.](http://www.sec.gov/Archives/edgar/data/1123360/000112336015000017/ex104formofpsuawardcertifi.htm) |

| [removed: 10.21+] [added: 10.27+] | [Fourth Amended and Restated Non-Employee Director Compensation Plan, dated September 28, 2016 (sub-plan to the Global Payments Inc. 2011 Incentive Plan, dated September 27, 2011), incorporated by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q filed January 9, 2017.](http://www.sec.gov/Archives/edgar/data/1123360/000112336017000006/ex105fourthamendedandresta.htm) |

| [removed: 10.22+] [added: 10.28+] | [Annual Performance Plan, adopted August 29, 2012 (sub-plan to the Global Payments Inc. 2011 Incentive Plan, dated September 27, 2011), incorporated by reference to Exhibit 10.52 to the Company’s Annual Report on Form 10-K filed July 25, 2013.](http://www.sec.gov/Archives/edgar/data/1123360/000112336013000025/ex1052-redacted_annualxpla.htm) |

| [removed: 10.23+] [added: 10.29+] | [Employment Agreement by and between the Company and Jeffrey S. Sloan, dated as of March 30, 2010, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 1, 2010.](http://www.sec.gov/Archives/edgar/data/1123360/000119312510074398/dex101.htm) |

| [removed: 10.24+] [added: 10.30+] | [Amendment to Employment Agreement by and between the Company and Jeffrey S. Sloan, dated as of October 1, 2013, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed October 7, 2013.](http://www.sec.gov/Archives/edgar/data/1123360/000112336013000034/a103amendmenttoemploymenta.htm) |

| [removed: 10.25+] [added: 10.31+] | [Second Amendment to Employment Agreement by and between the Company and Jeffrey S. Sloan, dated as of August 29, 2014, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed October 2, 2014.](http://www.sec.gov/Archives/edgar/data/1123360/000112336014000044/ex101jeffreyssloansecondam.htm) |

| [removed: 10.26+] [added: 10.33+] | [Employment Agreement by and between the Company and David E. Mangum, dated as of March 1, 2010, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 3, 2010.](http://www.sec.gov/Archives/edgar/data/1123360/000119312510046465/dex101.htm) |

| [removed: 10.27+] [added: 10.34+] | [Amendment to Employment Agreement by and between the Company and David E. Mangum, dated as of August 29, 2014, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed October 2, 2014.](http://www.sec.gov/Archives/edgar/data/1123360/000112336014000044/ex102davidemangumamendment.htm) |

| [removed: 10.28+] [added: 10.35+] | [Employment Agreement by and between the Company and Cameron M. Bready, dated as of May 21, 2014, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 23, 2014.](http://www.sec.gov/Archives/edgar/data/1123360/000112336014000023/ex101cameronmbreadyemploym.htm) |

| [removed: 10.29+] [added: 10.37+] | [Employment Agreement by and between the Company and Guido F. Sacchi, dated as of December 1, 2013, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed January 8, 2014.](http://www.sec.gov/Archives/edgar/data/1123360/000112336014000005/ex103employmentagreementda.htm) |

| [removed: 10.30+] [added: 10.39+] | [Employment Agreement by and between the Company and David L. Green, dated as of December 1, 2013, incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed January 8, 2014.](http://www.sec.gov/Archives/edgar/data/1123360/000112336014000005/ex104employmentagreementda.htm) |

| 21.1* | [List of [removed: Subsidiaries.](https://www.sec.gov/Archives/edgar/data/1123360/000112336018000007/ex21112312017listofsubsidi.htm)] [added: Subsidiaries](https://www.sec.gov/Archives/edgar/data/1123360/000112336019000008/ex21112312018listofsubsidi.htm).] |

| 10.6 | [Fifth Amendment to Second Amended and Restated Credit Agreement and First Amendment to Security Agreement, dated June 19, 2018, by and among the Company, the other borrowers party thereto, the guarantors party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 2, 2018.](http://www.sec.gov/Archives/edgar/data/1123360/000112336018000026/ex101fifthamendment.htm) |

| 10.7* | [Sixth Amendment to Second Amended and Restated Credit Agreement, dated October 18, 2018, by and among the Company, the other borrowers party thereto, the guarantors party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent](https://www.sec.gov/Archives/edgar/data/1123360/000112336019000008/ex107sixthamendmenttosecon.htm) |

| 10.16+ | [Form of Restricted Stock Award pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2018), incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q filed on May 3, 2018.](http://www.sec.gov/Archives/edgar/data/1123360/000112336018000016/ex102restrictedstockawardc.htm) |

| 10.17+ | [Form of Performance Unit Award Agreement pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2018), incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed on August 2, 2018.](http://www.sec.gov/Archives/edgar/data/1123360/000112336018000026/ex102performanceawardcerti.htm) |

| 10.18+ | [Form of Stock Option Award pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2018) incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q filed on May 3, 2018.](http://www.sec.gov/Archives/edgar/data/1123360/000112336018000016/ex104optionsawardcertifica.htm) |

| 10.23+ | [Form of Restricted Stock Award pursuant to the 2011 Incentive Plan (2015 fiscal year), incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed April 8, 2015.](http://www.sec.gov/Archives/edgar/data/1123360/000112336015000017/ex101formofrsagrantfy15exe.htm) |

| 10.32+ | [Third Amendment to Employment Agreement between Jeffrey S. Sloan and the Company, dated August 27, 2018, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on October 30, 2018.](http://www.sec.gov/Archives/edgar/data/1123360/000112336018000042/ex101employmentagreementsl.htm) |

| 10.36+ | [Amendment to Employment Agreement between Cameron M. Bready and the Company, dated August 27, 2018, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report On Form 10-Q filed on October 30, 2018.](http://www.sec.gov/Archives/edgar/data/1123360/000112336018000042/ex102employmentagreementbr.htm) |

| 10.38+ | [Amendment to Employment Agreement between Guido F. Sacchi and the Company, dated August 27, 2018, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on October 30, 2018.](http://www.sec.gov/Archives/edgar/data/1123360/000112336018000042/ex103employmentagreementsa.htm) |

| 10.40+ | [Amendment to Employment Agreement between David L. Green and the Company, dated August 27, 2018, incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on October 30, 2018.](http://www.sec.gov/Archives/edgar/data/1123360/000112336018000042/ex104exmploymentagreementg.htm) |

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