UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
    
FORM 10-K
x ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20172023
OR
o ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from              to     
 
Commission File No. 001-16111
GlobalPayments_Wordmark_CMYK.jpg
GLOBAL PAYMENTS INC.
(Exact name of registrant as specified in charter)
Georgia
Georgia58-2567903
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer

Identification No.)
3550 Lenox Road, Atlanta, Georgia30326
(Address of principal executive offices)(Zip Code)
 
Registrant's telephone number, including area code:     770-829-8000

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol
Name of each exchange
on which registered
Common Stock, No Par ValueGPNNew York Stock Exchange
4.875% Senior Notes due 2031GPN31ANew York Stock Exchange
 
Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  x☒  No o☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o☐ No x☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x☒  No o☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒   No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer x☒Accelerated filer o☐
Non-accelerated filer o☐Smaller reporting company o☐
Emerging growth company o☐
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o   No x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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



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 $13,694,503,028.$25,440,604,840. The number of shares of the registrant's common stock outstanding at February 19, 201812, 2024 was 159,205,866257,984,986 shares.


DOCUMENTS INCORPORATED BY REFERENCE
Specifically identified portions of the registrant's proxy statement for the 20182024 annual meeting of shareholders are incorporated by reference in Part III.



GLOBAL PAYMENTS INC.
20172023 ANNUAL REPORT ON FORM 10-K
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EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
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SIGNATURES
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EXPLANATORY NOTE REGARDING TRANSITION PERIOD

In 2016, we changed our fiscal year-end from May 31 to December 31. As a result, we refer to the period consistingTable of the seven-months ended December 31, 2016 as the "2016 fiscal transition period."Contents

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


CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS


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

We believe that it is important to communicate our plans for and expectations about the future to our shareholders and to the public. Some of the statements we use in this report, and in some of the documents we incorporate by reference in this report, contain forward-looking statements concerning our business operations, economic performance and financial condition, including in particular: our business strategy and means to implement the strategy; measures of future results of operations, such as revenues, expenses, operating margins, income tax rates, and earnings per share; other operating metrics such as shares outstanding and capital expenditures; statements we make regarding guidance and projected financial results for the year 2024; the effects of general economic conditions on our business; statements about the benefits of our acquisitions or divestitures, including future financial and operating results and the completion and expected timing of our acquisitions or completion of anticipated benefits or strategic initiatives; our success and timing in developing and introducing new services and expanding our business; and other statements about the benefits ofregarding our acquisition of the communities and sports divisions of Athlaction Topco, LLC ("ACTIVE Network"), including future financial performance and operating results, the combined company’s plans, objectives, expectations and intentions, and the successful integration of future acquisitions.intentions. You can sometimes identify forward-looking statements by our use of the words "believes," "anticipates," "expects," "intends," "plan," "forecast," "guidance" and similar expressions. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.


Although we believe that the plans and expectations reflected in or suggested by our forward-looking statements are reasonable, those statements are based on a number of assumptions, estimates, projections or plans that are inherently subject to significant risks, uncertainties and contingencies, many of which are beyond our control, cannot be foreseen and reflect future business decisions that are subject to change.decisions. Accordingly, we cannot guarantee you that our plans and expectations will be achieved. Our actual revenues, revenue growth rates and margins, and other results of operations and shareholder values could differ materially from those anticipated in our forward-looking statements as a result of many known and unknown factors, many of which are beyond our ability to predict or control. Important factors that may otherwise cause actual events or results to differ materially from those anticipated by oursuch forward-looking statements or historical performance include, among others, the effects of global economic, political, market, health and social events or other conditions; foreign currency exchange, inflation and rising interest rate risks; difficulties, delays and higher than anticipated costs related to integrating the businesses of acquired companies, including with respect to implementing controls to prevent a material security breach of any internal systems or to successfully manage credit and fraud risks in business units; the effect of a security breach or operational failure on our abilitybusiness; failing to safeguard our data; increased competition from larger companies and non-traditional competitors; our ability to update our servicescomply with the applicable requirements of Visa, Mastercard or other payment networks or card schemes or changes in a timely manner; ourthose requirements; the ability to maintain Visa and MasterCardMastercard registration and financial institution sponsorship; our reliance on financial institutionsthe ability to provide clearing servicesretain, develop and hire key personnel; the diversion of management’s attention from ongoing business operations; the continued availability of capital and financing; increased competition 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;the markets in which we operate and our ability to increase our market share ofin existing markets and expand into new markets; a declineour ability to safeguard our data; risks associated with our indebtedness; our ability to meet environmental, social and governance targets, goals and commitments; the potential effects of climate change, including natural disasters; the effects of new or changes in the use of cards for payment generally; unanticipated increases in chargeback liability; increases incurrent laws, regulations, credit card network fees; changes in laws, regulations or networkassociation rules or interpretations thereof; foreign currency exchangeother industry standards on us or our partners and interest rate risks; political, economiccustomers, including privacy and regulatory changes in the foreign countries in which we operate; future performance, integrationcybersecurity laws and conversion of acquired operations, including without limitation difficulties and delays in integrating or fully realizing cost savingsregulations; and other benefits ofevents beyond our acquisitions at all or within the expected time period; fully realizing anticipated annual interest expense savings from refinancing our Credit Facility; loss of key personnel;control, and other risk factors presented in Item "1A"Item 1A - Risk FactorsFactors" of this Annual Report on Form 10‑K,"10-K and subsequent filings we make with the Securities and Exchange Commissions ("SEC"), which we advise you to review.

These cautionary statements qualify all of our forward-looking statements, and you are cautioned not to place undue reliance on these forward-looking statements.

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





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PART I


ITEM 1- BUSINESS


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

Introduction


We are a leading worldwide provider of paymentpayments technology andcompany delivering innovative software solutions delivering innovativeand services to our customers globally.globally, with worldwide reach spanning North America, Europe, Asia-Pacific and Latin America. Our technologies, services and employeeteam member expertise enableallow us to provide a broad range of solutions that allowenable our customers to accept various payment types and operate their businesses more efficiently. We distribute our servicesefficiently across a variety of channels to customers in 30 countries throughout North America, Europe,around the Asia-Pacific region and Brazil and operate in three reportable segments: North America, Europe and Asia-Pacific.

We were incorporatedworld. Headquartered in Georgia aswith approximately 27,000 team members worldwide, Global Payments Inc. in 2000is a Fortune 500 company and spun-off from our former parent company in 2001. Including our time as part of our former parent company, we have been in the payment technology services business since 1967. Since our spin-off, we have 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.

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


Business Segments

We operate in two reportable segments: Merchant Solutions and Issuer Solutions. During the second quarter of 2023, we completed the sale of the consumer portion of our Netspend business, which comprised our former Consumer Solutions segment. See "Note 18—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.

Recent DevelopmentsBusiness Acquisitions and Dispositions


Acquisition of EVO Payments, Inc.

On September 1, 2017,March 24, 2023, we acquired ACTIVE Networkcompleted the acquisition of EVO Payments, Inc. (“EVO”) for total purchase consideration of $1.2 billion, consisting of approximately $600 million in cash and 6.4 million shares of our common stock. ACTIVE Network delivers cloud-based enterprise software, including$4 billion. EVO is a payment technology and services provider, offering payment solutions to event organizers inmerchants ranging from small and middle market enterprises to multinational companies and organizations across the communitiesAmericas and health and fitness vertical markets. ThisEurope. The acquisition aligns with our technology-enabled payments strategy, expands our geographic presence in attractive markets and augments our business-to-business ("B2B") software driven strategy and adds an enterprise software business operating in two additional vertical markets that we believe offer attractive growth fundamentals. payment solutions business.

Disposition of Consumer Business

On April 22, 2016,26, 2023, we merged with Heartland Payment Systems, Inc. ("Heartland") in a cash-and-stock transactioncompleted the sale of the consumer portion of our Netspend business for total purchase consideration of $3.9approximately $1 billion. The merger significantly expandeddisposition further aligns our smallbusinesses with our strategy to focus on our core corporate customers, including merchants, financial institutions, software partners and medium-sized enterprise distribution, merchant basetechnology leaders. Prior to disposition, the consumer business comprised our former Consumer Solutions segment and vertical reachprovided general purpose reloadable ("GPR") prepaid debit and payroll cards, demand deposit accounts and other financial service solutions to the underbanked and other consumers and businesses in the United States.

Disposition of Gaming Business

On April 1, 2023, we completed the sale of our gaming business for approximately $400 million. The disposition further aligns our businesses with our strategy to focus on our core corporate customers. Prior to disposition, the gaming business offered a comprehensive suite of solutions, including credit and debit card cash advance, cashless advance, iGaming solutions, traditional and digital check processing and other services specific to the gaming market in North America.

See "Note 2—Acquisitions" and “Note 3—Business Dispositions” in the notes to the accompanying consolidated financial statements for further discussion of these and other acquisitions.recent transactions.

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On May 2, 2017,
Merchant Solutions Segment

Through our Merchant Solutions segment, 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.

Payment Technology Services and Software Solutions Overview

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


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


Our value proposition is to provide distinctive high-quality, responsive and secure services to all of our customers. We distribute our Merchant Solutions services globally through multiple technology-enabled and relationship-led distribution channels and target customers in many vertical markets in 30 countries located throughout North America, Europe, the Asia-Pacific region and in Brazil.Latin America. The majority of our revenues is generated by services priced as a percentage of transaction value or a specified fee per transaction, depending on the cardpayment type or the market. We also earn software subscription and licensing and subscription fees, andas well as other fees based onfor specific value-added services, thatwhich may be unrelated to the number or value of transactions.



Distribution Channels
Direct Distribution

Our primary business model is toIn the Merchant Solutions segment, we actively market and provide our payment services, enterprise software solutions and other value-added services directly to our customers through a variety of technology-enabled and relationship-led distribution channels. We offer high touch services that provide our customers with reliable

Technology-Enabled. Our technology-enabled distribution channel includes integrated and securevertical market software solutions coupled with high quality and responsive support services. Through our direct sales force worldwide,ecommerce and omnichannel solutions, each as well as bank partnerships, we offer our payment technology services, software and other value-added solutions directly to customers in the markets we serve. See "Business Segments" below for a description of our direct sales forces located around the world.

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


Integrated and Vertical Markets. Solutions. Our integrated and vertical market solutions provide advanced payments technology that is deeply integratedembedded into business enterprisemanagement software solutions either owned by us or by our partners.technology partners who operate in numerous vertical markets, primarily in North America. We grow our business when new merchants implement our enterprise softwareintegrated solutions andbusiness when new or existing merchants enable payments services through enterprise software solutions sold by us or by our partners.partners, both new and existing.

Vertical Markets Software Solutions. Our vertical markets software solutions provide advanced payments technology that is integrated into business enterprise software solutions that we own. We distribute our integrated paymentvertical markets software solutions primarily through the following businesses:


OpenEdge. Through OpenEdge, we offer integrated payment solutions through more than 2,000 technology partners across over 60 different verticals 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 solutions in the Asia-Pacific region. Ezidebit focuses on recurring payments verticals and, similar to OpenEdge, markets its services through a network of integrated software vendors and direct channels to numerous vertical markets.

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

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


•AdvancedMD. Through AdvancedMD, we provide cloud-based enterprise solutions to small-to-medium sized ambulatory care physician practices in the United States.
Point-of-Sale
•Education Solutions. We offer leading-edgeintegrated payment solutions specifically designed for all levels of educational institutions. For colleges and universities, we offer integrated commerce software and payment solutions, as well as a variety of additional value added services. For institutions serving kindergarten through 12th grade levels, we provide ecommerce and in-person payments and cafeteria POS and back-office management solutions.

•Xenial. Through Xenial, we offer cloud-based enterprise software and hardware solutions integratedthat integrate with our payment services and other adjacent business service applications which may be on-premise or cloud-based, targeted primarily atto the restaurant and hospitality and retail verticals.stadium and event venue vertical markets.

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•Zego. Through Zego, we offer a comprehensive resident experience management software and digital commerce solutions to property managers, primarily in the United States.

Ecommerce and Omnichannel. We offer ecommerce and omnichannel solutions to our customers that seamlessly blend payment gateway services, retail payment acceptance infrastructure and payment technology service capabilities through a unified commerce platform to allow merchants and partners to accept various payment methods through any channel across our geographical footprint.channel. We sell ecommerce and omnichannel solutions to customers of all sizes, from small businesses accepting payments in a single country to payment facilitators, enterprise and multinational businessespartners and merchants that have complex payment needs and operate retail and online businesses in multiple countries.


Gaming. We offer a comprehensive suite of cash access solutions to the gaming market in North America. These solutions include credit and debit card cash advance, traditional and electronic check processingRelationship-Led. Through our relationship-led direct sales forces worldwide, as well as financial institution and other referral partnerships, we offer our payments technology services, specificsoftware and other value-added solutions directly to this market. Our services allow casino patronscustomers across numerous verticals in North America fast access to cash with high limits to enable gaming establishments to increase the flow of money to their gaming floors and reduce risk.

Wholesale Distribution

markets we serve. Although our primary business modelfocus is to build high qualityon building high-quality, direct relationships with merchants, we also provide our services through a wholesale distribution channel where we do not maintain the face-to-face relationship with the merchant. Through our wholesale channel, we provide payment services to merchants through independent sales organizations ("ISOs"). The ISOs act as third-party sales groups selling our payment technology services directly to end-user merchant customers. and financial institutions.



Credit and Debit Card Transaction Processing


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


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


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


How a Card Transaction Works


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


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


As an illustration, shown below in the sponsorship model, on a $100.00 card transaction the card issuer may fund the Member, our sponsor, (indirectly through the card network) $98.50 after retaining approximately $1.50 referred to as an interchange fee. The card issuer seekswould seek reimbursement of $100.00 from the cardholder in the cardholder's monthly credit card statement.
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The Member would, in turn, pay the merchant $100.00. The net settlement after this transaction would require us to advance the Member $1.50.$1.50 interchange fee to the Member. After the end of the month, we would bill the merchant a percentage, also known as the merchant discount, of the transaction amount or merchant discount, to cover the full amount of the interchange fee and our fee from the transaction. If our discount rate forAssuming the merchant discount in the above example was 2.00%is 2%, we would bill the merchant $2.00 after the end of the month for the transaction, reimburse ourselves for $1.50 in interchange fees and retain $0.50 as our feesfee for the transaction. Under some arrangements, we remit the net amount of $98.50$98.00 to the merchant, rather than funding the full $100.00 and subsequently billing the merchant at the end of the month.

Discount rates vary based on negotiations with merchants and the economic characteristics of transactions.transactions and take many forms, such as interchange plus our fee or a bundled rate that includes all fees. Interchange rates also vary based on the economic characteristics of individual transactions. Accordingly, our fee per transaction varies across our merchant base and is subject to change based on changes in discount rates and interchange rates. Our profit on thea transaction reflects the fee receivedmerchant discount less interchange fees, payment network fees and operating expenses, including payment network fees, systems costcosts to process the transaction and commissions paid to our sales force or ISO.external partner. Payment network fees are charged by the card brands, in part, based on the value of transactions processed through their networks.


howapaymenttransworksa03.jpg
Business Segments

Issuer Solutions Segment

Through our Issuer Solutions segment, we provide solutions that enable financial institutions and other financial service providers to manage their card portfolios, reduce technical complexity and overhead and offer a seamless experience for cardholders on a single platform. In addition, we provide flexible commercial payments, accounts payable and electronic payment alternatives solutions that support B2B payment processes for businesses and governments. We operate in three reportable segments: North America, Europealso offer complementary services, including account management and Asia-Pacific. See "Note 15—Segment Information" in the notesservicing, fraud solution services, analytics and business intelligence, cards, statements and correspondence, customer contact solutions and risk management solutions. Additionally, our Issuer Solutions segment provides B2B payment services and other financial service solutions marketed to the accompanying consolidated financial statements for additional information about our segments,businesses, including software-as-a-service (“SaaS”) offerings that automate key procurement processes, provide invoice capture, coding and approval, and enable virtual cards and integrated payments options across a variety of key vertical markets.

Issuer Solutions segment revenues operating income and depreciation and amortization by segment as well as financial information about geographic areas in which we operate. Our foreign operations subject us to various risks, including, without limitation, currency exchange risks and political, economic and regulatory risks. See "Item 1A - Risk Factors" for additional information about these risks.

North America

Approximately 73.7% of our revenues for the year ended December 31, 2017 wereare primarily derived from our operations in North America, whichlong-term processing contracts with financial institutions and other financial services providers. Payment processing services revenues are generated primarily from charges based on
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the number of accounts on file, transactions and authorizations processed, statements generated and/or mailed, managed services, cards embossed and mailed, and other processing services for cardholder accounts on file. Most of these customer contracts have prescribed annual minimums, penalties for early termination, and service level agreements that may affect contractual fees if specified service levels are not achieved. Issuer Solutions segment revenues also 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 oursoftware subscription, licensing fees, loyalty redemption services and solutions across numerous vertical markets, including, but not limited too, education, restaurant, event management, hospitality, retail, healthcare, convenience stores and petroleum, professional services, automotive and lodging.services.

In addition, our technology-enabled solutions represented a substantial component of our revenues in North America for the year ended December 31, 2017. Our technology-enabled distribution in North America primarily includes integrated and vertical market solutions as well as our gaming solutions business.

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

Europe

Approximately 19.3% of our revenues for the year ended December 31, 2017 were derived from our operations in Europe, which includes the United Kingdom, the Republic of Ireland, Spain, the Republic of Malta, the Czech Republic, Hungary, Slovakia, Romania and the Russian Federation. We have direct sales forces in these markets through which we sell our services

while also leveraging our bank referral relationships. Our ecommerce and omnichannel solutions represent a growing percentage of the services we sell in Europe.

Asia-Pacific

Approximately 7.0% of our revenues for the year ended December 31, 2017 were derived from our operations in the Asia-Pacific region, which includes the following countries and territories: Australia, China, Hong Kong, India, Macau, Malaysia, Maldives, New Zealand, the Philippines, Singapore, Sri Lanka and Taiwan. Our direct sales force in the Asia-Pacific region accounts for substantially all of the services we sell in the region.

Technology-enabled solutions represent a substantial and growing portion of our operations in the Asia-Pacific region, driven by Ezidebit in Australia. Our acquisition of eWay Limited in April 2016 has allowed us to further expand our ecommerce and omnichannel solutions offerings in this region.


Industry Overview


The paymentpayments technology services industry provides merchantsfinancial institutions, businesses and consumers with credit, debit, gift and loyalty card and other payment processing services, along withmerchant acceptance solutions and related information and other value-added services. The industry continues to grow as a result of wider merchant acceptance and increased consumer use of credit and debit cards, and advances in payment solutions and processing technology and telecommunications technology.migration to ecommerce, omnichannel and contactless payment solutions. The proliferation of credit and debit cards, as well as other digital payment solutions, has made the acceptance of card-baseddigital payments a virtual necessity for many businesses, regardless of size, in order to remain competitive. ThisCertain macroeconomic drivers, such as the COVID-19 pandemic, have further accelerated the use of digital payments, the need for development of technologies and digital-based solutions and the expansion of ecommerce, omnichannel and contactless payment solutions. The increased use of cards and the availability of more sophisticated technology services to all market segments hashave resulted in a highlyan increasingly competitive and specialized industry.

Competition

We are a leading provider of payments technology services 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 services to merchants, although the outsourcing of these services to third-party service providers is becoming more prevalent. Payment services have become increasingly complex, requiring significant capital commitments to develop, maintain and update the systems necessary to provide these advanced services at competitive prices.

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

Emerging Trends

The payments 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 or increase our scale and improve our competitiveness in existing markets by pursuing further acquisitions and joint ventures.

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

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



Strategy


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


Our key objectives includeConsistent with this focus, we continue to operate our business in accordance with the following:following strategic framework:


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

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

Leverage technology and operational advantages throughoutinnovation to deepen our global footprint;competitive advantages;


Continue•Further scaling the four pillars of our strategy: software-driven focus, ecommerce and omnichannel solutions, exposure to develop seamless multinationalfaster growth markets and B2B payments;

•Delivering commerce enablement solutions forglobally to broaden our leading global customers;position as a sales-driven, product-led company;


Provide•Providing frictionless, best-in-class customer service at levels that exceedexperiences, creating longer-term relationships;

•Nurturing our competition, while investing in technology, trainingculture, values and enhancementsdiversity, equity and inclusion initiatives to attract, retain and motivate exceptional team members; and

•Supporting our service offerings;communities as a socially responsible company with purpose and understanding.

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


Competitive Strengths


We believe that our competitive strengths include the following:


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

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

•Global Footprint and Distribution - Our worldwide presence allows us to focus our investments on markets with promising gross domestic product fundamentals and favorable secular trends, makes us more attractive to certain customers with international operations and exposes us to emerging innovations that we can adopt globally, while diversifying our economic risk.
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•Scalable Operating Environment and Technology Infrastructure - We operate as a single, unified international organization, with a multi-channel, global technology infrastructure whichthat provides scalable and innovative service offerings and a consistent service experience to our merchants, customers, financial institutions and other partners worldwide, while also driving sustainable operating efficiencies.


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


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



Competition

In each of our business segments, we compete with a large variety of companies - financial institutions, financial technology companies, traditional payment providers, new market entrants, and others, both large and small. The markets for the services we provide are highly fragmented and competitive. Many of these providers compete with us across our segments, markets and geographies. Some of these competitors possess greater financial, sales and marketing resources than we do. We expect each of our segments to become more competitive over time, as advances in technology enable new entrants, barriers to entry fall and existing providers expand their services, both operationally and geographically.

Our Merchant Solutions segment competes with financial institutions, merchant acquirers and other financial technology companies who provide businesses with merchant acquiring and related services. In the United States, we compete with a large number of providers, including but not limited to Fiserv, Inc. ("Fiserv"), Worldpay, LLC ("Worldpay"), Chase Paymentech Solutions, LLC, Elavon, Inc., a subsidiary of U.S. Bancorp, Bank of America Merchant Services, Wells Fargo Merchant Services, Toast, Inc., Stripe, Inc., Shopify Inc. and Block Inc. While these are our primary competitors in the merchant acquiring space, our vertically focused businesses in the United States compete with numerous other providers in their respective verticals.

Internationally, financial institutions remain the primary providers of payment technology services to merchants, although the outsourcing of these services to third-party service providers is becoming more prevalent. We compete outside the U.S. with financial institutions in the markets in which we operate, as well as both large providers (such as Worldpay, Worldline, Nexi) and new entrants (such as Adyen, Block and Stripe). We have seen competition internationally increase and expect that trend to continue as new companies enter our markets and existing competitors expand or consolidate their product lines and services.

Our Issuer Solutions segment encounters competition from other third-party payment card processors, the card brands, core banking platform providers, independent software vendors, B2B providers, and various other firms that deliver services to payment card issuers in the markets we serve, as well as financial institutions who provide such services in-house. Our competitors in this segment include, but are not limited to Fiserv, FIS, Marqeta, Nexi, Worldline, i2c, Bill.com, AvidExchange, Billtrust, Adyen, Stripe and Zeta. We expect the number of competitors in this segment to continue to expand.

See the section titled “Risk Factors - Risks Related to Our Business Model and Operations” for further information on the competitive and continuously evolving markets we serve.

Safeguarding Our Business


PrivacyIn order to provide our services, we process and store sensitive business information and personal information, which may include credit and debit card numbers, bank account numbers, social security are centralnumbers, driver’s license numbers, names and addresses, and other types of personal information or sensitive business information. Some of this information is also processed and stored by financial institutions, merchants and other entities, as well as third-party service providers to whom we outsource certain functions and other agents, which we refer to collectively as our services.associated third parties. We workmay have responsibility to the card networks, financial institutions, and in some instances, our merchants, ISOs and/or individuals, for our failure or the failure of our associated third-party service providers (as applicable) to protect this information.

For a further discussion of our approach to cybersecurity, see "Item 1C - Cybersecurity."

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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 patents, copyrights, trade secrets, trademarks, service marks and domain names that align with information security and forensics firms and employ advanced technologies to prevent, investigate and address issues relating to processing system security and availability.our brand strategy. We also collaborateenforce our trademarks against potential sources of misunderstanding that could harm our brand and ability to compete. In addition to using our intellectual property in our own operations, we grant licenses to certain of our customers to use our intellectual property.

Human Capital Management

Team Member Population

We currently do business around the world, with industry third parties, regulatorsapproximately 27,000 team members living and law enforcement to resolve security incidents and assistworking in efforts to prevent unauthorized access to our processing systems.

Employees and Labor

35 countries. As of December 31, 2017, we had2023, approximately 10,000 employees, many59% of whomour workforce resided in the Americas, 19% in Europe and 22% in Asia Pacific. Many of our team members are highly skilled in technical areas specific to payment technology services.and software solutions.


Our overall workforce strategies are developed and managed by our Chief Human Resources Officer, who reports to our President and CEO. More broadly, the board of directors and the Compensation Committee of our board of directors ("Compensation Committee") provide oversight on certain culture and human management topics, including diversity, equity and inclusion (“DEI”) and succession plans for critical talent. We regularly engage with our team members through a variety of forums, including periodic surveys, to help us understand their perspectives related to workplace culture, engagement, inclusion, talent management and well-being and to inform our human capital strategies and initiatives. The results of these interactions are also leveraged to further develop our talent management initiatives. Moreover, the board of directors also reviews critical feedback and receives updates on management’s plans in response thereto.

Talent Management and Retention

We place an emphasis on attracting and retaining diverse team members and having a workforce that reflects the communities in which we work and live around the world. To that end, we have implemented programs and initiatives focused on enriching new hire experiences, developing team members through extensive training and professional development opportunities, including mentorship and leadership programs, promoting team members’ wellness and safety, and providing flexible work arrangements. Furthermore, we offer comprehensive and competitive pay and benefits packages, including paid parental leave, team member assistance, savings and retirement programs and equity-based awards that vest over a period of time to support retention of key contributors. We also strive to celebrate and recognize the efforts of our team members through a combination of programs, including team appreciation activities and awards programs to honor top performers and notable contributors. Over the past several years, we have also made significant investments in modernizing our operating environments and technologies to include cloud-based systems and collaboration tools that support day-to-day engagement and execution.

Health and Well-being

The success of our business is connected to the well-being of our team members. Accordingly, we are committed to the health, safety and wellness of our team members worldwide, and we provide team members with various health and wellness programs and benefits, including employee education and assistance programs that focus on physical, financial, family, social and emotional resources.

Diversity, Equity and Inclusion

We remain committed to addressing the ever-changing needs of our team members and finding new ways to continuously enhance our culture. Our DEI strategy, led by our Chief Diversity Officer and our Chief Human Resources Officer, reflects the shift in our current workforce, changing business landscape and potential talent and is anchored by three pillars: Leadership Accountability, Inclusive Capability and Engagement. To further engrain our DEI strategy in the organization, we have established various Employee Resource Groups and diversity action teams, led by senior leaders throughout our company. These groups and teams are critical drivers in fostering organizational change, establishing dedicated focus on DEI priorities and managing the DEI program beyond our corporate function. We continue to include social and racial equity in our conversations, and aim to equip and empower our leaders with the right tools and training to lead effectively. Our Compensation Committee assists the board of directors in overseeing the Company’s DEI initiatives.
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Employee Growth and Development

Our strategy to develop and retain the best talent includes an emphasis on team member development and training. We provide a variety of training and development opportunities to team members globally, including our online training platform that contains a vast array of tools and application resources for all team members to build learning experiences and skills. In order to help our team members strengthen the skills and behaviors needed for career advancement, our performance management program enables team members to drive their development with a focus on growth, performance, and well-being through regular meetings with their leaders.

Government Regulation


Various aspects of our business are subject to regulation and supervision under federal, state and local laws in the United States as well asand foreign laws, regulations and rules. Many of these regulations and laws are evolving and their applicability and scope, as interpreted by courts and regulators, remain uncertain. These regulations and laws involve a variety of matters, including privacy and information security, data and personal information protection, money-transmission and payment instrument laws and regulations, consumer protection laws, anti-money laundering and anti-corruption laws, tax, environmental sustainability (including climate change) and human rights. In addition, we are subject to rules promulgated by the various payment networks, including Nacha, American Express, Discover, Interac, MasterCard, UPIMastercard and Visa; Directive 2007/64/EC in the European Union (the "Payment Services Directive"); as well as a variety of other regulations, including escheat laws and applicable privacy and information security regulations. In addition, because we provide data processing services to banks and other financial institutions, we are subject to examination by the Federal Financial Institutions Examination Council (the "FFIEC"). Visa.

Set forth below is a brief summary of some of the significant laws and regulations that apply to us. These descriptions are not exhaustive, and these laws, regulations and rules frequently change.change and are increasing in number. We are currently in compliance in all material respects with applicable existing legal and regulatory requirements and do not expect that maintaining compliance with these regulations will have a material effect on our capital expenditures, earnings or competitive and financial positions. For additional information about government regulation and laws applicable to our business and the potential risks associated with future changes in laws or regulations, see "Item 1A - Risk Factors" of this Annual Report on Form 10-K, including the risk factor titled "Legal, Regulatory Compliance and Tax Risks."


Dodd-Frank Act


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


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


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


Consumer Protection

The Dodd-Frank Act also created the Consumer Financial Protection Bureau ("CFPB"), which has responsibility for enforcing federal consumer protection laws, and the Financial Stability Oversight Council, (the "FSOC"), which was established to, among other things, identify risks to the stability of the U.S. financial system.  The FSOC has the authority to require supervision and regulation ofdetermine whether any nonbank financial companiescompany, such as us, should be supervised by the Board of Governors of the Federal Reserve System (the "Federal Reserve") on the ground that the FSOC determines pose a systemic riskit is "systemically important" to the U.S. financial system. Accordingly, we may be subject to additional systemic risk-related oversight.oversight in the future.


Payment Network RulesThe CFPB has significant authority to regulate consumer financial products in the U.S., including consumer payments, and similar products. The FTC, state attorneys general and similar regulatory agencies in other jurisdictions may have broad consumer protection mandates that could result in the promulgation and interpretation of rules and regulations that may affect our business.

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We
Furthermore, certain of our businesses are subjectregulated as money transmitters or otherwise require licensing in one or more states or jurisdictions, subjecting us to the rules of American Express, Discover, Interac, MasterCard, UPI and Visavarious licensing, supervisory and other requirements.

Financial Institution Regulations

Because we provide digital payment networks. In orderprocessing services to provide our services, several of our subsidiaries are either registered as service providers for member institutions with MasterCard, Visabanks and other networks or are direct members of MasterCard, Visa and other networks. Accordingly,financial institutions, we are subject to card association and network rules that could subject us to a variety of fines or penalties that may be leviedexamination by the card networks for certain acts or omissions.

Banking Laws and Regulations

The FFIEC isFederal Financial Institutions Examination Council (the "FFIEC"), an interagency body comprised primarily of federal bankbanking regulators, and credit union regulators suchwe are also subject to supervision or examination, as may be applicable, by various state and international financial regulatory agencies that supervise and regulate the Federal Reserve Board, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currencyfinancial institutions for which we provide digital payment processing and the Bureau of Consumer Financial Protection.other payment related services. The FFIEC examines large data processors in order to identify and mitigate risks associated with systemically significant service providers, including specifically the risks they may pose to the banking industry. In addition, we are subject to the Payment Services Directive, which was implemented in most European Union member states through national legislation. As a result

Certain of this legislation, weour subsidiaries hold payment institution ("PI") licenses. These subsidiaries are subject to regulation and oversight in the jurisdictions in which they operate. As a result of the acquisition of EVO, we have added PI licenses in Poland, Greece and Germany, in addition to those previously held in Spain, Malta and the Czech Republic as well as similar licenses in the United Kingdom. As a PI, each subsidiary is subject to regulation and oversight in the applicable jurisdiction, which includes, among other obligations, a requirement to maintain specific regulatory capital and adhere to certain European Union member nations,rules regarding the conduct and operation of their business, including the requirement that we maintain specified regulatory capital; however, these regulatory capitalrevised Payment Services Directive 2 and the forthcoming requirements are generally insignificant to our total assetsunder the Digital Operational Resilience Act and total equity and have no material effect on our liquidity.reporting obligations in respect of Central Electronic System of Payment Information.


Privacy, and Information Security Lawsand Other Business Practices Regulation


We provide services that may beAspects of our business are subject, directly or indirectly, to various state, federalprivacy and foreign privacy laws and regulations. These laws anddata protection regulations include the federal Gramm-Leach-Bliley Act of 1999, which applies to a broad range of financial institutions and to companies that provide services to financial institutions in the United States, including our gaming business. We are also subject to a variety of foreign data protection and privacy laws, including, without limitation, Directive 95/46/EC, as implemented in each member state ofthe United Kingdom, the European Union ("EU") and its successor,elsewhere. In most of the countries in which we operate, these laws impose requirements on the manner in which personal information can be collected, processed, stored and shared. They also impose requirements, which vary materially by jurisdiction, in the event of a personal data breach.

Compliance with the data protection regulations applicable to us or our customers requires increasing resources devoted to monitoring changes and developing solutions for our affected businesses. Maintaining compliance over time could require substantive technology infrastructure and process changes across many of the Company’s businesses. Noncompliance with the EU General Data Protection Regulation which becomes effective(“GDPR”), the Gramm-Leach-Bliley Act ("GLBA"), the California Privacy Rights Act, the U.S. Health Insurance Portability and Accountability Act of 1996 or similar regulations could lead to substantial regulatory fines and penalties, or in May 2018.  Amongsome cases, damages resulting from private causes of action. Evolving data localization requirements may affect how we provide services to customers in regions like the EU and Asia-Pacific. Additionally, evolving sector-specific regulations that affect the payments industry may introduce overlap or conflict with data privacy regulations, and these conflicts in regulatory requirements may affect our operations.

We also rely upon third parties to facilitate or enable our business activities and require that they are similarly in compliance with applicable regulations. Such third parties include suppliers and other things, these foreignpartners.

New regulations (including the EU Artificial Intelligence Regulation and domesticnew state laws in the United States or a possible federal privacy law) and their implementingnew interpretations of existing regulations, in certain cases restrictsuch as the collection, processing, storage,Federal Trade Commission ("FTC") Act, GLBA, and the GDPR, could create new privacy rights for individuals and new obligations for companies handling personal information. These regulations could limit our ability to use and disclosureshare personal or other data and increase costs related to compliance. In addition, emerging technologies including innovations in machine learning and artificial intelligence are expected to continue to drive regulation targeted to the specific risks anticipated from these technologies.

As our portfolio of personal information, require notice to individualsservices evolves, we may offer more services outside of our traditional business-to-business interaction context. As we interact directly with consumers, in conjunction with our existing customers and partners or directly on our own behalf, our compliance obligations under 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.regulations may expand.


Anti-Money Laundering, Anti-Corruption and Counter Terrorist RequirementsSanctions Regulations


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

establishIn addition, we and audit anti-money laundering programs;

establish procedures for obtaining and verifying customer information;

file reports on large cash transactions; and

file suspicious activity reports ifour sponsor financial institutions are subject to the financial institution believes a customer may be violating U.S. laws and regulations.

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


We are subject to anti-corruption laws and regulations, including the U.S. Foreign Corrupt Practices Act (“FCPA”) and similar laws outside of the U.S., such as the U.K. Bribery Act, that prohibit the making or offering of improper payments to foreign government officials and political figures. The FCPA has a broad reach and requires maintenance of appropriate records and adequate internal controls to prevent and detect possible FCPA violations.

State Wage Payment Laws and Regulations

The use of payroll card programs as a means for an employer to remit wages or other compensation to its employees or independent contractors is governed by state labor laws related to wage payments, which laws are subject to change. The paycard portion of our business includes payroll cards and convenience checks and is designed to allow employers to comply with applicable state wage and hour laws. Most states permit the use of payroll cards as a method of paying wages to employees, either through statutory provisions allowing such use or, in the absence of specific statutory guidance, the adoption by state labor departments of formal or informal policies allowing for their use. Nearly every state allowing payroll cards places certain requirements and/or restrictions on their use as a wage payment method, the most common of which involve obtaining the prior written consent of the employee or independent contractors, limitations on fees and disclosure requirements.

Recently, some states have begun to regulate earned wage access products, including, for example by enacting new laws requiring licensure of earned wage access providers and/or requiring fee restrictions on the products, or by including earned wage access products in existing lending laws, which could also result in licensure requirements and/or fee limitations. States could also potentially regulate these products under existing wage and hour laws related to the assignment of wages. We may be subject to additional requirements and limitations under federal or state lending laws as a result of new interpretations, formal guidance or additional regulations relating to earned wage access products.

Escheat Laws


We are subject to unclaimed or abandoned property state laws in the United States and in certain foreign countries that require us to transfer to certain government authorities the unclaimed property of others that we hold when that property has

been unclaimed for a certain period of time. Moreover, we are subject to audit by state and foreign regulatory authorities with regard to our escheatment practices.

Foreign Laws and Regulations

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


Debt Collection and Credit Reporting Laws


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

Telephone Consumer Protection Act

We are subject to the Telephone Consumer Protection Act ("TCPA") and various state laws to the extent we place telephone calls and short message service ("SMS") messages to customers and consumers. The TCPA regulates certain telephone calls and SMS messages placed using automatic telephone dialing systems or artificial or prerecorded voices.

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Other

In addition, there are other laws, rules or regulations that may directly affect us or the activities of our merchant customers and in some cases may subject us to investigations, fees, fines and disgorgement of funds in the event we are deemed to have proceduresaided and abetted or otherwise provided the means and instrumentalities to facilitate the illegal activities of a merchant through our payment processing services.

Sustainability

Certain governments around the world are adopting laws and regulations pertaining to sustainability performance, transparency and reporting. Regulators in placeEurope and the U.S. have also focused efforts on increased disclosure related to comply withclimate change and mitigation efforts. The EU recently adopted the European Sustainability Reporting Standards and the Corporate Sustainability Reporting Directive that will impose disclosure of the risks and opportunities arising from social and environmental issues, and on the effect of companies’ activities on people and the environment. In October 2023, California adopted new carbon and climate-related reporting requirements for large public and private companies doing business in the state. Further, the SEC has included in its regulatory agenda potential rulemaking on climate change disclosures that, if adopted, could significantly increase compliance burdens and associated regulatory costs and complexity. International sustainability disclosure standards have also been produced (and further standards will be produced) under the auspices of these laws.the International Sustainability Standards Board, which some countries (such as the United Kingdom) have indicated they may incorporate into sustainability disclosure standards required of certain companies


We are monitoring proposed and pending climate legislation for effect and are also working to continually ensure that our sustainability agenda is integrated into our overall business strategy. As part of our annual sustainability reporting, we provide additional information about our approach to sustainability matters in our Global Responsibility Report (which is not incorporated herein), which is available in the investor relations section of our website at www.globalpayments.com.

Where to Find More Information


We file annual and quarterly reports, proxy statements and other information with the U.S. Securities and Exchange Commission (the "SEC").SEC. You may read and print materials that we have filed with the SEC from its website at www.sec.gov. In addition, certain of our SEC filings, including our annual reports on Form 10-K, our transition report on Form 10-K for the 2016 fiscal transition period, our quarterly reports on Form 10-Q, our current reports on Form 8-K and amendments to them can be viewed and printed, free of charge, from the investor relations section of our website at www.globalpaymentsinc.com free of charge. as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

Certain materials relating to our corporate governance, including our codes of ethics applicable to our directors, senior financial officers and other employees, and our Global Responsibility Report are also available in the investor relations section of our website. Copies of our filings, specified exhibits and corporate governance materials are also available, free of charge, by writing us using the address on the cover of this Annual Report on Form 10-K. You may also telephone our investor relations office directly at (770) 829-8478. We are not including the information on our website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K.

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Our SEC filings may also be viewed and copied at the following SEC public reference room and at the offices
Table of the New York Stock Exchange.Contents

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


ITEM 1A - RISK FACTORS


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

Risks Factors Summary

The following is a result,summary of the market priceprincipal risks that could materially and adversely affect our business, financial condition, liquidity, results of our common stock could decline and you may lose all operations and/or part of your investment in our common stock.cash flows.


Risks Related to Our Business Model and Operations


•Our abilityinability to protect our systems and data from continually evolving cybersecurity risksthreats or other technological risks could adversely affect our ability to deliver our services; damage our reputation among our customers, card issuers, financial institutions, card networks, partners and cardholders,cardholders; adversely affect our continued card network registration or membership and financial institution sponsorship,sponsorship; and may expose us to penalties, fines, liabilities, legal claims and defense costs.

•Software and hardware defects, failures, undetected errors, and development delays could affect our ability to deliver our services, damage customer relations, expose us to liability and have an adverse effect on our business, financial condition and results of operations.

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

•The payments technology industry is highly competitive and highly innovative, and some of our competitors 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 and disruptive technologies.

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

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

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

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

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

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

•Consolidation among financial institutions or among retail customers, including the merger of our customers with entities that are not our customers or the sale of portfolios by our customers to entities that are not our customers, could affect our financial condition, results of operations and cash flows.

•If we do not renew or renegotiate our agreements on favorable terms with our customers within the Issuer Solutions segment, our business will suffer. The timing of the conversions or deconversions of card portfolios could also affect our revenues and expenses.
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•We incur chargeback losses when our merchants refuse or cannot reimburse us for chargebacks resolved in favor of their customers. Any increase in chargebacks not paid by our merchants could adversely affect our business, financial condition, results of operations and cash flows.

•Fraud by merchants or others and losses from overdrawn cardholder accounts could have an adverse effect on our financial condition, results of operations and cash flows.

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

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

•Our inability to complete certain divestitures or the effects of divesting a business could have a material adverse effect on our business and financial results.

Legal, Regulatory Compliance and Tax Risks

•Our business is subject to government regulation and oversight. Any new implementation of or changes made to laws, regulations or other industry standards affecting our business in any of the geographic regions in which we operate may require significant development and compliance efforts or have an unfavorable effect on our ability to continue to offer certain services, or on our financial results and our cash flows.

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

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

Financial Risks

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

•A downgrade in the ratings of our debt could restrict our ability to access the debt capital markets and increase our interest costs.

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

Intellectual Property Risks

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

Risks Related to Our Capital Structure

•Our substantial indebtedness could adversely affect us and limit our business flexibility.

•We may not be able to raise additional funds to finance our future capital needs.

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

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

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Risks Related to General Economic Conditions

•We are subject to economic and geopolitical risk, health and social events or conditions, the business cycles and credit risk of our customers and the overall level of consumer, business and government spending, which could negatively affect our business, financial condition, results of operations and cash flows.

General Risk Factors

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

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

Risks Related to Our Business Model and Operations

Our inability to protect our systems and data from continually evolving cybersecurity threats or other technological risks could adversely affect our ability to deliver our services; damage our reputation among our customers, card issuers, financial institutions, card networks, partners and cardholders; adversely affect our continued card network registration or membership and financial institution sponsorship; and expose us to penalties, fines, liabilities, legal claims.claims and defense costs.


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


We are a regular target of malicious third-party attempts to identify and exploit system vulnerabilities, and/or penetrate or bypass our security measures, in order to gain unauthorized access to our networks and systems or those of our associated third parties. Such attempts at unauthorized access couldcan lead, and occasionally have led, to the compromise of sensitive, business, personal or confidential information. As a result,To mitigate these risks, we follow a defense-in-depth model for cybersecurity, meaning we proactively seek to employ multiple methods at different layers to defend our systems against intrusion and attack and to protect the data we collect.possess. We have adopted policies and procedures, involving an incident response plan and both the board of directors and management oversight of cybersecurity risks, that we believe are designed to facilitate the identification, assessment and management of those risks including any risks that have the potential to be material. Our information security program establishes technical, physical and administrative controls to maintain the confidentiality, integrity and availability of our information and technical assets. However, we cannot provide any assurance that these cybersecurity risk management processes will be fully complied with or effective and we cannot be certain that these measures or other will always be successful andor will always be sufficient to counter, or to rapidly detect, contain, and remediate, all current and emerging technology threats.


OurMore particularly, our computer systems and/or our associated third parties’ computer systems couldhave been, and we expect will continue to be, subject totargeted for penetration on a regular basis, and our data protection measures may not prevent unauthorized access. The techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently, and are often difficult to detect.detect and continually evolve and become more sophisticated. Threats to our systems and our associated third parties’ systems can derive from human error, fraud or malice on the part of employees or third parties, including state-sponsored organizations with significant financial and technological resources. In addition, we have experienced and may continue to experience errors, interruptions or may resultdelays from accidental technological failure. Computercomputer viruses and other malware can be distributed andor vulnerabilities that could infiltrateinfect our systems or those of our associated third parties. In addition, denialDenial of service, ransomware or other attacks could be launched against us for a variety of purposes, including to interfere with our services or create a diversion for other malicious activities. Our defensive measures may not prevent downtime, unauthorized access or use of sensitive data. We have experienced such incidents in the past, and we cannot guarantee that we will be able to anticipate or detect all attacks or vulnerabilities or implement adequate preventative measures in the future. While we maintain first- and third-party insurance coverage that may cover certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses. Further, whileCompanies we selectacquire may require implementation of additional cyber defense methods to align with our standards and, as a result, there may be a period
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of heightened risk between the acquisition date and the completion of such implementation. Furthermore, certain of our third-party relationships are subject to our vendor management program and are governed by written contracts. We believe we have designed our risk identification, assessment, and management processes and procedures to account for cybersecurity risks associated with our use of third-party service providers; however, we do not control the actions of our associated third parties, carefully, we do not control their actions. Anyand any problems experienced by these third parties, including those resulting from breakdowns or other disruptions in the services provided by such parties or cyberattacks, targeted attacks against our employees and associated third parties and security breaches, could adversely affect our ability to service our merchant customers or otherwise conduct our business.


We also could be subject to liability for claims relating to misuse of personal information in violation of contractual obligations or data privacy laws. Regulatory authorities around the world are considering or have enacted a number of legislative and regulatory proposals concerning data protection and use, and the interpretation and application of consumer and data protection laws in the United States, Europe, the Asia-Pacific region and elsewhere is increasingly uncertain. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data practices or operations model, which could result in potential liability for fines, damages or a need to incur substantial costs to modify our operations. In addition, we impose contractual requirements on our counterparties, including vendors and other third parties, related to the use and security of personal data and other confidential information, along with compliance with applicable privacy and security laws. We cannot provide any assurance that thethese contractual requirements related to use, security and privacy that we impose on our associated third partiesthose who have access to this data will be followed or will be adequate to prevent the misuse of this data. AnyWe have occasionally received notifications from vendors and other third parties regarding the exposure of or unauthorized access to our data stored on their information systems, and any future misuse or compromise of personal information stored on those systems, or any other failure by a vendor or other third party to adequately enforce theseabide by our contractual requirements, could result inexpose us to regulatory fines, third-party liability, protracted and costly litigation and, with respect to misuse of the personal information of our merchants and consumers,customers, lost revenue and reputational harm.


Any type of security breach, attack or misuse of data described above or otherwise, whether experienced by us or an associated vendor or other third party, could harm our reputation andreputation; deter existing and prospective customers from using our services or from making electronicdigital payments generally,generally; increase our operating expenses in order to contain and remediate the incident,incident; expose us to unanticipated or uninsured liability,liability; disrupt our operations (including potential service interruptions),; distract our management,

management; increase our risk of litigation or regulatory scrutiny,scrutiny; result in the imposition of penalties and fines under state, federal and foreign laws or by the card networks,networks; and adversely affect our continued card network registration or membership and financial institution sponsorship. Our removalRemoval from the networks' lists of Payment Card Industry Data Security Standard compliant service providers could mean that existing merchant customers, sales partners or other third parties maycould cease using or referring others to our services. Also, prospective merchant customers, financial institutions, sales partners or other third parties maycould choose to terminate negotiations with us, or delay or choose not to consider us for their processing needs. In addition, the card networks could refuse to allow us to process through their networks. Any of the foregoing could adversely affect our business, financial condition or results of operation.


Software and hardware defects, failures, undetected errors, and development delays could affect our ability to deliver our services, damage customer relations, expose us to liability and have an adverse effect on our business, financial condition and results of operations.

Our core services are based on software and computing systems that may encounter development delays, and the underlying software may contain undetected errors, viruses, defects or vulnerabilities. The hardware infrastructure on which our systems run may have a faulty component or fail. Defects in our software services, underlying hardware, or errors or delays in our processing of digital transactions could result in additional development costs, diversion of technical and other resources from our other development efforts, and could result in loss of credibility with current or potential customers, harm to our reputation and exposure to liability claims.

In instances in which we rely on third-party software, our services are occasionally affected by defects, viruses, vulnerabilities, security incidents or other failures that take place at the vendor level. Depending on the circumstances, a vendor failure could cause delays, disruption or data loss or damage, and therefore cause harm to our credibility, reputation or financial condition. In addition, our insurance may not be adequate to compensate us for all losses or failures that may occur.

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

We depend on the efficient and uninterrupted operation of our computer systems, software, data centers and telecommunications networks, as well as the systems and services of third parties. A system outage or data loss could have a material adverse effect on our business, financial condition, results of operations and cash flows. Not only could we suffer damage to our reputation in the event of a system outage or data loss, but we could also be liable to third parties. Many of our contractual agreements with financial institutions and certain other customers require the payment of penalties if we do not meet certain operating standards. Our systems and operations or those of our third-party providers could be exposed to damage or interruption from, among other things, fire; climate-related events, including extreme weather events; natural disasters; pandemics; power loss; telecommunications failure; terrorist acts; war; unauthorized entry; malicious attack; human error; hardware failure; and computer viruses or other defects. We have been and continue to be exposed to defects in our systems or those of third parties, errors or delays in the processing of payment transactions, telecommunications failures, or other difficulties (including those related to system relocation), which could result in loss of revenues, loss of customers, loss of
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merchant and cardholder data, harm to our business or reputation, exposure to fraud losses or other liabilities, negative publicity, additional operating and development costs, litigation expenses, fines and other sanctions imposed by card networks or regulators, and/or diversion of technical and other resources. There is also a risk that third-party suppliers of hardware and infrastructure required to support our employee productivity or our suppliers could be affected by supply chain disruptions, such as manufacturing and shipping delays. An extended supply chain disruption could also affect the delivery of our services.

The payment processingpayments technology industry is highly competitive and highly innovative, 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 and disruptive technologies.


We operate in the electronic payments market,technology industry, which is highly competitive.competitive and highly innovative. In this market,industry, our primary competitors include other independent payment processors, credit card processing firms, third-party card processing software institutions, as well as financial institutions, ISOs, payment facilitators, prepaid programs managers and, potentially, card networks. ManySome of our current and potential competitors are companies that aremay be larger than we are withand have greater financial and operational resources or brand recognition than we have. Our competitors that are financial institutions or subsidiaries of financial institutions do not incur the costs associated with being sponsored by a direct member for participation in the card networks, as we do in certain jurisdictions, and may be able to settle transactions more quickly for merchants than we can. These financial institutions may also provide payment processing services to merchants at lower margins or at a loss in order to generate banking fees from the merchants. It is also possible that larger financial institutions, including some who are customers of ours, could decide to perform in-house some or all of the services that we currently provide or could provide. These attributes may provide them with a competitive advantage in the market.


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


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


The electronic payments marketstechnology industry in which we compete areis 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,platforms, products, mobile payment applications, ecommerce services and other new offerings emerging in the electronic payments technology industry. These projects carry the risks associated with any development effort, including cost overruns, delays in delivery and performance problems.problems, which could in turn lead to impairment of long-lived assets associated with projects. In the electronic payments technology markets, these risks are even more acute. Any delay in the delivery of new services or the failure to differentiate our services could render our services less desirable to customers, or possibly even obsolete. Furthermore, as the market for alternative payment processing services evolves, it may develop too rapidly or not rapidly enough for us to recover the costs we have incurred in developing new services targeted at this market.


In addition, certain of the services we deliver to the electronic payments marketstechnology market are designed to process very complex transactions and deliver reports and other information on those transactions, all at very high volumes and processing speeds. Any failure to deliver an effective, accurate, compliant and secure product or any performance issue that arises with a new product or service could result in significant processing or reporting errors or other losses. As a result of these factors, our development efforts could result in higher costs that could reduce our earnings in addition to a loss of revenues and earnings if promised new services are not delivered timely to our customers or do not perform as anticipated. We rely in part on third parties, including some of our competitors and potential competitors, for the development of and access to new technologies. If development efforts are required or if promised new services are not delivered timely to our customers or do not perform as anticipated, we could incur higher costs, a loss of revenues and lower earnings and cash flows.


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Our revenues from the sale of services to merchants that accept Visa cards and MasterCard cardsMastercard are dependent upon our continued Visa and MasterCardMastercard registrations, financial institution sponsorship and, in some cases, continued membership in certain card networks.
 
In order to provide our Visa and MasterCardMastercard transaction processing services, we must be either a direct member or be registered as a merchant processor or service provider of Visa and MasterCard,Mastercard, respectively. Registration as a merchant processor

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


We rely on various financial institutionsThe termination of our registration, or any changes in the rules of Visa or Mastercard or any other network that would impair our registration or prevent us from providing services to provide clearingour customers, could require us to stop providing payment processing services in connection with our settlement activities. If we are unableor prevent us from successfully submitting transactions to maintain clearing services with these financial institutions and are unablesuch network, which would make it impossible for us to find a replacement,conduct our business on its current scale. The rules of the card networks may be adversely affected.

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

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

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

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

We rely on various financial institutions to provide clearing services in the Visa or MasterCard rules that would impairconnection with our registration, could require us tosettlement activities. If such financial institutions should stop providing Visa and MasterCard paymentclearing services, we would have to find other financial institutions to provide those services. If we were unable to find a replacement financial institution we may no longer be able to provide processing services which would make it impossible for us to conduct our business on its current scale.

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

We depend on the efficient and uninterrupted operation of our computer systems, software, data centers and telecommunications networks, as well as the systems and services of third parties. A system outage or data loss could have a material adverse effect on our business, financial condition, results of operations and cash flows. Not only would we suffer damage to our reputation in the event of a system outage or data loss, but we may also be liable to third parties. Our systems and operations or those of our third-party providers could be exposed to damage or interruption from, among other things, fire, natural disaster, power loss, telecommunications failure, terrorist acts, war, unauthorized entry, human error, and computer viruses or other defects. Defects in our systems or those of third parties, errors or delays in the processing of payment transactions, telecommunications failures, or other difficulties (including those related to system relocation) could result in loss of revenue, loss of customers, loss of merchant and cardholder data, harm to our business or reputation, exposure to fraud losses or other liabilities, negative publicity, additional operating and development costs, fines and other sanctions imposed by card networks, and/or diversion of technical and other resources.


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

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

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


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


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


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Our future growth depends in part on the continued expansion ofwithin 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 electronic transaction payment processingtechnology and software solutions and our ability to penetrate these markets. As part of our strategy to achieve this expansion, we look for acquisition opportunities, investments and alliance relationships with other businesses, including referral partners, ISOs and other financial institutions, that will allow us to increase our market penetration, technological capabilities, product offerings and distribution capabilities. We may not be able to successfully identify suitable acquisition, investment and alliance candidates in the future, and if we do, they may not provide us with the value and benefits we anticipate.anticipate, which may inhibit our growth prospects and adversely affect our business, financial condition and results of operations.


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

Our ability to acquire other businesses or technologies, make strategic investments or integrate acquired businesses effectively may also be impaired by a variety of factors including adverse financial conditions, trade tensions and increased global scrutiny of foreign investments. A number of countries, including the U.S. and countries in Europe and the Asia-Pacific region, are considering or have adopted restrictions on foreign investments. Governments may continue to adopt or tighten economic sanctions, tariffs or trade restrictions of this nature, and such restrictions could negatively affect our business and financial results.

Furthermore, our future success will depend, in part, upon our ability to manage our expanded business, which could pose substantial challenges for our management, including challenges related to the management and monitoring of new operations and associated costs and complexity. We may also face increased scrutiny from governmental authorities if we become a larger business.
 
There may be a decline in the use of cards and other electronicdigital payments as a payment mechanism for consumers or other adverse developments with respect to the card industry in general.


If consumers do not continue to use credit, or debit cards or other electronicdigital payment methods of the type we process as a payment mechanism for their transactions or if there is a change in the mix of payments between cash, checks, credit cards and debit cards, whichthat is adverse to us, it could have a material adverse effect on our business, financial condition, results of operations and cash flows. Consumer credit risk may make it more difficult or expensive for consumers to gain access to credit facilities such as credit cards. Regulatory changes may result in financial institutions seeking to charge their customers additional fees for use of credit or debit cards. Such fees may result in decreased use of credit or debit cards by cardholders. In each case, our business, financial condition, results of operations and cash flows maycould be adversely affected. We believe future growth

Consolidation among financial institutions or among retail customers, including the merger of our customers with entities that are not our customers or the sale of portfolios by our customers to entities that are not our customers, could materially affect our financial condition, results of operations and cash flows.

Consolidation among financial institutions, particularly in the usearea of credit card operations, and debit cardsconsolidation in the retail industry, is a risk that could negatively affect our existing customer agreements and future revenues. In addition, consolidation among financial institutions has led to an increasingly concentrated customer base, which results in a changing mix toward larger customers. Continued consolidation among financial institutions could increase the bargaining power of our current and future customers and further increase our customer concentration. Consolidation among financial institutions and retail customers and the resulting loss of any significant number of customers by us could have a material adverse effect on our financial condition, results of operations and cash flows.

If we do not renew or renegotiate our agreements on favorable terms with our customers within the Issuer Solutions segment, our business will suffer. The timing of the conversions or deconversions of card portfolios could also affect our revenues and expenses.

A significant amount of our Issuer Solutions segment revenues is derived from long-term contracts with large financial institutions and other electronic payments willfinancial service providers. The financial position of these customers and their willingness to pay for our
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services are affected by general market conditions, competitive pressures and operating margins within their industries. When our long-term contracts near expiration, the renewal or renegotiation of the contract presents our customers with the opportunity to consider other providers, transition all or a portion of the services we provide in-house or seek lower rates for our services. Additionally, as we modernize the technology platform we use to deliver services, some Issuer Solutions customers may not be driven byagreeable to our modernization effort and may choose to end their contracts prematurely, or not renew their contracts as a result. The loss of our contracts with existing customers or renegotiation of contracts at reduced rates or with fewer services could have a material adverse effect on our financial condition, results of operations and cash flows. 

In addition, the cost, ease-of-use,timing of the conversion of card portfolios of new payment processing customers to our processing systems and qualitythe deconversion of services offeredexisting customers to consumersother systems could affect our revenues and businesses. In orderexpenses. Due to consistently increasea variety of factors, conversions and maintaindeconversions may not occur as scheduled, and this may have a material adverse effect on our profitability, consumersfinancial condition, results of operations and businesses must continue to use electronic payment methods that we process, including credit and debit cards.cash flows.


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


In the event a dispute between a cardholder and a merchant is not resolved in favor of the merchant, the transaction is normally charged back to the merchant and the purchase price is credited or otherwise refunded to the cardholder. If we are unable to collect

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


Fraud by merchants or others and losses from overdrawn cardholder accounts could have an adverse effect on our operatingfinancial condition, results financial conditionof operations and cash flows.


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

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


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

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

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

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


Increases in card network fees may result in the loss of customers and/or a reduction in our earnings.
 
From time-to-time, the card networks, including Visa and MasterCard,Mastercard, increase the fees that they charge processors. We could attempt tooften pass these increases along to our merchant customers, butcustomers; however, if merchants do not accept these increases, this strategy might result in the loss of customers to our competitors, who may not pass along the increases, thereby reducing our revenues and earnings. If competitive practices prevent us from passing along the higher fees to our merchant customers in the future, we may have to absorb all or a portion of such increases, thereby reducing our earnings.

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

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

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



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

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

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

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

Our inability to complete certain divestitures or the effects of divesting a business could have a material adverse effect on our business and financial results.

From time-to-time, we may divest businesses that do not meet our strategic objectives.

We may not be able to complete desired divestitures on terms favorable to us. Losses on the sales of, or lost operating income from, those businesses could negatively affect our profitability and margins. Moreover, we have incurred and in the future may incur asset impairment charges related to potential divestitures that reduce our profitability.

Our divestiture activities may also present financial, managerial, and operational risks. Those risks include diversion of management attention from our other businesses, difficulties separating personnel and systems, possible need for providing transition services to buyers, adverse effects on existing business relationships with suppliers and customers and indemnities and potential disputes with the buyers. Any of these factors could adversely affect our financial condition and results of operations.

Legal, Regulatory Compliance and Tax Risks

Our business is subject to government regulation and oversight. 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 and compliance efforts or have an unfavorable effect on our ability to continue to offer certain services, or on our financial results and our cash flows.


OurAs a payments technology company, our business is affected by laws and complex regulations and examinations that affect us and our industry in the countries in which we operate. Regulation and proposed regulation of the payments industry has increasedhave continued to increase significantly in recent years. Failure to comply with regulations or guidelines may result in the suspension or revocation of a license or registration, the limitation, suspension or termination of service, and the imposition of civil and criminal penalties, including fines, or may cause customers or potential customers to be reluctant to do business with us, any of which could have an adverse effect on our financial condition. For example, we are subject to the card network rules

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Table of Visa, MasterCard and other card networks, Interac, and various debit networks; applicable privacy and information security regulations in the regions where we operate and of the card networks; the Payment Services Directive in Europe; The Code of Conduct for the Credit and Debit Card Industry in Canada (issued by Canada's Department of Finance); the Housing Assistance Tax Act of 2008 in the United States, which requires information returns to be made for each calendar year by merchant acquiring entities; and a myriad of U.S. federal and state consumer protection laws and state escheat regulations. We are also subject to examination by the FFIEC as a result of our provision of data processing services to financial institutions. Additionally, we manage a membership discount program that is billed to customers annually on a recurring basis. Change in regulation of this type of billing could negatively affect our revenue.Contents

Interchange fees (which are retained by the card issuer in connection with transactions) are subject to intense legal, regulatory and legislative scrutiny worldwide. For instance, the Dodd-Frank Act which was signed into law in July 2010, significantly changedrestricts the U.S. financial regulatory system. Changes affecting the payment processing industry include restricting amounts of debit card fees that certain issuing institutions can charge merchants and allowingallows merchants to set minimum amounts for the acceptance of credit cards and to offer discounts for different payment methods. These types of restrictions could negatively affect the number of debit transactions, which would adversely affect our business. The Dodd-Frank Act also created the Consumer Financial Protection Bureau (the "CFPB"),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 aslike 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 "toimportant" to the U.S. financial system. Any such designation would result in increased regulatory burdens on our business, which increases our risk profile and may have an adverse effect on our business, financial condition, results of operations and cash flows.


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


In many countries, weWe are legally or contractually requiredalso subject to comply with the anti-money laundering laws and regulations, such as, in the United States, the BSA, as amendedexamination by the USA PATRIOT Act,FFIEC as a result of our provision of data processing services to financial institutions. As the regulatory environment remains unpredictable and similar laws of other countries, which require that customer identifying information be obtained and verified. In some countries, we are directly subject to these requirements;rapid change, new obligations could increase the cost and complexity of compliance. Evolving regulations also increase the risk of investigations, fines, nonmonetary penalties and litigation. Because of our services in other countries, we have contractually agreedrelation to assistthe banking industry, much of our sponsor financial institutionsbusiness is obligated, either under law or via contracts with their obligationour customers, to comply with anti-money laundering requirements that applyregulations. Noncompliance with these regulations could lead to them. substantial regulatory fines and penalties or damages from private causes of action. The effect of the regulations could be detrimental to our financial condition.

In addition, we and our sponsor financial institutions are subject to the laws and regulations enforced by the Office of Foreign Assets Control, ("OFAC"), which prohibit U.S. persons from engaging in transactions with certain prohibited persons or entities. Similar requirements apply in other countries. Our failureFurthermore, certain of our businesses are regulated as money transmitters or otherwise require licensing in one or more states or jurisdictions, subjecting us to complyvarious licensing, supervisory and other requirements.

Continuing developments in privacy and data protection regulation globally, combined with anythe rapid pace of these contractual requirements or laws could adversely affecttechnology innovation, have created risks and operational challenges for many of our business financial credit results of operationsactivities as described in "Item 1 - Business." It is possible that these laws may be interpreted and cash flows.


We are also subject toapplied in a variety of foreign and domestic laws, and their implementing regulations, 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,manner that govern the collection, processing, storage, use and disclosure of personal information, require notice to individuals ofis inconsistent with our data privacy practices and provide individuals with certain rightsor operations model, which could result in potential liability for fines, damages or a need to prevent use and disclosure of protected information.incur substantial costs to modify our operations. Compliance with these laws and regulations can be costly and time consuming, adding a layer of complexity to business practices and innovation. As with other regulatory schemes, our failure to comply could result in public or private enforcement action and accompanying litigation costs, losses, fines and penalties.

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 rulepenalties, which could have a material adverse effect onadversely affect our business, financial condition, results of operations and cash flows.


PortionsIn addition, U.S. banking agencies and the SEC have adopted or proposed enhanced cyber risk management standards that could apply to us and our financial institution clients and that would address cyber risk governance and management, management of internal and external dependencies, and incident response, cyber resilience and situational awareness. Several states and foreign countries also have adopted or proposed new privacy and cybersecurity laws targeting these issues. Legislation and regulations on cybersecurity, data privacy and data localization may compel us to enhance or modify our systems, invest in new systems or alter our business may be subject to the Fair Debt Collection Practices Act, the Fair Credit Reporting Actpractices or our policies on data governance and similar state laws. These debt collection laws are designed to eliminate abusive, deceptive and unfair debt collection practices and may require licensing at the state level. The Fair Credit Reporting Act regulates the use and reporting of consumer credit information and also imposes disclosure requirements on entities that take adverse action based on information obtained from credit reporting agencies.privacy. If we fail to comply with any of these outcomes were to occur, our operational costs could increase significantly.

The rise in the use of generative artificial intelligence has dramatically altered the corporate landscape. Incorporating artificial intelligence, including machine learning technologies, into our businesses presents numerous risks and uncertainties. Furthermore, the global regulatory framework has not kept pace with the rapid developments in the generative artificial intelligence technology field, creating uncertainties regarding compliance with upcoming laws and regulations. Beyond legal considerations in the development and deployment of these models there exists an ethical consideration given the potential risk of generating misleading or harmful content. The unpredictable nature of outputs further amplifies this risk, potentially leading to unintended consequences and biases. Additionally, the extent theyabsence of clear requirements pertaining to explainability and the data used to train these models, introduces the risk of intellectual property disputes, including the inability to protect or potential infringement claims regarding the artificially generated content. We are applicableexploring opportunities to us,expand our portfolio with artificial intelligence capabilities to strengthen our market position, amplify our teams' capabilities, and enhance our customers'
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experiences. If we are unsuccessful in doing so, we may be subject to fines, penaltieshave a competitive disadvantage in developing new products and litigation.operating our business and our customers may prefer different solutions.


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

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

A substantial portion of our indebtedness bears interest at a variable rate, and we may incur additional variable-rate indebtedness in the future. Increases in interest rates will reduce our operating cash flows and could hinder our ability to fund our operations, capital expenditures, acquisitions, share repurchases or dividends. We are also subject to risks related to the changes in currency exchange rates as a result of our investments in foreign operations and from revenues generated in currencies other than the U.S. dollar. Revenues and profit generated by international operations will increase or decrease compared to prior periods as a result of changes in currency exchange rates. Volatility in currency exchange rates has affected and may continue to affect our financial results.

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

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

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

We expect to continue to expanddifficulty aligning our operations in North America, Europe and the Asia-Pacific region. Some of the countries in which we operate, such as the Russian Federation and the United Kingdom, have undergone significant political, economic andto comply with all applicable laws.

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

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

On June 23, 2016, the United Kingdom held a referendum in which voters approved an exit from the European Union, commonly referred to as "Brexit," and on March 29, 2017, notified the European Union that it intended to exit as provided in Article 50 of the Treaty on European Union. The terms of the withdrawal are subject to a negotiation period that could last at least two years from the withdrawal notification date. Nevertheless, the referendum has caused, and may continue to cause, volatility in global stock markets and currency exchange rate fluctuations, resulting in a decline in the value of the British pound relative to the U.S. dollar. In addition, Brexit could lead to increased regulatory complexities, including without limitation regulation relating to data security, privacy, and taxation. These changes may adversely affect our operations, financial results and cash flows.

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

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

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

If we are unable to successfully integrate the benefits plans, duties and responsibilities, and other factors of interest to the management and employees of the acquired business, we could lose employees to our competitors in the region, which could significantly affect our ability to operate the business and complete the integration;
If the integration process causes any delays with the delivery of our services, or the quality of those services, we could lose customers to our competitors, which would reduce our revenues and earnings;
The acquisition may otherwise cause disruption to the acquired company’s business and operations and relationships with financial institution sponsors, customers, merchants, employees and other partners;
The acquisition and the related integration could divert the attention of our management from other strategic matters including possible acquisitions and alliances and planning for new product development or expansion into new electronic payments markets; and
The costs related to the integration of the acquired company’s business and operations into ours may be greater than anticipated.

The costs and effects of pending and future litigation, investigations or similar matters, or adverse facts and developments related thereto, could materially affect our business, financial position, results of operations and cash flows.
We are from time-to-time involved in various litigation matters and governmental or regulatory investigations or similar matters arising out of our current or future business. Our insurance or indemnities may not cover all claims that may be asserted against us, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. Furthermore, there is no guarantee that we will be successful in defending ourselves in pending or future litigation or similar matters under

various laws. Should the ultimate judgments or settlements in any pending litigation or future litigation or investigation significantly exceed our insurance coverage, they could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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

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

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


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


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


AsIn December 2022, the EU Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a resultminimum effective tax rate of the recently enacted U.S. Tax Cuts and Jobs Act of 2017 (the "2017 U.S. Tax Act")15%, 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 providesOrganization for the reporting of provisional amounts that may change during a measurement periodEconomic Co-operation and the deferral of recognition of any amounts in other instances until a reasonable estimate can be made.Development Pillar Two Framework. The U.S. Treasury Department, the U.S. Internal Revenue ServiceEU effective dates are January 1, 2024, and other standard-setting bodies could interpret or issue guidance on how provisionsJanuary 1, 2025, for different aspects of the 2017 U.S. Tax Act will be applied or otherwise administered that is different from our interpretation. Changesdirective. A significant number of other countries are expected to implement similar legislation with varying effective dates in the provisional amounts thatfuture. We are continuing to evaluate the potential effect on future periods of the Pillar Two Framework, pending legislative adoption by additional individual countries; however, we recorded could negatively affectdo not expect the directive to have a material effect on our financial condition or results of operations.


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

We may become subject to additional U.S., state or foreign taxes that cannot be passed through to our customers, in which case our earnings could be adversely affected.
We are or may be subject in various jurisdictions to certain taxes that are not derived based on earnings (e.g. sales, gross receipts, property, value-added and other business taxes). Application of these taxes is an emerging issue in our industry and the

taxing authorities have not yet all adopted uniform regulations on certain of these topics. If we are required to pay such taxes and are not able to pass the tax cost through to our customers, our earnings and cash flows would be negatively affected.

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

Risks Related to Our Organizational and Capital Structure

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

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

We have a significant amount of indebtedness. As of December 31, 2017, the outstanding balance under our Credit Facility was $4.7 billion. Our increased level of debt and the covenants to which we have agreed in connection with this and other financing transactions could, among other things, (i) require us to dedicate a larger portion of our cash flow from operations to servicing and repayment of the debt, (ii) reduce funds available for strategic initiatives and opportunities, working capital, capital investment and other general corporate needs and (iii) limit our ability to incur certain kinds or amounts of additional indebtedness, which could restrict our flexibility to react to changes in our business our industry and economic conditions.

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

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

incur additional indebtedness;
create liens;
consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
enter into certain lines of business;
enter into certain transactions with affiliates;
pay dividends and repurchase shares of our common stock.

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

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


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

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

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

As a result of our acquisitions, a significant portion of our total assets are intangible assets (including goodwill). Goodwill and intangible assets, net of amortization, together accounted for approximately 61% of the total assets on our balance sheet as of December 31, 2017. We expect to engage in additional acquisitions, which may result in our recognition of additional intangible assets and goodwill. We evaluate on a regular basis whether all or a portion of our goodwill and other intangible assets may be impaired. Under current accounting rules, any determination that impairment has occurred would require us to record an impairment charge, which would negatively affect our earnings. An impairment of a portion of our goodwill or intangible assets could have a material adverse effect on our business, financial condition and results of operations.

We may not be able or permitted to, or we may decide not to, pay dividends or repurchase shares at a level anticipated by shareholders of our common stock, which could reduce shareholder returns.
The extent to which we pay dividends on our common stock and repurchase our common stock in the future is at the discretion of our board of directors and will depend on, among other factors, our results of operations, financial condition, capital requirements, compliance with debt covenants and such other factors as our board of directors deems relevant. Our Credit Facility may prohibit us from (i) repurchasing more than $250 million of our common stock in any fiscal year and (ii) paying quarterly dividends in excess of $0.01 per share. No assurance can be given that we will be able to or will choose to pay any dividends or repurchase any shares in the foreseeable future.


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


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


Financial Risks

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

A portion of our indebtedness bears interest at a variable rate, and we may incur additional variable-rate indebtedness in the future. Elevated interest rates could increase our cost of debt, and reduce our operating cash flows, limit options to refinance existing debt on favorable terms or at all, and could hinder our ability to fund our operations, capital expenditures, acquisitions, share repurchases or dividends.

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

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

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

A downgrade in the ratings of our debt could restrict our ability to access the debt capital markets and increase our interest costs.

We currently maintain investment credit ratings with nationally recognized statistical rating organizations. Unfavorable changes in the ratings that these rating agencies assign to our debt may ultimately negatively affect our access to the debt capital markets and increase the costs we incur to borrow funds. If ratings for our debt fall below investment grade, our access to the capital markets could become restricted, and our relationships with certain customers of our Issuer Solutions segment could also be affected. Future tightening in the credit markets and a reduced level of liquidity in many financial markets due to turmoil in the financial and banking industries could affect our access to the debt capital markets or the price we pay to issue debt. Additionally, our revolving credit facility includes an increase in interest rates if the ratings for our debt are downgraded. 

Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.business.
 
Section 404 of the Sarbanes-Oxley Act requires us to evaluate annually the effectiveness of our internal control over financial reporting as of the end of each fiscal year and to include a management report assessing the effectiveness of our internal control over financial reporting in our annual report. If we fail to maintain the adequacy of our internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.reporting. Furthermore, this assessment may be complicated by any acquisitions we have completed or may complete.


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



While we continue to dedicate resources and management time to ensuringensure that we have effective internal control over financial reporting, failure to achieve and maintain an effective internal control environment could have a material adverse effect on our ability to timely generate accurate financial statements in conformity with accounting principles generally accepted in the United States, on the market's perception of our business and on our stock price.


Anti-takeover provisionsIntellectual Property Risks

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

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

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

Risks Related to Our Capital Structure

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

We have a significant amount of incorporationindebtedness and by-lawsmay incur other debt in the future. Our level of debt and provisionsthe covenants to which we agreed could have negative consequences for us, including, among other things, (1) requiring us to dedicate a large portion of Georgia lawour cash flow from operations to servicing and repayment of the debt; (2) limiting funds available for strategic initiatives and opportunities, working capital and other general corporate needs; and (3) limiting our ability to incur certain kinds or amounts of additional indebtedness, which could restrict our flexibility to react to changes in our business, our industry and economic conditions.

If we are unable to generate sufficient cash flow from operations in the future to service our debt, we may be required, among other things, to seek additional financing in the debt or equity markets, refinance or restructure all or a portion of our indebtedness, sell selected assets or reduce or delay planned capital, operating or investment expenditures. Such measures may not be sufficient to enable us to service our debt, which could result in us defaulting on our obligations.

We may not be able to raise additional funds to finance our future capital needs.

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

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

As a result of our acquisitions, a significant portion of our total assets are intangible assets (including goodwill). Goodwill and intangible assets, net of amortization, together accounted for approximately 73% of our total assets as of December 31, 2023. We expect to engage in controladditional acquisition activity from time-to-time, which may result in our recognition of additional intangible assets, including goodwill. We evaluate on a regular basis whether all or a portion of our goodwill and other intangible assets may be impaired. Under current accounting rules, any determination that individualimpairment has occurred would require us to record an impairment charge, which would negatively affect our earnings. An impairment of a portion of our goodwill or other intangible assets could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to, or we may decide not to, pay dividends or repurchase shares at a level anticipated by our shareholders, favor.which could reduce shareholder returns.
 
ProvisionsThe extent to which we pay dividends on our common stock and repurchase our common stock in the future is at the discretion of our articles of incorporation and by-laws and provisions of applicable Georgia law may discourage, delay or prevent a merger or other change in control that individual shareholders may consider favorable. The provisions of our articles and by-laws, among other things:
divide our board of directors into three classes, with membersand will depend on, among other factors, our results of each class to be elected in staggered three-year terms; 
limit the right of shareholders to remove directors; 
regulate how shareholders may present proposals or nominate directors for election at annual meetings of shareholders;operations, financial condition, capital requirements and
authorizesuch other factors as our board of directors deems relevant. No assurance can be given that we will be able to issue preferredor will choose to continue to pay dividends or repurchase shares in onethe foreseeable future.
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Risks Related to General Economic Conditions

We are subject to economic and geopolitical risk, health and social events or conditions, the business cycles and credit risk of our customers and the overall level of consumer, business and government spending, which could negatively affect our business, financial condition, results of operations and cash flows.

The global payments technology industry depends heavily on the overall level of consumer, business and government spending. We are exposed to general economic conditions, including but not limited to, recessions, inflation, rising interest rates, high unemployment, currency fluctuations, and rising energy prices, that affect consumer confidence, discretionary income and changes in consumer purchasing and spending habits. Adverse economic conditions have at times affected and may continue to negatively affect our financial performance by reducing the number or average purchase amount of transactions made using digital payments. A reduction in the amount of consumer spending could result in a decrease in our revenues and profits. If our merchants make fewer sales to consumers using digital payments, or consumers using digital payments spend less per transaction, we will have fewer transactions to process or lower transaction amounts, each of which would contribute to lower revenues. Additionally, credit card issuers may reduce credit limits and become more series, without shareholder approval.selective in their card issuance practices. When such conditions arise, we evaluate where we may be able to implement cost-saving measures, including those related to headcount and discretionary expenses. While economic conditions have shown moderate improvement in recent months, any of these developments could have a material adverse effect on our financial condition and results of operations.


Adverse macroeconomic conditions in any of our markets could force merchants, financial institutions or other customers to cease operations or petition for bankruptcy protection, resulting in lower revenue and earnings for us and greater exposure to potential credit losses and future transaction declines. We also have a certain amount of fixed costs, including rent, debt service, and salaries, which could limit our ability to quickly adjust costs and respond to changes in our business and the economy. Changes in economic conditions could also adversely affect our future revenues and profits and have a materially adverse effect on our business, financial condition, results of operations and cash flows.

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

In addition, our business, growth, financial condition or results of operations could be materially adversely affected by public health emergencies, such as the COVID-19 pandemic, political and economic instability or changes in a country’s or region’s economic conditions, changes in laws or regulations or in the interpretation of existing laws or regulations, whether caused by a change in government or otherwise, increased difficulty of conducting business in a country or region due to actual or potential political or military conflict or action by the United States or foreign governments that may restrict our ability to transact business in a foreign country or with certain foreign individuals or entities.

Risks associated with heightened geopolitical and economic instability, include among others, reduction in consumer, government or corporate spending, international sanctions, embargoes, heightened inflation and actions taken by central banks to counter inflation, volatility in global financial markets, increased cyber disruptions or attacks, higher supply chain costs and increased tensions between countries in which we may operate, which could result in charges related to the recoverability of assets, including financial assets, long-lived assets and goodwill, and other losses, and could adversely affect our financial condition and results of operations.

Climate-related events, including extreme weather events and natural disasters and their effects on critical infrastructure in the U.S. or internationally, could have adverse effects on our operations, customers or third-party suppliers. Furthermore, our shareholders, customers and other stakeholders have begun to consider how corporations are addressing sustainability matters, which include environmental and corporate responsibility issues. Government regulators, investors, customers and the general public are increasingly focused on sustainability practices and disclosures, and views on this topic are diverse and rapidly changing. These shifts in investing priorities may result in adverse effects on the trading price of the Company's common stock if investors determine that the Company has not made sufficient progress on sustainability matters. Furthermore, developing and acting on these initiatives, and collecting, measuring and reporting related information and metrics can be costly, difficult and time consuming, and are subject to evolving reporting standards and/or contractual obligations. The standards and laws by which sustainability efforts are tracked and measured are in many cases new, have not been harmonized, and continue to evolve.

We could also face potential negative sustainability related publicity in traditional media or social media if shareholders or other stakeholders determine that we have not adequately considered or addressed sustainability and governance matters. We have been the recipient of proposals from shareholders to promote their corporate responsibility positions, and we may receive
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other such proposals in the future. Such proposals may not be in the long-term interests of the Company or our shareholders and may divert management’s attention away from operational matters or create the impression that our practices are inadequate.

General Risk Factors

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

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

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

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

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ITEM 1C - CYBERSECURITY

Processes for the Identification, Assessment, and Management of Material Risks from Cybersecurity Threats

Although Global Payments is unable to eliminate all risks associated with cybersecurity threats and we cannot provide full assurance that our cybersecurity risk management processes will be fully complied with or effective, we have adopted policies and procedures that are designed to facilitate the identification, assessment, and management of those risks, including any such risks that have the potential to be material.

We use multiple mechanisms to identify risks associated with cybersecurity threats, including but not limited to the following:

•Our information security program describes three levels of risk assessment exercises to be performed or obtained on a periodic basis by the Information Security function, ranging from enterprise-level to system-level risk assessments;

•Our Information Security function also includes a threat intelligence team that performs continual threat monitoring activities;

•Our Business Technology Services function includes teams that provide architectural review, security advisory, and application testing services in connection with the development of new products, applications, and integrations;

•Our Internal Audit function performs annual reviews designed to evaluate selected systems’ compliance with our information security program and/or recognized external control frameworks;

•Independent consultants and auditors evaluate selected systems and applications on an annual basis; and

•All team members are empowered to submit self-identified information security risks for analysis by our internal risk management professionals.

Cybersecurity risks identified through any of the foregoing mechanisms and submitted to our governance, risk, and compliance platform are assessed by our internal risk management professionals, in collaboration with appropriate subject-matter experts ("SMEs"), pursuant to standards established by our Enterprise Risk Management ("ERM") organization. Our internal risk management professionals work with the SMEs and other stakeholders to establish remediation plans for identified information security risks and to determine when risk acceptance might be a reasonable and appropriate solution. Issues relating to cybersecurity identified by Internal Audit are reported to the Technology Committee of our board of directors ("Technology Committee").

Our ERM organization, under the supervision of the Chief Risk Officer, leads our efforts to consider and assess threats to the Company and the risks that result therefrom, including cybersecurity threats and related risks. With support from Information Security, Legal, and the Privacy Office, ERM conducts periodic evaluations of our information security posture, manages regular meetings with the executive leadership team to discuss risk levels across the company, and maintains and monitors risk tolerances and escalation criteria that drive executive and the board of director communications, as further described in our disclosures related to the board of directors oversight of material risks associated with cybersecurity threats.

We manage risks associated with cybersecurity threats first and foremost through our information security program. We have implemented a comprehensive, layered security approach, across our computing environment, that is designed to facilitate the reduction of cybersecurity risk through the establishment of technical, physical and administrative controls oriented towards the maintenance of the confidentiality, integrity and availability of our information and technical assets. The structure of the information security program is informed by the NIST Cybersecurity Framework, and the program includes controls designed to facilitate the compliance of our cardholder data environments with PCI-DSS. The information security program is under the responsibility of the Chief Information Security Officer ("CISO"), while governance and oversight is provided by the Technology Committee as set forth in the Technology Committee Charter. The CISO is responsible for the strategy, execution and administration of the program and reports directly to the Chief Information Officer ("CIO"), while also maintaining reporting lines to the Technology Committee, its chair and the full board of directors. We have also established a Management Risk Committee ("MRC"), composed primarily of executive management, that is responsible for identifying, assessing, prioritizing and monitoring action plans to mitigate key risks. The MRC meets regularly.

To encourage alignment on risk identification, assessment, and management objectives throughout all levels of the company, we have implemented a security education and awareness program that is designed to reinforce key behaviors that
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facilitate risk reduction and inform team members about the material cybersecurity risks facing our organization. We also include periodic training on information security to the board of directors.

Identification, Assessment, and Management of Third-Party Cybersecurity Risks

We have designed our risk identification, assessment, and management processes and procedures to account for cybersecurity risks associated with our use of third-party service providers. In addition to performing periodic assessments of vendors that include evaluating those vendors for cybersecurity risks, we endeavor to reduce supply chain cybersecurity risks by: (1) seeking to impose contractual requirements on our counterparties related to the use and security of personal data and other confidential information, as well as compliance with applicable privacy and security laws, wherever required by law to do so; and (2) requiring new software integrations and connectivity with vendors to undergo an architectural review process that involves consultation with the information security function and other relevant stakeholders. Moreover, critical vendors receive periodic comprehensive risk assessments conducted by the vendor management office (a team within ERM), in collaboration with Information Security and our Business Resiliency Governance ("BRG") team, that include a focus on the vendor’s cybersecurity practices.

Evaluation, Categorization, and Escalation of Cybersecurity Incidents

Our information security program includes an incident response plan, which establishes (1) a framework for classifying security incidents according to their severity level, taking into account the nature and scope of the incident; and (2) protocols for the escalation of incidents, including to the attention of the Technology Committee as appropriate. The incident response plan is approved annually by the board of directors. We maintain a Global Security Operations Center ("GSOC"), staffed 24/7, and a Global Critical Incident Management ("GCIM") team, and the roles and responsibilities of the GSOC and GCIM in the incident response context are established by the incident response plan, as well as in associated playbooks and other procedural documentation. On an annual basis, we retain an outside consultant to develop and administer a simulation of a cybersecurity incident designed to test our response capabilities and capacity for effective cross-functional coordination in the wake of an incident and to inform management and the Technology Committee of the results of the exercise. We maintain a business resiliency program, overseen by BRG, that is designed to facilitate our ability to respond, recover and resume services in the event of an incident that causes an operational disruption.

Discussion of Material Cybersecurity Risks and Incidents

We have not experienced any material cybersecurity incidents in the past calendar years and the expenses we have incurred from cybersecurity incidents during that period were immaterial. We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition. We face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. For a full discussion of cybersecurity risks, see the section entitled "Risk Factors" in Item 1A.

Board and Management Oversight of Risks Associated with Cybersecurity Threats

The Technology Committee provides the board of director-level oversight of our information technology and information security practices and cyber-risk profile and serves as a liaison between our board of directors and the CISO and the Chief Privacy Officer with respect to such matters. The Technology Committee reviews our key initiatives and practices relating to information technology, information security, cybersecurity, disaster recovery, business continuity, data privacy and data governance, and monitors compliance with regulatory requirements and industry standards. The Technology Committee helps to ensure that our strategic business goals are aligned with our technology strategy and infrastructure and that management has adequate support for the Company's internal technology and information security needs.

At every regular meeting of the Technology Committee, the CISO provides the Technology Committee with updates and changes to the state, strategy and risks related to the information security program as well as other security news and topics. Further, the Technology Committee and Audit Committee receive quarterly reports from the Chief Risk Officer regarding our risk exposure related to significant information technology and information security practices.

The CISO and CIO meet regularly with the chair of the Technology Committee outside of committee meetings. In addition, the board of directors regularly receives information about these topics from the chair of the Technology Committee, the CIO, and management, and the board of directors is apprised directly of incidents as appropriate, pursuant to our incident response plan.

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ITEM 2 - PROPERTIES


Our principal facilitiesWe have properties located within the various global geographic markets in North America are located in Atlanta, Georgia; Dallas, Texas; Jeffersonville, Indiana; Las Vegas, Nevada; Lindon, Utah; and Toronto, Canada. Our principal facilities in Europe are located in Barcelona, Spain; Dublin, Ireland; Leicester, England; London, England; Moscow, Russia; and Prague, Czech Republic. Our principal facilities in the Asia-Pacific region are located in Brisbane, Australia; Hong Kong Special Administrative Region, China; and Manila, Philippines. At December 31, 2017, we owned four international facilities and leased 51 domestic properties and 96 international properties, which we use for operational, salesconduct business. Our properties include office space and administrative purposes.data centers, most of which we lease. We believe that all of our facilities and equipment will beproperties are suitable and adequate for our business as presently conducted. See "Note 7—Leases" in the notes to the accompanying consolidated financial statements for further discussion of our leases.


ITEM 3 - LEGAL PROCEEDINGS
 
We are party to a number of claims and lawsuits incidental to our business. In our opinion, the liabilities, if any, whichthat may ultimately result from the outcome of such matters, individually or in the aggregate, are not expected to have a material adverse effect on our financial position, liquidity, results of operations or cash flows.


Part
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PART II


ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 
Our common stock trades on the New York Stock Exchange under the ticker symbol "GPN." The 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, 2018,12, 2024, there were 2,38411,706 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, 201679.93
 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


Equity Compensation Plan Information


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



Stock Performance Graph


The following graph compares our cumulative shareholder returns with the Standard & Poor's Information Technology("S&P") 500 Index and the Standard & Poor'sS&P 500 Financials Index for the yearyears ended December 31, 2017, the 2016 fiscal transition period,2023, 2022, 2021, 2020, and the years ended May 31, 2016, 2015, 2014 and 2013.2019. The line graph assumes the investment of $100 in our common stock, the Standard & Poor'sS&P 500 Index and the Standard & Poor's Information TechnologyS&P 500 Financials Index on MayDecember 31, 20122018 and assumes reinvestment of all dividends.


Global Payments was reclassified by S&P to the Financials sector of the S&P 500 from the Information Technology sector under the revised Global Industry Classification Standard (GICS®) structure in March 2023. We are reflecting this sector change in the performance graph below to be consistent with the revised classification.

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COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Global Payments Inc., the S&P 500 Index
and the S&P Information Technology500 Financials Index

2023 Comparison of 5 Year Cumulative Total Return.jpg.jpg

*$100 invested on MayDecember 31, 20122018 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31

Copyright© 20182023 Standard & Poor's, a division of S&P Global. All rights reserved.
Global
Payments		S&P 500
Index		S&P 500
Financials Index
December 31, 2018$100.00 $100.00 $100.00 
December 31, 2019$177.25 $131.49 $132.13 
December 31, 2020$210.10 $155.68 $129.89 
December 31, 2021$132.55 $200.37 $175.40 
December 31, 2022$98.22 $164.08 $156.92 
December 31, 2023$126.72 $207.21 $175.99 


Recent Sales of Unregistered Securities

There were no unregistered sales of equity securities during the year ended December 31, 2023.

35
  
Global
Payments
 
S&P
500 Index
 
S&P
Information
Technology Index
May 31, 2012 $100.00
 $100.00
 $100.00
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
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Issuer Purchases of Equity Securities


Information about the shares of our common stock that we repurchased during the quarter ended December 31, 2023 is set forth below:

Period
Total Number of
Shares Purchased (1)
Approximate Average Price Paid per Share, excluding commissionTotal 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 1-31, 20236,215 $115.44 — $— 
November 1-30, 20232,652 110.31 — — 
December 1-31, 20234,389 117.92 — — 
Total13,256 $109.38 — $1,090.2 

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

During the quarter ended December 31, 2023, pursuant to our employee incentive plans, we withheld 13,256 shares at an average price per share of $115.24 in order to satisfy employees' tax withholding and payment obligations in connection with the vesting of awards of restricted stock.

(2)As of December 31, 2017,2023, the approximate dollar value of shares that may yet be purchased under our share repurchase program was $264.9 million remaining$1,090.2 million. On January 25, 2024, our board of directors approved an increase to our existing share repurchase program authorization, which raised the total 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.$2.0 billion. The authorizations by theour board of directors do not expire, but could be revoked at any time. In addition, we are not required by any of the board'sour board of directors' 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.

During the quarter ended December 31, 2017, pursuant to our employee incentive plans, we withheld 81,889 shares at an average price of $96.82 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.

ITEM 6 - SELECTED FINANCIAL DATA[RESERVED]
 
You should read the selected financial data set forth below in conjunction with (i) "Item 7 ‑ Management's Discussion and Analysis of Financial Condition and Results of Operations," (ii) "Item 8 ‑ Financial Statements and Supplementary Data" and (iii) the historical consolidated financial statements of Global Payments and the related notes presented in this Annual Report on Form 10-K. 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.
 Year Ended
December 31,		 Seven Months Ended December 31, Year Ended May 31,
 2017 2016 2016 2015 2014 2013
            
 (in thousands, except per share data)
Income statement data:           
Revenues$3,975,163
 $2,202,896
 $2,898,150
 $2,773,718
 $2,554,236
 $2,375,923
Operating income558,868
 237,951
 424,944
 456,597
 405,499
 357,213
Net income494,070
 137,683
 290,217
 309,115
 269,952
 238,713
Net income attributable to Global Payments468,425
 124,931
 271,666
 278,040
 245,286
 216,125
            
Per share data:           
Basic earnings per share$3.03
 $0.81
 $2.05
 $2.07
 $1.70
 $1.39
Diluted earnings per share3.01
 0.81
 2.04
 2.06
 1.69
 1.38
Dividends per share0.04
 0.02
 0.04
 0.04
 0.04
 0.04
            
Balance sheet data (at period end):          
Total assets$12,998,069
 $10,664,350
 $10,509,952
 $5,779,301
 $4,002,527
 $3,114,025
Settlement lines of credit635,166
 392,072
 378,436
 592,629
 440,128
 187,461
Long-term debt4,659,716
 4,438,612
 4,515,286
 1,740,067
 1,390,507
 960,749
Total equity3,965,231
 2,779,342
 2,877,404
 863,553
 1,132,799
 1,286,607


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

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

(a) acquisition and integration expenses were $94.6 million for the year ended December 31, 2017, $91.6 million for the 2016 fiscal transition period and $51.3 million for the year ended May 31, 2016; and,

(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:

(a) a provisional net income tax benefit of $158.7 million recorded in connection with the 2017 U.S. Tax Act. See "Note 9—Income Tax" in the notes to the accompanying consolidated financial statements for further discussion; and,

(b) a gain of $41.2 million recorded in connection with the sale of our membership interests in Visa Europe Limited ("Visa Europe") for the seven months ended December 31, 2016.

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with "Item 8 - Financial Statements and Supplementary Data." This discussion and analysis contains forward-looking statements about our plans and expectations of what may happen in the future. Forward-looking statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties, and our actual results could differ materially from the results anticipated by our forward-looking statements as a result of many known and unknown factors, including but not limited to, those discussed in "Item 1A - Risk Factors." See "Cautionary Notice Regarding Forward-Looking Statements" located above in "Item 1 - Business."

You should readWe operate in two reportable segments: Merchant Solutions and Issuer Solutions. During the following discussionsecond quarter of 2023, we completed the sale of the consumer portion of our Netspend business, which comprised our former Consumer Solutions segment. Our consolidated financial statements include the results of our former Consumer Solutions segment for periods prior to disposition. See "Note 18—Segment Information" in the notes to the accompanying consolidated financial statements for additional information about our segments.

Discussions of our results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 that have been omitted under this item can be found in "Part II, Item 7 - Management's Discussion and analysisAnalysis of Financial Condition and Results of Operations" in conjunctionour Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with "Item 6 - Selected Financial Data"the United States Securities and "Item 8 - Financial Statements and Supplementary Data."Exchange Commission on February 17, 2023.

General
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Executive Overview
 
We are a leading worldwide provider of paymentpayments technology services and software solutionscompany delivering innovative software and services to our customers globally. Our technologies, services and employeeteam member expertise enableallow us to provide a broad range of solutions that allowenable our customers to accept various payment types and operate their businesses more efficiently. We distribute our servicesefficiently across a variety of channels around the world.

We have grown organically, as well as through acquisitions, and we continue to invest in new and innovative technology solutions, infrastructure to support our growing business and the ongoing consolidation and enhancement of our operating platforms. These investments include new product development and innovation to further enhance and differentiate our suite of technology and cloud-based solutions available to customers, in 30 countries throughout North America, Europe, the Asia-Pacific regionalong with migration of certain underlying technology platforms to cloud environments to enhance performance, improve speed to market and Brazildrive cost efficiencies. We also continue to execute on integration and operate in three reportable segments: North America, Europeother activities, such as combining business operations, streamlining technology infrastructure, eliminating duplicative corporate and Asia-Pacific.operational support structures and realizing scale efficiencies.


We were incorporated in Georgiahave furthered our business strategy through several recent key transactions during 2023 as Globalfollows:

•We completed the acquisition of EVO Payments, Inc. in 2000 and spun-off from our former parent company in 2001. Including our time as part(“EVO”) for total purchase consideration of our former parent company, we have been in the payment technology services business since 1967. 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.

We provide$4.3 billion. EVO is a payment technology and softwareservices provider, offering payment solutions to customers globally. Our payment solutions are similar aroundmerchants ranging from small and middle market enterprises to multinational companies and organizations across the world inAmericas and Europe. The cash portion of the purchase consideration was funded through cash on hand and borrowings from our revolving credit facility.

•We completed the sale of the consumer portion of our Netspend business for approximately $1 billion. In connection with the sale, we provided $675 million of seller financing and a five-year $50 million secured revolving facility that we enable our customers to accept card, electronic, check and digital-based payments. Our comprehensive offerings include terminal sales and deployment, authorization processing, settlement and funding processing, customer support and help-desk functions, chargeback resolution, industry compliance, payment security services, consolidated billing and statements and on-line reporting.

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

The majoritycompleted the sale of our revenues is generated by services pricedgaming business for approximately $400 million.

•Our capital structure initiatives during 2023 included the issuance of Euro-denominated senior notes and the launch of a commercial paper program:

◦We issued €800 million aggregate principal amount of 4.875% senior unsecured notes due March 2031 and received net proceeds of €790.6 million, or $843.6 million based on the exchange rate on the issuance date. The net proceeds from the offering were used for general corporate purposes.

◦We established a $2.0 billion commercial paper program under which we may issue senior unsecured commercial paper notes with maturities of up to 397 days from the date of issue as a percentagecost effective means of transaction value or a specified fee per transaction, depending on the card type or the vertical. We also earn software licensing and subscription fees and other fees based on specific value-added services that may be unrelated to the number or value of transactions.satisfying our short-term liquidity needs.


Our primary business model is to actively market and provide our payment services, enterprise software solutions and other value-added services directly to our customers through a variety of distribution channels. We offer high touch services that provide our customers with reliable and secure solutions coupled with high quality and responsive support services. Through our direct sales force worldwide, as well as bank partnerships, we offer our payment technology services, software and other value-added solutions directly to customers in the markets we serve. In addition, we also provide certain of our services through a wholesale distribution channel where we do not maintain the face-to-face relationship with the customer.

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

Our business has not had pronounced seasonality in which more than 30% of our revenues occurred in one fiscal quarter. However, each geographic channel has somewhat higher and lower quarters given the nature of the merchant portfolio.


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

Executive Overview

We experienced strong business and financial performance around the world during the year ended December 31, 2017. Highlights related to our financial condition at December 31, 2023, and results of operations as of December 31, 2017 and for the year then ended, include the following:


•Consolidated revenues increased by 17.9% to $3,975.2 million for the year ended December 31, 2017 from $3,371.02023 increased to $9,654.4 million, for 2016, reflecting growth in each of our operating segments and additional revenues from acquired businesses.

Consolidated operating income was $558.9compared to $8,975.5 million for the year ended December 31, 2017 comparedprior year. The increase in consolidated revenues was primarily due to $356.3 million for 2016. Ouran increase in transaction volumes, including from the recently acquired EVO business, partially offset by the effects on revenue of the divested businesses.

•Merchant Solutions and Issuer Solutions segment operating income and operating margin for the year ended December 31, 2017 was 14.1%2023 increased compared to 10.6% for 2016. The increase in operating income and operating margin wasthe prior year primarily due to the contributionfavorable effect of revenue growthincreases in revenues, since certain fixed costs do not vary with revenues, and a decrease in costs associated with acquisition and integration expenses of $47.5 million.continued expense management.


Net•Consolidated operating income attributable to Global Payments was $468.4 million for the year ended December 31, 20172023 included the favorable effects of the increase in revenues as compared to $201.8 million for 2016, and diluted earnings per share was $3.01the prior year, partially offset by an increase in expenses primarily related to the acquisition of EVO. Consolidated operating income for the year ended December 31, 2017 compared to $1.37 for 2016.2023 also included the effects of a loss on the sale of our consumer business, which was partially offset by a gain on the sale of our gaming business.


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
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Continuing 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.

Emerging Trends


The payments technology industry continues to evolve and 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 orand pursue additional acquisitions and joint ventures in existing markets to increase our scale and improve our competitivenesscompetitiveness.

The industry continues to grow globally as a result of wider merchant acceptance and increased use of credit and debit cards, advances in existing markets by pursuing further acquisitionspayment processing technology and joint ventures.migration to ecommerce, omnichannel and contactless payment solutions. The proliferation of credit and debit cards, as well as other digital payment solutions, has made the acceptance of digital payments a virtual necessity for many businesses, regardless of size, in order to remain competitive. Furthermore, the expanding digitization of the economy and availability and access to financial services increases the demand for cards and digital payment solutions, which in turn drives growth in acceptance and transaction volumes.


The use of digital payment solutions, the need for development of technologies and digital-based solutions andexpansion of ecommerce, omnichannel and contactless payment solutions has accelerated. We believe that the number of electronicdigital payment transactions will continue to grow and that an increasing percentage of these will be facilitated through emerging technologies. As a result, we expect an increasing portion of our future capital investment will be allocated to support the development of new and emerging technologies; however, we do not expect our aggregate capital spending to increase materially from our current level of spending as a result of this.technologies, including technology modernization, innovation and integration through strategic partnerships.


We also believe new markets will continue to develop and expand in areas that have been previously dominated by paper-based transactions. We expect industries such as education, government and healthcare, as well as payment types such as recurring payments and business-to-businessB2B payments, to continue to see transactions migrate to electronic-baseddigital-based solutions. We anticipate that the continued development of new services and technologies, the emergence of new vertical markets and continued expansion of technology-enabled ecommerce and omnichannel solutions, including expanded scale and market reach through new innovative cloud-based capabilities and strategic partnerships, will be a factor in the growth of our business and our revenuerevenues in the future.

Acquisitions

On September 1, 2017, Furthermore, due to its benefits and growth potential, we acquired ACTIVE Network for total purchase considerationanticipate the increased exploration of $1.2 billion, consistinguse of approximately $600 million in cash and 6.4 million shares of our common stock. ACTIVE Network delivers cloud-based enterprise software, including payment technology solutions, to event organizersartificial intelligence in the communities and health and fitness vertical markets. This acquisition aligns with our technology-enabled, software driven strategy and adds an enterprise software business operating in two additional vertical markets that we believe offer attractive growth fundamentals.payments industry.


On April 22, 2016, we merged with Heartland inFor a cash-and-stock transaction for total purchase consideration of $3.9 billion. The merger significantly expanded our small and medium-sized enterprise distribution, merchant base and vertical reach in the United States.

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.

See "Note 2—Acquisitions" in the notes to the accompanying consolidated financial statements for further discussion of thesetrends, uncertainties and other acquisitions.factors that could affect our continuing operating results, see the section entitled "Risk Factors" in Item 1A.


Visa EuropeMacroeconomic Effects and Other Global Conditions


Through certainRisks Related to Macroeconomic Conditions

We are exposed to general economic conditions, including currency fluctuations, inflation, rising interest rates and other conditions that affect the overall level of consumer, business and government spending, which could negatively affect our financial performance.

Certain of our subsidiariesoperations are conducted in Europe, we wereforeign currencies. Consequently, a memberportion of our revenues and shareholder of Visa Europe. On June 21, 2016, Visa acquired allexpenses has been and may continue to be affected by fluctuations in foreign currency exchange rates. A strengthening of the membership interestsU.S. dollar or other significant fluctuations in Visa Europe,foreign currency exchange rates could result in an adverse effect on our future financial results; however, we are unable to predict the extent of the potential effect on our financial results.

We have sought to reduce our interest rate risk through issuance of fixed rate debt in place of variable rate debt, including ours, uponthe effect of interest rate swap hedging arrangements to convert a significant portion of the eligible variable rate borrowings under our revolving credit facility to a fixed rate. However, inflationary pressure or interest rate fluctuations have affected and could continue to affect our business and financial performance as a result of higher costs and/or lower consumer spending. In addition, continued inflation or a rise in interest rates could result in an adverse effect on our future financial results and the recoverability of assets. However, as the future magnitude, duration and effects of these conditions are difficult to predict at this time, we are unable to predict the extent of the potential effect on our financial results.

In addition, failures of several financial institutions in the first quarter of 2023, including Silicon Valley Bank and Credit Suisse, have created some uncertainty in the global financial markets and a greater focus on the potential failure of other banks in the future. Although we do not have exposure to and did not experience losses as a result of these failures, we regularly maintain cash balances with financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit or the equivalent outside the U.S. A disruption in financial markets could impair our banking partners, which could affect our ability to access our cash or cash equivalents, our ability to provide settlement services or our customers' ability to access their existing cash to fulfill their payment obligations to us. The occurrence of these events could negatively affect our business, financial condition and results of operations.
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When adverse macroeconomic conditions arise, we evaluate where we may be able to implement cost-saving measures, including those related to headcount and discretionary expenses. While economic conditions have shown moderate improvement in recent months, a downturn in macroeconomic conditions could have an adverse effect on our financial condition and results of operations.

Other Global Conditions

We continue to evaluate the potential effects on our business from health and social events, including pandemics like the COVID-19 pandemic. Although the COVID-19 pandemic has subsided, it caused an economic slowdown and other macroeconomic effects in the U.S. and other markets in which we recordedoperate. The global macroeconomic effects of the pandemic may persist for an indefinite period.

We also continue to evaluate the potential effects on our business from heightened geopolitical and economic instability or increased difficulty of conducting business in a gaincountry or region due to actual or potential political or military conflict or action, such as those arising from recent global events, which have increased the level of $41.2 million includedeconomic and political uncertainty in interestvarious regions of the world. Although we have not experienced significant exposure or adverse effects on our business and financial results to date, the extent to which these events could affect the global economy and our operations is difficult to predict at this time. However, a significant escalation, expansion of the scope or continuation of the related economic disruptions could have an adverse effect on our business and financial results.

For a further discussion of trends, uncertainties and other incomefactors that could affect our continuing operating results, see the section entitled "Risk Factors" in our consolidated statement of income for the seven months ended December 31, 2016. 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).Item 1A.



Results of Operations


Revenues


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


We provide payment technology 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 generally recognized inas billed to the amount of customer, billing net of interchange fees and payment network fees. We market our services through a variety of salesrelationship-led and technology-enabled distribution channels, including a direct sales force, trade associations, agent and enterprise software providers and referral arrangements with value-added resellers which we generally refer to as "direct distribution."("VARs"). We also sell services through ourto ISOs, payment facilitators and financial institutions. In certain of these arrangements, the ISO, channel, where the ISOfinancial institution or other external partner 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 accompanying consolidated statements of income.


Issuer Solutions. Issuer Solutions segment revenues are primarily derived from long-term processing contracts with financial institutions and other financial services providers. Payment processing services revenues are generated primarily from charges based on the number of accounts on file, transactions and authorizations processed, statements generated and/or mailed, managed services, cards embossed and mailed, and other processing services for cardholder accounts on file. Most of these customer contracts have prescribed annual minimums, penalties for early termination, and service level agreements that may affect contractual fees if specific service levels are not achieved. Issuer Solutions revenues also include loyalty redemption services, professional services, and fees from B2B payments services and other financial service solutions marketed to businesses, including software-as-a-service (“SaaS”) offerings that automate key procurement processes, provide invoice capture, coding and approval, and enable virtual cards and integrated payments options across a variety of key vertical markets.

Consumer Solutions. During the second quarter of 2023, we completed the sale of the consumer portion of our Netspend business, which comprised our former Consumer Solutions segment. For the periods prior to disposition, our Consumer Solutions arrangements included a stand-ready performance obligation to provide account access and facilitate purchase transactions. Revenues principally consisted of fees collected from cardholders and fees generated by cardholder activity in connection with the programs that we managed. Customers were typically charged a fee for each purchase transaction made using their cards, unless the customer was on a monthly or annual service plan, in which case the customer was instead charged
39
a monthly or annual subscription fee, as applicable. Customers were also charged a monthly maintenance fee after a specified period of inactivity. We also charged fees associated with additional services offered in connection with our accounts, including the use of overdraft features, a variety of bill payment options, card replacement, foreign exchange and card-to-card transfers of funds initiated through our call centers.Revenues were recognized net of fees charged by the payment networks for services they provided in processing transactions routed through them.

Operating Expenses


Cost of Service

Service. Cost of service consists primarily of salaries, wages and related expenses paid to operations and technology-related personnel, including those who monitor our transaction processing systems and settlement functions; 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 performingsupporting these functions; amortization of intangible assets andassets; costs to fulfill customer contracts; provisions for operating losses.losses; and, when applicable, integration costs.


Selling, General and Administrative Expenses

Expenses. Selling, general and administrative expenses consist primarily of salaries, wages, commissions and related expenses paid to sales personnel, customer support functions other than those supporting revenue,revenues, administrative employees and management; commissionsshare-based compensation; costs to obtain customer contracts; residuals paid to ISOs,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 expenseadvertising costs; and, advertisingwhen applicable, acquisition and integration costs.


Operating Income and Operating Margin


For the purpose of discussing segment operations, we refer to "operating income," which is calculated by subtracting segment direct expenses from segment revenues. Overhead and shared expenses, including share-based compensation, are not allocated to segment operations; they are reported in the caption "Corporate." Similarly,Impairment of goodwill and gains or losses on business dispositions are also not included in determining segment operating income. In addition, in discussing segment operations we refer to "operating margin" regarding segment operations,margin," which is calculated by dividing segment operating income by segment revenues.



Equity in Income of Equity Method Investments

We have equity method investments, including a 45% interest in China UnionPay Data Co., Ltd., which we account for using the equity method of accounting. Equity in income of equity method investments reflects our proportional share of earnings from these investments.

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Year Ended December 31, 20172023 Compared to Year Ended December 31, 20162022


The following table sets forth key selected financial data for the yearyears ended December 31, 20172023 and 2016,2022, this data as a percentage of total revenues, and the changes between periods in dollars and as a percentage of the prior-period amount. The income statement data for the yearyears ended December 31, 2017 are2023 and 2022 is derived from the auditedaccompanying consolidated financial statements included in Item"Item 8 - Financial Statements and Supplementary Data. The income statement data for the year ended December 31, 2016 are derived from our unaudited consolidated financial statements for that period."

 Year Ended December 31, Year Ended December 31,    
(dollar amounts in thousands)2017 
% of Revenue(1)
 2016 
% of Revenue(1)
 Change % Change
Revenues(2):
           
North America$2,929,522
 73.7 % $2,475,323
 73.4 % $454,199
 18.3 %
Europe767,524
 19.3 % 655,477
 19.4 % 112,047
 17.1 %
Asia-Pacific278,117
 7.0 % 240,176
 7.1 % 37,941
 15.8 %
          Total revenues$3,975,163
 100.0 % $3,370,976
 100.0 % $604,187
 17.9 %
            
Consolidated operating expenses(2):
           
Cost of service$1,928,037
 48.5 % $1,603,532
 47.6 % $324,505
 20.2 %
Selling, general and administrative1,488,258
 37.4 % 1,411,096
 41.9 % 77,162
 5.5 %
          Operating expenses$3,416,295
 85.9 % $3,014,628
 89.4 % $401,667
 13.3 %
            
Operating income (loss)(2):
           
North America$457,009
 11.5 % $350,291
 10.4 % $106,718
 30.5 %
Europe272,769
 6.9 % 232,882
 6.9 % 39,887
 17.1 %
Asia-Pacific81,273
 2.0 % 58,709
 1.7 % 22,564
 38.4 %
Corporate(3)
(252,183) (6.3)% (285,534) (8.5)% 33,351
 (11.7)%
          Operating income$558,868
 14.1 % $356,348
 10.6 % $202,520
 56.8 %
            
Operating margin:           
North America15.6%   14.2%   1.4%  
Europe35.5%   35.5%   —%  
Asia-Pacific29.2%   24.4%   4.8%  
Year Ended December 31,Year Ended December 31,
(dollar amounts in thousands)2023
% of Revenue(1)
2022
% of Revenue(1)
Change% Change
Revenues(2):
Merchant Solutions$7,151,79374.1 %$6,204,91769.1 %$946,87615.3 %
Issuer Solutions2,398,87024.8 %2,245,62325.0 %153,2476.8 %
Consumer Solutions182,7401.9 %620,4826.9 %(437,742)(70.5)%
Intersegment eliminations(78,984)(0.8)%(95,507)(1.1)%16,523(17.3)%
          Consolidated revenues$9,654,419100.0 %$8,975,515100.0 %$678,9047.6 %
Consolidated operating expenses(2):
Cost of service$3,727,52138.6 %$3,778,61742.1 %$(51,096)(1.4)%
Selling, general and administrative4,073,76842.2 %3,524,57839.3 %549,19015.6 %
Impairment of goodwill(3)
—— %833,0759.3 %(833,075)NM
Net loss on business dispositions136,7441.4 %199,0942.2 %(62,350)(31.3)%
          Operating expenses$7,938,03382.2 %$8,335,36492.9 %$(397,331)(4.8)%
Operating income (loss)(2):
Merchant Solutions$2,345,25524.3 %$2,040,25522.7 %$305,00014.9 %
Issuer Solutions409,8074.2 %356,2154.0 %53,59215.0 %
Consumer Solutions(3,908)— %53,5940.6 %(57,502)(107.3)%
Corporate(898,024)(9.3)%(777,744)(8.7)%(120,280)15.5 %
Impairment of goodwill(3)
—— %(833,075)(9.3)%833,075NM
Net loss on business dispositions(136,744)(1.4)%(199,094)(2.2)%62,350(31.3)%
          Operating income$1,716,38617.8 %$640,1517.1 %$1,076,235168.1 %
Operating margin(2):
Merchant Solutions32.8 %32.9 %(0.1)%
Issuer Solutions17.1 %15.9 %1.2 %
Consumer Solutions(2.1)%8.6 %(10.7)%


NM = Not meaningful

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


(2) Revenues, consolidated operating expenses, operating income and operating margin reflect the effecteffects of acquired businesses from the respective acquisition dates and the effects of acquisition. Fordivested businesses through the respective disposal dates. See “Note 2—Acquisitions” and “Note 3—Business Dispositions” for further discussion, see "Note 2—Acquisitions" in the notes to the accompanying consolidated financial statements.discussion.


(3) During the years ended December 31, 2017 and 2016, operating loss for CorporateOperating income included acquisition and integration expenses of $94.6$341.9 million and $142.1$259.2 million for the years ended December 31, 2023 and 2022, respectively, which were primarily included within Corporate expenses. For the years ended December 31, 2023 and 2022, operating loss for Corporate also included $18.5 million and $47.1 million, respectively, which are included primarily in selling, general and administrative expenses in the consolidated statements of income.other charges related to facilities exit activities.


Revenues

(3)For the year ended December 31, 2017, revenues increased by $604.22022, consolidated operating income included an $833.1 million or 17.9%, compared to the prior year, to $3,975.2 million, reflecting growth in each of our operating segments.

North America Segment. For the year ended December 31, 2017, revenues from our North America segment increased by $454.2 million, or 18.3%, compared to the prior year, to $2,929.5 million primarily duegoodwill impairment charge related to our merger with Heartland, the resultsformer Business and Consumer Solutions reporting unit. See “Note 6—Goodwill and Other Intangible Assets” for further discussion.

41

Revenues
approximately eight months during the year ended December 31, 2016.

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

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

Operating Expenses

Cost of Service. For the year ended December 31, 2017, cost of service increased by $324.5 million, or 20.2%, compared to the prior year, to $1,928.0 million. As a percentage of revenues, cost of service increased to 48.5% for the year ended December 31, 2017 from 47.6%2023 increased by 7.6% to $9,654.4 million, compared to $8,975.5 million for the prior year. These increases were driven primarily by an increase in the variable costs associated with our revenue growth, including the incremental expenses associated with acquired businesses, as well as additional intangible asset amortization of $78.6 million.

Selling, General and Administrative Expenses. For the year ended December 31, 2017, selling, general and administrative expenses increased by $77.2 million, or 5.5%, compared to the prior year, to $1,488.3 million. The increase in selling, general and administrative expensesrevenues was primarily due to additional costs to supportan increase in transaction volumes, including from the growth ofEVO business acquired in 2023.

Merchant Solutions Segment. Revenues from our business, including incremental costs associated with acquired businesses. As a percentage of revenues, selling, general and administrative expenses decreased to 37.4%Merchant Solutions segment for the year ended December 31, 2017 from 41.9%2023 increased by 15.3% to $7,151.8 million, compared to $6,204.9 million for the prior year. The decreaseincrease in selling,revenues was primarily due to an increase in transaction volumes, including from the EVO business, and growth in subscription and software revenue.

Issuer Solutions Segment. Revenues from our Issuer Solutions segment for the year ended December 31, 2023 increased by 6.8% to $2,398.9 million, compared to $2,245.6 million for the prior year. The increase in revenues was primarily due to an increase in transaction volumes.

Operating Expenses

Cost of Service. Cost of service for the year ended December 31, 2023 was $3,727.5 million, compared to $3,778.6 million for the prior year. Cost of service as a percentage of revenues decreased to 38.6% for the year ended December 31, 2023, compared to 42.1% for the prior year. Compared to the prior year, cost of service for the year ended December 31, 2023 decreased primarily due to continued prudent expense management and inclusion of costs related to the divested businesses for only a portion of the current year. These favorable effects were partially offset by the inclusion of costs for the EVO business, including the related amortization of acquired intangibles. Cost of service included amortization of acquired intangibles of $1,318.5 million and $1,263.0 million for the years ended December 31, 2023 and 2022, respectively.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year ended December 31, 2023 increased by 15.6% to $4,073.8 million, compared to $3,524.6 million for the prior year. Selling, general and administrative expenses as a percentage of revenues was due primarily 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.

Operating Income and Operating Margin

North America Segment. Operating income in our North America segment increased by 30.5% to $457.0 million42.2% for the year ended December 31, 20172023, compared to the prior year and operating margin increased by 1.4 percentage points. The increase in operating income was primarily due to revenue growth in our U.S. business, which during the year ended December 31, 2017 was partially offset by additional intangible asset amortization associated with acquired businesses. The increase in operating margin during the year ended December 31, 2017 was primarily due to revenue growth and a decrease in Heartland customer-related intangible asset amortization, which is calculated using an accelerated method.

Europe Segment. Operating income in our Europe segment increased by 17.1% to $272.8 million39.3% for the year ended December 31, 2017 compared to the prior year, while operating margin remained equal to the prior year. The increase in operating income was primarily due to revenue growth.

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

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

Other Income/Expense, Net

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.

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

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

Income Tax Benefit (Provision)

We reported an income tax benefit of $101.4 million for the year ended December 31, 2017, reflecting the effect of a provisional net income tax benefit of $158.7 million recorded in connection with the 2017 U.S. Tax Act. Our effective tax rate for the year ended December 31, 2017 was a benefit of 25.8%, which differs from the federal U.S. statutory rate and the effective income tax rate for the year ended December 31, 2016 primarily due to the net tax benefit we recorded in connection with the 2017 U.S. Tax Act. See "Note 9—Income Tax" in the notes to the accompanying consolidated financial statements for more discussion about the effects of the 2017 U.S. Tax Act on our accounting for income taxes for the year ended December 31, 2017.

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


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

The following table sets forth key selected financial data for the seven months ended December 31, 2016 and 2015, this data as a percentage of total revenues, and the changes between periods in dollars and as a percentage of the prior-period amount. The income statement data for the seven months ended December 31, 2016 are derived from the audited consolidated financial statements included in Item 8 - Financial Statements and Supplementary Data. The income statement data for the seven months ended December 31, 2015 are derived from our unaudited consolidated financial statements for that period.
 Seven Months Ended December 31, Seven Months Ended December 31,    
(dollar amounts in thousands)2016 
% of Revenue(1)
 2015 
% of Revenue(1)
 Change % Change
Revenues(2):
           
North America$1,650,616
 74.9% $1,227,916
 71.0% $422,700
 34.4 %
Europe403,823
 18.3% 380,246
 22.0% 23,577
 6.2 %
Asia-Pacific148,457
 6.8% 121,908
 7.0% 26,549
 21.8 %
          Total revenues$2,202,896
 100.0% $1,730,070
 100.0% $472,826
 27.3 %
            
Consolidated operating expenses(2):
           
Cost of service$1,094,593
 49.7% $638,700
 36.9% $455,893
 71.4 %
Selling, general and administrative870,352
 39.5% 784,823
 45.4% 85,529
 10.9 %
          Operating expenses$1,964,945
 89.2% $1,423,523
 82.3% $541,422
 38.0 %
            
Operating income (loss)(2):
           
North America$233,850
   $191,185
   $42,665
 22.3 %
Europe145,767
   157,722
   (11,955) (7.6)%
Asia-Pacific37,530
   29,564
   7,966
 26.9 %
Corporate(3)
(179,196)   (71,924)   (107,272) 149.1 %
          Operating income$237,951
 10.8% $306,547
 17.7% $(68,596) (22.4)%
            
Operating margin:           
North America14.2%   15.6%   (1.4)% 

Europe36.1%   41.5%   (5.4)% 

Asia-Pacific25.3%   24.3%   1.0 % 


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

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

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

Revenues

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


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

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

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

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

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by 10.9% to $870.4 million for the seven months ended December 31, 2016 compared to the prior-year period. As a percentage of revenues, selling, general and administrative expenses decreased to 39.5% for the seven months ended December 31, 2016 compared to 45.4% in the prior year. The increase in selling, general and administrative expenses was primarily due to additionalan increase in variable selling and other costs related to support the growthincrease in revenues and the inclusion of costs for the EVO business. In addition, the increase was driven by the effects of higher acquisition and integration expenses, related primarily to the acquisition of EVO, and higher compensation and benefits costs, including an increase in share-based compensation expense for retirement eligible executives and our business, including incremental expenses associated with the integration of Heartland. The decrease in selling,previous CEO, whose departure was announced on May 1, 2023.

Selling, general and administrative expenses as a percentageincluded acquisition and integration expenses of revenues$341.4 million and $258.0 million for the years ended December 31, 2023 and 2022, respectively. Share-based compensation expense was $209.0 million and $163.3 million for the years ended December 31, 2023 and 2022, respectively.

Corporate. Corporate expenses for the year ended December 31, 2023 were $898.0 million, compared to $777.7 million for the prior year. The increase for the year ended December 31, 2023 was primarily due to synergies achievedthe increase in generalacquisition and administrativeintegration and compensation expenses, frompartially offset by lower charges related to facilities exit activities in the merger with Heartland.current year.


Operating Income and Operating Margin

North America Segment. OperatingConsolidated operating income in our North America segment increased by 22.3%for the year ended December 31, 2023 was $1,716.4 million, compared to $233.9$640.2 million for the seven months ended December 31, 2016 compared to the prior-year period. The increase in operating income was primarily due to revenue growth in our U.S. business, partially offset by expenses associated with the integration of Heartland and additional intangible asset amortization associated with the merger. Operating margin decreased by 1.4 percentage points for the seven months ended December 31, 2016 compared to the prior-year period primarily as a result of the incremental merger-related expenses.

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

Asia-Pacific Segment. Operating income in our Asia segment increased by 26.9% to $37.5 million for the seven monthsyear ended December 31, 20162023 compared to the prior-year period. Operating margin increased 1.0 percentage pointprior year included the favorable effects of the increase in revenues, since certain fixed costs do not vary with revenues, prudent expense management and lower charges related to facilities exit activities as described above. These effects were partially offset by higher acquisition and integration expenses, amortization of acquired intangibles and compensation expenses as described above. Consolidated operating income for the seven monthsyear ended December 31, 2016 compared to2023 also included the prior-year period. The increases ineffects of a $106.9 million gain on the sale of our gaming business and a $243.6 million loss on the sale of our consumer business.

Consolidated operating income and operating margin were primarily due to organic revenue growth.

Corporate. Corporate expenses increased by $107.3 million for the seven monthsyear ended December 31, 20162022 included the unfavorable effects of an $833.1 million goodwill impairment charge related to our former Business and Consumer Solutions reporting unit and a $127.2 million loss related to the sale of our Merchant Solutions business in Russia. We also recognized charges within loss on business dispositions in our consolidated statement of income of $71.9 million during the year ended December 31, 2022 to reduce the consumer business disposal group to estimated fair value less costs to sell.

42
Segment Operating Income and Operating Margin

In our Merchant Solutions segment, operating income and operating margin for the year ended December 31, 2023 increased compared to the prior-year period,prior year primarily due to the mergerfavorable effect of the increase in revenues, since certain fixed costs do not vary with Heartlandrevenues, and continued expense management. These favorable effects were partially offset by incremental expenses related to continued investment in products, innovation and our technology environments. In addition, the inclusion of $91.6 million associatedEVO had an unfavorable effect on the Merchant Solutions operating margin for the year ended December 31, 2023 as compared to the prior year.

In our Issuer Solutions segment, operating income and operating margin for the year ended December 31, 2023 increased compared to the prior year primarily due to the favorable effect of the increase in revenues, since certain fixed costs do not vary with its integration.revenues, and continued expense management.


Other Income/Expense, Net


Interest and other income for the seven monthsyear ended December 31, 20162023 increased to $113.7 million, compared to $33.6 million for the prior year, primarily due to interest income associated with the new seller financing notes receivable of $58.3 million recognized during the year ended December 31, 2023. Other income for the year ended December 31, 2022 included a gain of $41.2$13.2 million recordedrecognized in connection with the salerelease and conversion of a portion of our membership interests in Visa Europe.

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

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

Income Tax Provision

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

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

The following table sets forth key selected financial data for the years ended May 31, 2016 and 2015, this data as a percentage of total revenues, and the changes between years in dollars and as a percentage of the prior year amount.
(dollar amounts in thousands)2016 
% of Revenue(1)
 2015 
% of Revenue(1)
 Change % Change
Revenues(2):
           
North America$2,052,623
 70.8% $1,968,890
 71.0% $83,733
 4.3 %
Europe631,900
 21.8% 615,966
 22.2% 15,934
 2.6 %
Asia-Pacific213,627
 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 %
            
Consolidated operating expenses(2):
           
Cost of service$1,147,639
 39.6% $1,022,107
 36.8% $125,532
 12.3 %
Selling, general and administrative1,325,567
 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 %
            
Operating income (loss)(2):
           
North America$307,626
   $293,139
   $14,487
 4.9 %
Europe244,837
   240,014
   4,823
 2.0 %
Asia-Pacific50,743
   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)%
            
Operating margin:           
North America15.0%   14.9%
  0.1 %  
Europe38.7%   39.0%
  (0.3)%  
Asia-Pacific23.8%   21.0%   2.8 %  

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

(2) Revenues, operating expenses, operating income and operating margin reflect the effect of acquired businesses from the respective dates of acquisition. Notably, on April 22, 2016, we merged with Heartland as further discussed inconvertible preferred shares. See "Note 2—Acquisitions"8—Other Assets" in the notes to the accompanying consolidated financial statements.statements for further discussion of this transaction.

(3) During the year ended May 31, 2016, operating loss for Corporate included costs of $51.3 million incurred in connection with our merger with Heartland. These merger-related costs are included in selling, general and administrative expenses in the consolidated statements of income.


Revenues

For the year ended May 31, 2016, revenues increased by 4.5% to $2,898.2 million compared to the prior year, reflecting growth in each of our operating segments, in spite of the unfavorable effect of fluctuations in foreign currency exchange rates. For the year ended May 31, 2016, currency exchange rate fluctuations reduced our revenues by $117.0 million compared to the prior year, calculated by converting revenues for the year ended May 31, 2016 in local currencies using exchange rates for the year ended May 31, 2015.

North America Segment. For the year ended May 31, 2016, revenues from our North America segment increased by $83.7 million, or 4.3%, compared to the prior year to $2,052.6 million. The increase was due to growth of $124.4 million, primarily in our U.S. business, partially offset by the unfavorable effect of currency fluctuations in Canada of $40.7 million. The growth in revenues was primarily due to additional revenues from our merger with Heartland and the acquisition of the FIS Gaming Business as well as organic growth in our direct distribution business.

Europe Segment. For the year ended May 31, 2016, revenues from our Europe segment increased by $15.9 million, or 2.6%, compared to the prior year to $631.9 million. The increase reflects revenue growth in local currencies, generally due to an increase in the number of card transactions and volume growth in the United Kingdom and Spain, partially offset by the unfavorable effect of currency fluctuations in Europe of $62.6 million.

Asia-Pacific Segment. For the year ended May 31, 2016, revenues from our Asia-Pacific segment increased by $24.8 million, or 13.1%, compared to the prior year to $213.6 million. The increase was primarily due to additional revenues of $29.6 million associated with recent acquisitions and organic growth, partially offset by the unfavorable effect of currency fluctuations.
Operating Expenses

Cost of Service. Cost of service increased by 12.3% to $1,147.6 million during the year ended May 31, 2016 compared to the prior year. As a percentage of revenues, cost of service increased to 39.6% for the year ended May 31, 2016 compared to 36.8% in the prior year, driven primarily by an increase in the variable costs associated with our revenue growth. The increase in cost of service as a percentage of revenues is due to additional intangible asset amortization of $41.1 million related to acquisitions.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by 2.4% to $1,325.6 million during the year ended May 31, 2016 compared to the prior year. As a percentage of revenues, selling, general and administrative expenses decreased to 45.7% for the year ended May 31, 2016 from 46.7% in the prior year. The increase in selling, general and administrative expenses was due to additional costs to support the growth of our business, including expenses of $51.3 million associated with our merger with Heartland.

Operating Income and Operating Margin
North America Segment. Operating income in our North America segment increased by 4.9% to $307.6 million for the year ended May 31, 2016 compared to the prior year despite the effect of unfavorable currency fluctuations of $20.5 million. The operating margin was 15.0% and 14.9% for the years ended May 31, 2016 and 2015, respectively. The increase in operating income was primarily due to revenue growth in our U.S. business, partially offset by additional intangible asset amortization related to our acquisitions and the effect of unfavorable currency fluctuations.

Europe Segment. Operating income in our Europe segment increased by 2.0% to $244.8 million for the year ended May 31, 2016 compared to the prior year despite the effect of unfavorable currency fluctuations of $19.7 million. The operating margin was 38.7% and 39.0% for the years ended May 31, 2016 and 2015, respectively. The increase in operating income was primarily driven by revenue growth, partially offset by the effect of unfavorable currency fluctuations.

Asia-Pacific Segment. Operating income in our Asia segment increased by 27.8% to $50.7 million for the year ended May 31, 2016 compared to the prior year despite the effect of unfavorable currency fluctuations in the Asia-Pacific region of $3.4 million. The operating margin was 23.8% and 21.0% for the years ended May 31, 2016 and 2015, respectively. The increases in operating income and operating margin were due to incremental revenues from the acquisition and subsequent organic growth of Ezidebit, which generates a higher operating margin than our legacy business in the region.

Corporate. Corporate expenses increased to $178.3 million for the year ended May 31, 2016 compared to the prior year due primarily to expenses of $51.3 million associated with our merger with Heartland.

Other Income/Expense, Net


Interest and other expense increased by $24.9 million for the year ended MayDecember 31, 20162023 increased to $660.2 million, compared to $449.4 million for the prior year, primarily due tonearly equally affected by an increase in our average outstanding borrowings to fund our merger with Heartland.

Income Taxes Provision

The provisionand higher average interest rates on outstanding borrowings. In addition, during the year ended December 31, 2023, we incurred a noncash charge of $15.2 million for income taxes decreased by $37.3 millionthe estimated future credit losses on the new seller financing notes receivable. Interest expense for the year ended MayDecember 31, 20162022 included fees and charges incurred in connection with financing activities that occurred during 2022, including $17.3 million related to commitment fees associated with bridge financing for the EVO acquisition.

Income Tax Expense

Our effective income tax rates for the years ended December 31, 2023 and 2022 were 17.9% and 74.3%, respectively. The effective tax rate for the year ended December 31, 2023 reflects recognition of a gain on the dispositions of our consumer and gaming businesses for income tax reporting purposes, while an aggregate net loss on the dispositions was recognized for financial reporting purposes. This was partially offset by the favorable effect on the rate of foreign interest income not subject to tax, tax credits, the foreign-derived intangible income deduction, and the realization of built in losses on corporate restructurings.

The effective tax rate for the year ended December 31, 2022 included the unfavorable effects of the goodwill impairment charge and loss on the sale of our Merchant Solutions business in Russia, for which no tax benefit was recognized, partially offset by the remeasurement of state deferred taxes to reflect enacted tax law changes.

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act into law, which, among other things, implemented a 15% corporate alternative minimum tax based on global adjusted financial statement income and a 1% excise tax on share repurchases effective beginning January 1, 2023. We do not expect the corporate alternative minimum tax will have a material effect on our reported results, cash flows or financial position. During the year ended December 31, 2023, we reflected excise tax of $3.9 million within equity as part of the cost of common stock repurchased, net of share issuances, during the period.

In December 2022, the EU Member States formally adopted the Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development Pillar Two Framework. The EU effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive. A significant number of other countries are expected to also implement similar legislation with varying effective dates in the future. We are continuing to evaluate the potential effect on future periods of the Pillar Two Framework, pending legislative adoption by additional individual countries.

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Equity in Income of Equity Method Investments

Equity in income of equity method investments decreased to $67.9 million compared to $85.7 million for the prior year. Equity in income of equity method investments for the year ended December 31, 2022 included $18.8 million in gains on the sale of certain equity method investments that did not recur in the current year.

Net Income Attributable to Global Payments

Net income attributable to Global Payments was $986.2 million compared to $111.5 million for the prior year, duereflecting the changes noted above.

Diluted Earnings per Share

Diluted earnings per share was $3.77 compared to $0.40 for the prior year. Diluted earnings per share for the year ended December 31, 2023 reflects the changes in net income and a decrease in income before income taxes, largely due to expensesthe weighted-average number of $51.3 million in the U.S. associated with our merger with Heartland, and a lower effective income tax rate. The decrease in our effective income tax rate from 25.9% to 19.6% during the year ended May 31, 2016 was primarily due to a higher percentage of the earnings before income taxes derived from foreign operations with lower income tax rates (primarily as a result of the merger-related expenses incurred in the United States) as well as the elimination of certain net deferred tax liabilities associated with undistributed earnings from Canada as a result of management’s plans to reinvest these earnings outside of the United States indefinitely.shares outstanding.


Liquidity and Capital Resources


We have numerous sources of capital, including cash on hand and cash flows generated from operations as well as various sources of financing. In the ordinary course of our business, a significant portion of our liquidity comes from operating cash flows. Cash flow from operations is usedflows and borrowings, including the capacity under our revolving credit facility.

Our capital allocation priorities are to make planned capital investments in our business, to pursue acquisitions that meet our corporate objectives, to pay dividends, to pay downprincipal and interest on our outstanding debt and to repurchase shares of our common stock. AccumulatedOur significant contractual cash balancesrequirements also include ongoing payments for lease liabilities and contractual obligations related to service arrangements with suppliers for fixed or minimum amounts, which primarily relate to software, technology infrastructure and related services. Commitments under our borrowing arrangements are investedfurther described in high-quality, marketable short-term instruments."Note 9—Long-Term Debt and Lines of Credit" in the notes to the accompanying consolidated financial statements and below under "Long-Term Debt and Lines of Credit." For additional information regarding our other cash commitments and contractual obligations, see "Note 7—Leases" and “Note 19—Commitments and Contingencies” in the notes to the accompanying consolidated financial statements.


Our capital plan objectives are to support our operational needs and strategic plan for long-term growth while maintaining a lowoptimizing our cost of capital. Wecapital and financial position. To supplement cash from operating activities, we use a combination of bank financing, such as borrowings under our Credit Facilitycredit facilities, commercial paper program and senior note issuances, for general corporate purposes and to fund acquisitions. In addition,Our commercial paper program, established during the first quarter of 2023, provides a cost effective means of addressing our short-term liquidity needs and is backstopped by our revolving credit agreement, in that the amount of commercial paper notes outstanding cannot exceed the undrawn portion of our revolving credit facility. Finally, specialized lines of credit are also used in certain of our markets to fund merchant settlement prior to receipt of funds from the card network. networks.

We regularly evaluate our liquidity and capital position relative to cash requirements, and we may elect to raise additional funds in the future either through the issuance of debt or equity or otherwise.by other means. Accumulated cash balances are invested in high-quality, marketable short-term instruments. We believe that our current and projected sources of liquidity will be sufficient to meet our projected liquidity requirements associated with our operations for the near and long term.


At December 31, 2017,2023, we had cash and cash equivalents totaling $1,335.9$2,088.9 million. Of this amount, we consider $658.4considered $703.3 million to be available for general purposes, of which $64.3 million is undistributed foreign earnings considered to be indefinitely reinvested outside the United States. The available cash of $703.3 million does not include the following: (i) settlement-related cash balances, (ii) funds held as collateral for merchant losses ("Merchant Reserves") and (iii) funds held for customers. Settlement-related cash balances represent funds that we hold when the incoming amount from the card networks precedes the funding obligation to the merchant. Settlement-related cash balances are not restricted;restricted in their use; however, these funds are generally paid out in satisfaction of settlement processing obligations the following day. Merchant Reserves serve as collateral to minimize contingent liabilities associated with any losses that may occur under the merchantmerchant's agreement. While this cash is not restricted in its use, we believe that designating this cash to collateralizeas a Merchant ReservesReserve strengthens our fiduciary standing with our member sponsors and is in accordance with the guidelines set by the card networks.sponsors. Funds held for customers, and the corresponding liability that we recordwhich are not restricted in "customer deposits"their use, include amounts collected priorbefore the corresponding obligation is due to remittance on our customers' behalf.

Our available cash balancebe settled to or at December 31, 2017 included $595.1 million of cash held by foreign subsidiaries whose earnings were considered indefinitely reinvested outside the United States prior to the enactment of the 2017 U.S. Tax Act. These cash balances reflected our capital investments in these subsidiaries and the accumulation of cash flows generated by their operations, net of cash flows used to service debt locally and fund acquisitions outside of the United States. Under the 2017 U.S. Tax Act, a company's foreign earnings accumulated under legacy tax laws are deemed repatriated, and the 2017 U.S. Tax Act generally eliminates U.S. federal income taxes on dividends from foreign subsidiaries. As a result, our provisional position is that we now only consider approximately $60 milliondirection of our undistributed foreign earnings to be indefinitely reinvested outside the United Statescustomers.

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We also had restricted cash of $167.2 million as of December 31, 2017. In February 2018, we repatriated approximately $300 million from certain of our foreign subsidiaries2023, representing amounts deposited by customers for prepaid card transactions and used the cashfunds held as a liquidity reserve. These balances are subject to reduce outstanding borrowings under our Revolving Credit Facility.local regulatory restrictions requiring appropriate segregation and restriction in their use.



Operating activities provided net cash of $512.4$2,248.7 million duringand $2,244.0 million for the yearyears ended December 31, 2017,2023 and 2022, respectively, which was primarily attributable toreflect net income of $494.1 million adjusted for non-cashnoncash items, including depreciation, amortization and amortization expense of $451.2 million, partially offset by a decreasethe provision for credit losses, charges associated with the net loss on business dispositions and facility exit charges and changes in working capital of $358.9 million.

Fluctuationsoperating assets and liabilities. The increase in working capitalcash flows from operating activities from the prior year was due to fluctuations in operating results and related assets and liabilities that are affected primarily by timing of month-end and transaction volume, especiallyincluding changes in settlement processing assets and liabilities. Changes in settlement processing assetsobligations and liabilities decreased operating cash flows by $361.7 millionaccounts payable and $78.8 million during the years ended December 31, 2017 and May 31, 2015, respectively. Changes in settlement processing assets and liabilities increased operating cash flows by $35.6 million during the 2016 fiscal transition period and $218.1 million during the year ended May 31, 2016.other liability balances.

Operating activities provided net cash of $515.8 million during the 2016 fiscal transition period and $592.9 million and $429.9 million, respectively, during the years ended May 31, 2016 and 2015. The increase in cash flows provided by operating activities since 2015, during which time we completed the acquisitions of Heartland and ACTIVE Network, among others, was primarily due to our revenue growth and corresponding increase in operating income. The increase in operating cash flows from our growing business during this period was partially offset by investments made to integrate the acquired businesses. During the year ended December 31, 2017, the 2016 fiscal transition period and the year ended May 31, 2016, we incurred $94.6 million, $91.6 million and $51.3 million, respectively, of acquisition and integration expenses primarily related to Heartland. In addition, during that same period of time, our interest expense increased substantially as a result of long-term debt we have issued, primarily to help fund these acquisitions. During the year ended December 31, 2017, the 2016 fiscal transition period and the year ended May 31, 2016, cash paid for interest expense was $154.2 million, $93.6 million and $58.7 million, respectively.


We used net cash in investing activities of $736.0 million, $86.7$4,361.1 million and $2,127.2$675.5 million during the yearyears ended December 31, 2017, the 2016 fiscal transition period2023 and the year ended May 31, 2016,2022, respectively. Cash used for investing activities primarily represents primarily cash used to fund business acquisitions, net of cash and restricted cash acquired, and capital expenditures. During the yearyears ended December 31, 2017,2023 and 2022, we used cash of $599.5$4,225.6 million to acquire ACTIVE Network, and during the year ended May 31, 2016, we used cash of $2.0 billion to acquire Heartland. In addition to cash, we have used our common stock to fund a portion of the consideration$68.8 million, respectively, for both the Heartland and ACTIVE Network acquisitions. See "Note 2—Acquisitions" in the notes to the accompanying consolidated financial statements for further discussion of our business acquisitions and how we funded those acquired businesses.

We made capital expenditures of $181.9 million, $88.9$658.1 million and $91.6$615.7 million to purchase property and equipment (including internal-use capitalized software development projects) during the yearyears ended December 31, 2017, the 2016 fiscal transition period2023 and the year ended May 31, 2016,2022, respectively. These investments include software and hardware to support the development of new technologies, continuedinfrastructure to support our growing business and the consolidation and enhancement of our operating platformsplatforms. These investments also include new product development and infrastructureinnovation to supportfurther enhance and differentiate our growing business.

Duringsuite of technology and cloud-based solutions available to customers. We expect to continue to make significant capital investments in the business, and we anticipate capital expenditures to grow at a similar rate as our revenue growth during the year ending December 31, 2024. Additionally, investing cash flows for the year ended December 31, 2017, we sold our operating facility in Jeffersonville, Indiana for $37.5 million. In addition, during2023 includes the 2016 fiscal transition period we exchanged allnet effect on cash from the sale of our membership interestconsumer and gaming businesses, cash received from the sale of investments in Visa Europecommon shares of $42.1 million and the issuance and subsequent repayment of a $50.0 million secured revolving credit facility available from the date of the sale to the purchasers of the consumer business. Investing cash flows for the year ended December 31, 2022 includes the net effect on cash from the sale of our Merchant Solutions business in Russia and cash received from the sale of investments in Visa for up-front consideration, including cashcommon shares of approximately $37.7$13.2 million and equity method investments of $19.9 million.


Financing activities include borrowings and repayments made under our Credit Facilityvarious debt arrangements, as well as borrowings and repayments made under specialized lines of credit to fund daily settlement activities. Our borrowing arrangements are further described in "Note 9—Long-Term Debt and Lines of Credit" in the notes to the accompanying consolidated financial statements and below under "Long-Term Debt and Lines of Credit." Financing activities also include cash flows associated with common stock repurchase programs and share-based compensation programs, as well as cash distributions made to our shareholders and cash contributions from and distributions to noncontrolling interests and our shareholders. Cash flows from financinginterests. Financing activities provided net cash of $352.3$2,141.1 million and $2.0 billion during the yearsyear ended December 31, 20172023, and May 31, 2016, respectively. During the 2016 fiscal transition period, we used net cash in financing activities of $278.8 million.$1,376.7 million during the year ended December 31, 2022.


Proceeds from long-term debt were $2.0 billion, $1.3 billion$10,336.9 million and $6.1 billion$9,812.3 million for the yearyears ended December 31, 2017, the 2016 fiscal transition period2023 and the year ended May 31, 2016,2022, respectively. Repayments of long-term debt were $1.8 billion, $1.4 billion$9,099.9 million and $3.7 billion$7,895.1 million for the yearyears ended December 31, 2017, the 2016 fiscal transition period2023 and the year ended May 31, 2016,2022, respectively. Proceeds from and repayments of long-term debt includeconsist of borrowings and repayments that we make with available cash, from time-to-time, under our Revolving Credit Facility. Proceeds from long-term debt also include incremental borrowings we have made to fund a portion of the consideration paid for acquired businesses and the effect of various refinancing activities to optimize our borrowing programs. Repayments of long-term debt include repayments that we make from time-to-time under our Revolving Credit Facilityrevolving credit facility, as well as scheduled principal repayments made underwe make on our term loans. Debt issuance costs reflect the amount we paid to complete theseloans, finance leases and other vendor financing activities.arrangements. During the year ended December 31, 2023, we also had net borrowings of $1,371.6 million under our commercial paper program. See section "Long-Term Debt and Lines of Credit" below for further discussion of our recent debt transactions.


May 31, 2016, we added incremental borrowings to the credit facility then in place of $1.8 billion to fund, in part, the cash consideration and merger-related costs associated with Heartland and to repay certain portions of Heartland's indebtedness.

Because we often receive funding from the payment networks after we fund our merchants, we have specialized lines of credit in various markets where we do business to fund settlement. Activity under our settlement lines of credit is affected primarily by timing of month-end and transaction volume. During the yearyears ended December 31, 20172023 and the 2016 fiscal transition period,2022, we had net proceeds from settlement lines of credit of $221.5 million and $20.6 million. During the year ended May 31, 2016, we had net repaymentsborrowings of settlement lines of credit of $206.0 million.$220.7 million and $285.6 million, respectively.


We make repurchases ofrepurchase our common stock mainly through the use of open market purchasesrepurchase plans and, at times, through accelerated share repurchase ("ASR") programs. During the yearyears ended December 31, 2017, the 2016 fiscal transition period2023 and the year ended May 31, 2016,2022, we invested $34.8 million, $178.2used $418.3 million and $136.0$2,921.3 million, respectively, to repurchase shares of our common stock. On February 6, 2018,As of December 31, 2023, the board increased its authorizationremaining amount available under our share repurchase program was $1,090.2 million.

We paid dividends to repurchase shares of our common stockshareholders in the amounts of $260.4 million and $274.0 million during the years ended December 31, 2023 and 2022, respectively. We made distributions to $600 million.noncontrolling interests in the amount of $33.0 million and $23.0 million during the years ended December 31, 2023 and 2022, respectively.


We believe that our current level
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Long-Term Debt and Lines of Credit


Senior Notes

We have $10.8 billion in aggregate principal amount of senior unsecured notes, which mature at various dates ranging from November 2024 to August 2052. Interest on the senior notes is payable annually or semi-annually at various dates. Each series of the senior notes is redeemable, at our option, in whole or in part, at any time and from time-to-time at the redemption prices set forth in the related indenture.

On March 17, 2023, we issued €800 million aggregate principal amount of 4.875% senior unsecured notes due March 2031 and received net proceeds of €790.6 million, or $843.6 million based on the exchange rate on the issuance date. We issued the senior notes at a discount of $2.8 million, and we incurred debt issuance costs of $7.2 million, including underwriting fees, fees for professional services and registration fees, which were capitalized and reflected as a reduction of the related carrying amount of the notes in our consolidated balance sheet. Interest on the senior unsecured notes is payable annually in arrears on March 17 of each year, commencing March 17, 2024. The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness. The net proceeds from the offering were used for general corporate purposes.

On August 22, 2022, we issued $2.5 billion aggregate principal amount of senior unsecured notes consisting of the following: (i) $500.0 million aggregate principal amount of 4.950% senior notes due August 2027; (ii) $500.0 million aggregate principal amount of 5.300% senior notes due August 2029; (iii) $750.0 million aggregate principal amount of 5.400% senior notes due August 2032; and (iv) $750.0 million aggregate principal amount of 5.950% senior notes due August 2052. We issued the senior notes at a total discount of $5.2 million, and we incurred debt issuance costs of $24.8 million, including underwriting fees, fees for professional services and registration fees, which were capitalized and reflected as a reduction of the related carrying amount of the notes in our consolidated balance sheet. Interest on the senior unsecured notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing February 15, 2023. The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness. The net proceeds from the offering were used to refinance the outstanding indebtedness under our credit facility, to make cash payments and pay transaction fees and expenses in connection with the acquisition of EVO and for general corporate purposes.

On November 22, 2021, we issued $2.0 billion aggregate principal amount of senior unsecured notes consisting of the following: (i) $500.0 million aggregate principal amount of 1.500% senior notes due November 2024; (ii) $750.0 million aggregate principal amount of 2.150% senior notes due January 2027; and (iii) $750.0 million aggregate principal amount of 2.900% senior notes due November 2031. We incurred debt issuance costs of approximately $14.4 million, including underwriting fees, fees for professional services and registration fees, which were capitalized and reflected as a reduction of the related carrying amount of the notes in our consolidated balance sheet. Interest on the senior unsecured notes is payable semi-annually in arrears on May 15 and November 15 for the 2024 and 2031 notes and January 15 and July 15 on the 2027 note, commencing May 15, 2022 for the 2024 note and the 2031 note and July 15, 2022 for the 2027 note. The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness. We used the net proceeds from the offering to repay the outstanding indebtedness under our prior credit facility and for general corporate purposes.

On February 26, 2021, we issued $1.1 billion aggregate principal amount of 1.200% senior unsecured notes due March 2026. We incurred debt issuance costs of approximately $8.6 million, including underwriting fees, fees for professional services and registration fees, which were capitalized and reflected as a reduction of the related carrying amount of the notes in our consolidated balance sheet. Interest on the notes is payable semi-annually in arrears on March 1 and September 1 of each year, commencing September 1, 2021. The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness. We used the net proceeds from this offering to fund the redemption in full of the 3.800% senior unsecured notes due April 2021, to repay a portion of the outstanding indebtedness under our prior credit facility and for general corporate purposes.

We have $1.0 billion in aggregate principal amount of 2.900% senior unsecured notes due May 2030. Interest on the notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing November 15, 2020. The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness. We issued the senior notes at a total discount of $3.3 million and capitalized related debt issuance costs of $8.4 million.

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We have $3.0 billion in aggregate principal amount of senior unsecured notes consisting of the following: (i) $1.0 billion aggregate principal amount of 2.650% senior notes due 2025; (ii) $1.25 billion aggregate principal amount of 3.200% senior notes due 2029; and (iii) $750.0 million aggregate principal amount of 4.150% senior notes due 2049. Interest on the senior notes is payable semi-annually in arrears on each February 15 and August 15, beginning on February 15, 2020. Each series of the senior notes is redeemable, at our option, in whole or in part, at any time and from time-to-time at the redemption prices set forth in the related indenture. We issued the senior notes at a total discount of $6.1 million and capitalized related debt issuance costs of $29.6 million.

In addition, in connection with our merger with Total System Services, Inc. ("TSYS") in September 2019 (the "TSYS Merger"), we assumed $3.0 billion aggregate principal amount of senior unsecured notes of TSYS, consisting of the following: (i) $750.0 million aggregate principal amount of 3.800% senior notes due 2021, which were redeemed in February 2021; (ii) $550.0 million aggregate principal amount of 3.750% senior notes due 2023, which were redeemed in June 2023; (iii) $550.0 million aggregate principal amount of 4.000% senior notes due 2023, which were redeemed in June 2023; (iv) $750 million aggregate principal amount of 4.800% senior notes due 2026; and (v) $450 million aggregate principal amount of 4.450% senior notes due 2028. For the 4.800% senior notes due 2026, interest is payable semi-annually each April 1 and October 1. For the 4.450% senior notes due 2028, interest is payable semi-annually each June 1 and December 1. The difference between the acquisition-date fair value and face value of senior notes assumed in the TSYS Merger is recognized over the terms of the respective notes as a reduction of interest expense. The amortization of this fair value adjustment was $15.7 million and $27.4 million for the years ended December 31, 2023 and 2022, respectively.

Convertible Notes

We have $1.5 billion in aggregate principal amount of 1.000% convertible notes due 2029, which were issued on August 8, 2022 in a private placement pursuant to an investment agreement with Silver Lake Partners. The net proceeds from this offering were approximately $1.44 billion, reflecting an issuance discount of $37.5 million and $20.4 million of debt issuance costs, which were capitalized and reflected as a reduction of the related carrying amount of the convertible notes in our consolidated balance sheet.

Interest on the notes is payable semi-annually in arrears on February 15 and August 15 of each year, beginning on February 15, 2023, to the holders of record on the preceding February 1 and August 1, respectively.

The notes are convertible at the option of the holder at any time after the date that is 18 months after issuance (or earlier, upon the occurrence of certain corporate events) until the scheduled trading day prior to the maturity date. The notes are convertible into cash and shares of our common stock based on a conversion rate of 7.1421 shares of common stock per $1,000 principal amount of the convertible notes (which is equal to a conversion price of approximately $140.01 per share), subject to customary anti-dilution and other adjustments upon the occurrence of certain events. Upon conversion, the principal amount of, and interest due on, the convertible notes are required to be settled in cash and any other amounts may be settled in shares, cash or a combination of shares and cash at our election.

The notes are not redeemable by us. If certain corporate events that constitute a fundamental change (as defined in the indenture governing the notes) occur, any holder of the notes may require that we repurchase all or any portion of their notes for cash at a purchase price of par plus accrued and unpaid interest to, but excluding, the repurchase date. In addition, if certain corporate events that constitute a make-whole fundamental change (as defined in the indenture governing the notes) occur, then the conversion rate will in certain circumstances be increased for a specified period of time. The notes include customary covenants for notes of this type, as well as customary events of default, which may result in the acceleration of the maturity of the convertible notes.

On August 8, 2022, in connection with the issuance of the notes, we entered into privately negotiated capped call transactions with certain financial institutions to cover, subject to customary adjustments, the number of shares of common stock initially underlying the notes. The economic effect of the capped call transactions is to hedge the potential dilutive effect upon conversion of the notes, or offset our cash obligation if the cash settlement option is elected, up to a cap price determined based on a hedging period that commenced on August 9, 2022 and concluded on August 25, 2022. The capped call had an initial strike price of $140.67 per share and a cap price of $229.26 per share. The capped call transactions meet the accounting criteria to be reflected in stockholders’ equity and not accounted for as derivatives. The cost of $302.4 million incurred in connection with the capped call transactions was reflected as a reduction to paid-in-capital in our consolidated balance sheet at December 31, 2022, net of applicable income taxes.

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Revolving Credit Facility

On August 19, 2022, we entered into a revolving credit agreement with Bank of America, N.A., as administrative agent, and a syndicate of financial institutions, as lenders and other agents. The revolving credit agreement provides for an unsubordinated unsecured $5.75 billion revolving credit facility. We capitalized debt issuance costs of $12.3 million in connection with the issuance under the revolving credit facility. The revolving credit facility matures in August 2027. Borrowings under the revolving credit facility may be repaid prior to maturity without premium or penalty, subject to payment of certain customary expenses of lenders and customary notice provisions.

Borrowings under the revolving credit facility are available to be made in US dollars, euros, sterling, Canadian dollars and, subject to certain conditions, certain other currencies at our option. Borrowings under the revolving credit facility will bear interest, at our option, at a rate equal to (i) for Secured Overnight Financing Rate ("SOFR") based currencies or certain alternative currencies, a secured overnight financing rate (subject to a 0.00% floor) plus a 0.10% credit spread adjustment or an alternative currency term rate (subject to a 0.00% floor), as applicable, (ii) for US dollar borrowings, a base rate, (iii) for US dollar borrowings, a daily floating secured overnight financing rate (subject to a 0.00% floor on or after January 1, 2023) plus a 0.10% credit spread adjustment or (iv) for certain alternative currencies, a daily alternative currency rate (subject to a 0.00% floor), in each case, plus an applicable margin. The applicable margin for borrowings under the revolving credit facility will range from 1.125% to 1.875% depending on our credit rating. In addition, we are required to pay a quarterly commitment fee with respect to the unused portion of the revolving credit facility at an applicable rate per annum ranging from 0.125% to 0.300% depending on our credit rating.

We may issue standby letters of credit of up to $250.0 million in the aggregate under the revolving credit facility. Outstanding letters of credit under the revolving credit facility reduce the amount of borrowings available to us. The amounts available to borrow under the revolving credit facility are also determined by a financial leverage covenant. As of December 31, 2023, there were borrowings of $1,570.0 million outstanding under the revolving credit facility with an interest rate of 6.84%, and the total available commitments under the revolving credit facility were $2.8 billion.

Commercial Paper

In January 2023, we established a $2.0 billion commercial paper program under which we may issue senior unsecured commercial paper notes with maturities of up to 397 days from the date of issue. The program is backstopped by our revolving credit agreement, in that the amount of commercial paper notes outstanding cannot exceed the undrawn portion of our revolving credit facility. As such, we could draw on the revolving credit facility to repay commercial paper notes that cannot be rolled over or refinanced with similar debt.

Commercial paper notes are expected to be issued at a discount from par, or they may bear interest, each at commercial paper market rates dictated by market conditions at the time of their issuance. The proceeds from issuances of commercial paper notes will be used primarily for general corporate purposes but may also be used for acquisitions, to pay dividends, for debt refinancing or for other purposes.

As of December 31, 2023, we had net borrowings under our commercial paper program of $1,371.6 million outstanding with a weighted average annual interest rate of 6.06%.

Prior Credit Facility

Prior to the revolving credit facility, we were party to a prior credit facility agreement with Bank of America, N.A., as administrative agent, and a syndicate of financial institutions, as lenders and other agents (as amended from time to time)time-to-time). This Credit Facility was most recently amended on May 2, 2017 (the "Fourth Amendment")The prior credit facility provided for a senior unsecured $2.0 billion term loan facility and as amended, provides for (i) a $1.25senior unsecured $3.0 billion revolving credit facility; (ii) a $1.5 billion term loan; (iii) a $1.3 billion term loan;facility. In August 2022, all borrowings outstanding and (iv) a $1.2 billion term loan facility. The Fourth Amendment increased the total financing capacityother amounts due under the Credit Facility on May 2, 2017 from $4.9 billion to $5.2 billion, although the outstanding debt under the Credit Facility did not change as weprior credit facility were repaid certain outstanding amounts under the Term A Loan, the Term A-2 Loan and the Revolving Creditprior credit facility was terminated.

Bridge Facility

On August 1, 2022, in connection with our entry into the Fourth Amendment. Substantially allEVO merger agreement, we obtained commitments for a $4.3 billion, 364-day senior unsecured bridge facility. Upon the execution of permanent financing, including the issuance of our senior unsecured notes and entry into the revolving credit facility described above, the aggregate commitments under the bridge facility were reduced to zero and terminated.

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Compliance with Covenants

The convertible notes include customary covenants and events of default for convertible notes of this type. The revolving credit agreement contains customary affirmative covenants and restrictive covenants, including, among others, financial covenants based on net leverage and interest coverage ratios, and customary events of default. The required leverage ratio was increased to 4.50 to 1.00 as a result of the assetsacquisition of our domestic subsidiaries are pledged as collateral underEVO, and will gradually step-down over eight quarters to the Credit Facility.

The Credit Facility provides for an interest rate, at our election,original required ratio of either LIBOR or a base rate, in each case plus a leverage-based margin.3.75 to 1.00. As of December 31, 2017,2023, the interest rates on the Term A Loan, the Term A-2 Loanrequired leverage ratio is 4.50 to 1.00, and the Term B-2 Loanrequired interest coverage ratio is 3.00 to 1.00. We were 3.32%, 3.24% and 3.57%, respectively, and the interest rate on the Revolving Credit Facility was 3.24%. The Credit Facility also provides for a commitment feein compliance with respect to borrowings under the Revolving Credit Facility at anall applicable rate per annum ranging from 0.20% to 0.30% depending on our leverage ratio. Ascovenants as of December 31, 2017, the aggregate outstanding balance on the term loans was $3.9 billion, and the outstanding balance on the Revolving Credit Facility was $765.0 million.

The Term A Loan and the Term A-2 Loan mature, and the Revolving Credit Facility expires, on May 2, 2022. The Term B-2 Loan matures on April 22, 2023. The Term A Loan principal must be repaid in quarterly installments in the amount of 1.25% of principal through June 2019, increasing to 1.875% of principal through June 2021, and increasing to 2.50% of principal through March 2022, with the remaining principal balance due upon maturity in May 2022. The Term A-2 Loan principal must be repaid in quarterly installments of $1.7 million through June 2018, increasing to quarterly installments of $8.6 million through March 2022, with the remaining balance due upon maturity in May 2022. The Term B-2 Loan principal must be repaid in quarterly installments in the amount of 0.25% of principal through March 2023, with the remaining principal balance due upon maturity in April 2023.

The Credit Facility allows us to issue standby letters of credit of up to $100 million in the aggregate under the Revolving Credit Facility. Outstanding letters of credit under the Revolving Credit Facility reduce the amount of borrowings available to us. Borrowings available to us under the Revolving Credit Facility are further limited by the covenants described below under "Compliance with Covenants." The total available commitments under the Revolving Credit Facility at December 31, 2017 were $473.3 million.


Settlement Lines of Credit


In various markets where we do business, we have specialized lines of credit, whichthat are restricted for use in funding settlement. The settlement lines of credit generally have variable interest rates, are subject to annual review and are denominated in local currency but may, in some cases, facilitate borrowings in multiple currencies. For certain of our lines of credit, the available credit is increased

by the amount of cash we have on deposit in specific accounts with the lender. Accordingly, the amount of the outstanding linelines of credit may exceed the stated credit limit. As of December 31, 2017 and 2016,2023, a total of $59.3$88.5 million and $51.0 million, respectively, of cash on deposit was used to determine the available credit.


As of December 31, 2017 and 2016,2023, we had $635.2$981.2 million and $392.1 million, respectively, outstanding under these lines of credit with additional capacity to fund settlement of $689.4 million as of$1,852.5 million. During the year ended December 31, 2017 to fund settlement.2023, the maximum and average outstanding balances under these lines of credit were $1,506.5 million and $515.7 million, respectively. The weighted-average interest rate on these borrowings was 2.0% and 1.90%5.95% at December 31, 2017 and 2016, respectively.2023.
Compliance with Covenants

The Credit Facility contains customary affirmative and restrictive covenants, including, among others, financial covenants based on our leverage and fixed charge coverage ratios, as defined in the agreement. As of December 31, 2017, financial covenants under the Credit Facility required a leverage ratio no greater than: (i) 4.50 to 1.00 as of the end of any fiscal quarter ending during the period from July 1, 2017 through June 30, 2018; (ii) 4.25 to 1.00 as of the end of any fiscal quarter ending during the period from July 1, 2018 through June 30, 2019; and (iii) 4.00 to 1.00 as of the end of any fiscal quarter ending thereafter. The fixed charge coverage ratio is required to be no less than 2.25 to 1.00.

The Credit Facility and settlement lines of credit also include various other covenants that are customary in such borrowings. The Credit Facility includes covenants, subject in each case to exceptions and qualifications that may restrict certain payments, including, in certain circumstances, the payment of cash dividends in excess of our current rate of $0.01 per share per quarter.

The Credit Facility also includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations to be immediately due and payable. We were in compliance with all applicable covenants as of and for the year ended December 31, 2017.


See "Note 7—9—Long-Term Debt and Lines of Credit" in the notes to the accompanying consolidated financial statements for further discussion ofinformation about our borrowing arrangements.agreements.

Off-Balance Sheet Arrangements

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


BIN/ICA Agreements
 
We have enteredIn certain markets, we enter into sponsorship or depository and processing agreements with certain banks. These agreements allow us to use the banks' identification numbers, referred to as Bank Identification Number ("BIN") for Visa transactions and Interbank Card Association ("ICA") number for MasterCardMastercard transactions, to clear credit card transactions through Visa and MasterCard.Mastercard. Certain of such agreements contain financial covenants, and we were in compliance with all such covenants as of December 31, 2017.2023.



Commitments and Contractual Obligations

The following table summarizes our contractual obligations and commitments as of December 31, 2017:
 Payments Due by Future Period
 Total Less than 1 Year 1-3 Years 3-5 Years 5+ Years
          
 (in thousands)
Long-term debt$4,697,677
 $108,979
 $303,056
 $3,201,767
 $1,083,875
Interest on long-term debt(1)
678,440
 155,324
 295,870
 215,340
 11,906
Settlement lines of credit635,166
 635,166
 —
 —
 —
Operating lease obligations334,284
 41,542
 64,065
 49,382
 179,295
Purchase obligations(2)
268,951
 70,663
 110,344
 56,433
 31,511
Transition tax payable under 2017 U.S. Tax Act(3)
63,744
 8,022
 9,691
 9,691
 36,340

(1) Interest on long-term debt is based on rates effective and amounts borrowed as of December 31, 2017. The estimated effect of interest rate swaps is included in interest on long-term debt. Since the contractual rates for our long-term debt and settlements on our interest rate swaps are variable, actual cash payments may differ from the estimates provided.

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

(3) Under the 2017 U.S. Tax Act, a company's foreign earnings accumulated under legacy tax laws are deemed repatriated with a one-time mandatory "transition" tax on foreign earnings not previously subjected to U.S. income tax. The transition tax on those deemed repatriated earnings may be paid over eight years. The total amount of the transition tax payable and the payments due by future period are estimates as of December 31, 2017 and subject to change. See "Note 9—Income Tax" in the notes to the accompanying consolidated financial statements for more discussion about the effects of the 2017 U.S. Tax Act on our accounting for income taxes for the year ended December 31, 2017.

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

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


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

Business Combinations

From time-to-time, we make strategic acquisitions that may have a material effect on Form 10-K.

Goodwill

We have historically performed our annual goodwill impairment testconsolidated results of operations and financial position. The measurement principle for the assets acquired and the liabilities assumed in a business combination is at estimated fair value as of January 1.the acquisition date, with certain exceptions. The excess of the total consideration transferred over the amount of the net identifiable assets acquired determined in accordance with the measurement guidance for such items is recognized as goodwill.

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The estimates we use to determine the fair value of long-lived assets, such as intangible assets, can be complex and require significant judgments. We use information available to us to make fair value determinations, and we engage independent valuation specialists, when necessary, to assist in the fair value determination of significant acquired long-lived assets. The estimated fair values of customer-related and contract-based intangible assets are generally determined using the income approach, which is based on projected cash flows discounted to their present value using discount rates that consider the timing and risk of the forecasted cash flows. The discount rates used represent a risk adjusted market participant weighted-average cost of capital, derived using customary market metrics. These measures of fair value also require considerable judgments about future events, including forecasted revenue growth rates, forecasted customer attrition rates, contract renewal estimates and technology changes. Acquired technologies are generally valued using the replacement cost method, which requires us to estimate the costs to construct an asset of equivalent utility at prices available at the time of the valuation analysis, with adjustments in value for physical deterioration and functional and economic obsolescence. Trademarks and trade names are generally valued using the "relief-from-royalty" approach. This method assumes that trademarks and trade names have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. This method requires us to estimate the future revenues for the related asset, the appropriate royalty rate and the weighted-average cost of capital. This measure of fair value requires considerable judgment about the value a market participant would be willing to pay in order to achieve the benefits associated with the trademark or trade name.

While we use our best estimates and assumptions to determine the fair values of the assets acquired and the liabilities assumed, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we make adjustments to the assets acquired and liabilities assumed. Upon the conclusion of the measurement period, any subsequent adjustments are recognized in our consolidated statements of income. We are also required to estimate the useful lives of intangible assets to determine the period over which to recognize the amount of acquisition-related intangible assets as an expense. We periodically review the estimated useful lives assigned to our intangible assets to determine whether such estimated useful lives continue to be appropriate.

Goodwill, intangibles and other long-lived assets are also regularly evaluated for impairment, which requires the use of significant estimates and assumptions as further described below. Achange in estimated fair value could result in an impairment charge, which could be material to 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.consolidated financial statements.


Goodwill

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

Factors we consider in the qualitative assessment include general macroeconomic conditions, industry and market conditions, cost factors, overall financial performance of our reporting units, events or changes affecting the composition or carrying amount of the net assets of our reporting units, sustained decrease in our share price, and other relevant entity-specific events. If we elect to bypass the qualitative assessment or if we determine, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, a quantitative test would be required.


When applying the quantitative assessment, we determine the fair value of our reporting units based on a weighted average of multiple valuation techniques, principally a combination of an income approach and a market approach. The income approach calculates a value based upon the present value of estimated future cash flows, while the market approach uses earnings multiples of similarly situated guideline public companies. Determining the fair value of a reporting unit involves judgment and the use of significant estimates and assumptions, which include assumptions regarding the revenue growth rates and operating margins used to calculate estimated future cash flows, risk-adjusted discount rates and future economic and market conditions.

During the firstsecond quarter of 2017,2022, the sustained decline in our share price and increases in discount rates, primarily resulting from increased economic uncertainty, indicated a potential decline in fair value and triggered a requirement to evaluate our Issuer Solutions and former Business and Consumer Solutions reporting units for potential impairment as of June 30, 2022. Furthermore, the estimated sales price for the consumer business portion of our former Business and Consumer Solutions reporting unit also indicated a potential decline in fair value as of June 30, 2022. We determined on the basis of the quantitative assessment that the fair value of our Issuer Solutions reporting unit was still greater than its carrying amount, indicating no impairment. Based on the quantitative assessment of our former Business and Consumer Solutions reporting unit, including consideration of the consumer business disposal group and the remaining assets of the reporting unit, we revisedrecognized a goodwill impairment charge of $833.1 million in our consolidated statement of income during the three months ended June 30, 2022.
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We regularly monitor any changes in the business and evaluate whether such changes affect the determination of our reporting unit structure within our North America segment to reflect changes made in connection withunits. During the integrationthird quarter of 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. As2022, as a result of the pending divestiture of our consumer business and changes in how our business is managed, we realigned the businesses previously comprising our former Business and Consumer Solutions segment to include the B2B portion within our Issuer Solutions segment and the consumer portion forming our Consumer Solutions segment. In connection with the change in presentation of segment information, the B2B portion of our former Business and Consumer Solutions reporting unit was realigned into the Issuer Solutions reporting unit, including a reallocation of goodwill. During the second quarter of 2023, we completed the sale of our consumer business. In addition, during 2023, we realigned our reporting units we performedbased on organizational changes and the acquired operations of EVO. There were no significant changes in the methodology used to assess goodwill for potential impairment tests immediately before and after this change in reporting units and determined that there was no impairment.during the year ended December 31, 2023.

Following the revision described above, we now have seven reporting units: North America Payments, North America Integrated Solutions and Vertical Markets, U.K. merchant services, Asia-Pacific merchant services, Central and Eastern Europe merchant services, Russia merchant services and Spain merchant services. As of October 1, 2017,2023, our reporting units consisted of the following: North America Payments Solutions, Vertical Market Software Solutions, Europe Merchant Solutions, Spain Merchant Solutions, Asia-Pacific Merchant Solutions, Latin America Merchant Solutions and Issuer Solutions. As of October 1, 2023, we elected to performperformed a qualitativequantitative assessment of impairment for each of our Issuer Solutions, Asia-Pacific Merchant Solutions and Latin America Merchant Solutions reporting units and a qualitative assessment for all other reporting units. We determined on the basis of qualitative factorsthe quantitative assessments of our Issuer Solutions, Asia-Pacific Merchant Solutions and Latin America Merchant Solutions reporting units that the fair value of each reporting unit was greater than its respective carrying amount, indicating no impairment. Additionally, we determined on the basis of the qualitative factors that the fair value of other reporting units was not more likely than not less than the respective carrying amounts. We believe that the fair value of each of our reporting units is substantially in excess of its carrying amount.amount, except for our Latin America Merchant Solutions reporting unit, which has smaller excess compared to the other reporting units since it was recently acquired in connection with the EVO acquisition, and our Issuer Solutions reporting unit, whose fair value exceeded its carrying amount by approximately 4% as of October 1, 2023.


We continue to closely monitor developments related to global events and macroeconomic conditions. The future magnitude, duration and effects of these events and conditions are difficult to predict at this time, and it is reasonably possible that future developments could have a negative effect on the estimates and assumptions utilized in our goodwill impairment assessments and could result in material impairment charges in future periods.

Intangible and Long-lived Assets

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

Amortization for most of our customer-related intangible assets is calculated using an accelerated method. In determining amortization expense under our accelerated method for any given period, we calculate the expected cash flows for that period that were used in determining the acquired value of the asset and divide that amount by the expected total cash flows over the estimated life of the asset. We multiply that percentage by the initial carrying amount of the asset to arrive at the amortization expense for that period. If the cash flow patterns that we experience differ significantly from our initial estimates, we adjust the amortization schedule prospectively. These cash flow patterns are derived using certain assumptions and cost allocations due to a significant amount of asset interdependencies that exist in our business. We did not make any significant adjustments to the amortization schedules of our intangible assets during the year ended December 31, 2017.

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


We regularly evaluate whether events and circumstances have occurred that indicate the carrying amount of property and equipment, lease right-of-use assets and finite-life intangible assets may not be recoverable. When factors indicate that these long-lived assets should be evaluated for possible impairment, we assess the potential impairment by determining whether the carrying amount of such long-lived assets will be recovered through the future undiscounted cash flows expected from use of the asset and its eventual disposition. The evaluation is performed at the asset group level, which is the lowest level of identifiable cash flows. If the carrying amount of the asset group is determined not to be not recoverable and exceeds its fair value, an impairment loss is recorded,recognized, measured as the difference between the fair value and the carrying amount. Fair values are determined based on quoted market prices

or discounted cash flow analysis as applicable. We regularly evaluate whether events

As a result of actions taken during the years ended December 31, 2023 and circumstances have occurred that indicate2022 to reduce our facility footprint in certain markets around the useful livesworld, we recognized charges of property$6.0 million and $30.4 million, respectively, primarily related to certain lease right-of-use assets, leasehold improvements, furniture and fixtures and equipment to reduce the carrying amount of each asset group to estimated fair value.

We classify an asset or business as a held for sale disposal group if we have committed to a plan to sell the asset or business within one year and finite-life intangible assets may warrant revision.are actively marketing the asset or business in its current condition for a price that is reasonable in comparison to its estimated fair value. Disposal groups held for sale are reported at the lower of carrying amount or fair value less costs to sell. Subsequent changes to the estimated selling price of an asset or disposal group held for sale are recognized as gains or losses in our consolidated statement of income and any subsequent gains are limited to the cumulative losses previously recognized. During the years ended December 31, 2023 and 2022, we recognized net losses of $243.6 million and $71.9 million, respectively, on the consumer business disposition to reduce the carrying amount of the consumer disposal group to estimated fair value less costs to sell, including the effects of incremental negotiated closing adjustments, changes in the estimated fair value of the seller financing and the effects of the final tax structure of the transaction. In addition, we recognized a $106.9 million gain on the sale of the gaming business in our consolidated statement of income during the year ended December 31, 2023.


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Capitalization of Internal-Use Software Costs


We develop software that is used in providing services to customers. Capitalization of internal-use software costs, primarily associated with operating platforms, occurs when we have completed the preliminary project stage, management authorizes the project, management commits to funding the project, it is probable the project will be completed and the project will be used to perform the function intended. The preliminary project stage consists of the conceptual formulation of alternatives, the evaluation of alternatives, the determination of existence of needed technology and the final selection of alternatives. Costs incurred during the preliminary project stage are expensedrecognized as expense as incurred. Currently unforeseen circumstances in software development, such as a significant change in the manner in which the software is intended to be used, obsolescence or a significant reduction in revenues due to merchantcustomer attrition, could require us to implement alternative plans with respect to a particular effort, which could result, and from time-to-time has resulted, in thean impairment ofcharge related to previously capitalized software development costs. The carrying amount of internal-use software, including work in progress,work-in-progress, at December 31, 20172023 was $327.2$1,080.7 million. Costs capitalized during the year ended December 31, 2017,2023 totaled $337.8 million.

In addition, we capitalize implementation costs associated with cloud computing arrangements that are service contracts following the 2016 fiscal transition period andsame internal-use software capitalization criteria. Our cloud computing arrangements involve services we use to support certain internal corporate functions as well as technology associated with revenue-generating activities. We regularly evaluate whether events or circumstances have occurred that indicate the years ended Maycarrying amount of the capitalized implementation costs may not be recoverable. As of December 31, 2016 and 2015 totaled $79.3 million, $37.7 million, $36.52023, capitalized implementation costs, net of accumulated amortization, were $206.5 million and $35.1 million, respectively. Internal-useare presented within other noncurrent assets in the consolidated balance sheets. Costs capitalized during the year ended December 31, 2023 totaled $66.2 million.

There were no significant changes in the accounting methodology used for capitalization of internal-use software is amortized over its estimated useful life, which is typically 2during the year ended December 31, 2023.

Revenue Recognition

In accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers ("ASC 606"), we apply judgment in the determination of performance obligations, in particular related to 10 years,large customer contracts within the Issuer Solutions segment. Performance obligations in a mannercontract are identified based on the goods or services that best reflectswill be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, we must apply judgment to determine whether promised services are capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised services are combined and accounted for as a single performance obligation. In addition, a single performance obligation may comprise a series of distinct goods or services that are substantially the same and that have the same pattern of economic use oftransfer to the assets.customer.


Income Taxes


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

Accounting Standards Codification ("ASC") Topic 740, "Income Taxes" ("ASC 740") requires companies to recognize the effect of tax law changes in the period of enactment. To address the application of GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed in reasonable detail to complete the accounting for certain income tax effects of the 2017 U.S. Tax Act, which was enacted on December 22, 2017, the SEC staff issued SAB 118. SAB 118 provides guidance for registrants regarding the application of ASC Topic 740 in the reporting period that includes December 22, 2017, including reporting provisional amounts for those specific income tax effects of the 2017 U.S. Tax Act for which the accounting is incomplete but a reasonable estimate can be determined. In addition, SAB 118 requires provisional amounts or adjustments to provisional amounts identified in the measurement period, as defined, to be included as an adjustment to tax expense or benefit from continuing operations in the period the amounts are determined.

As a result of the enactment of the 2017 U.S. Tax Act, our income tax benefit for the year ended December 31, 2017 included a net benefit of $158.7 million, reflecting provisional amounts for specific income tax effects as a result of the enactment of the 2017 U.S. Tax Act for which our accounting is incomplete but could be reasonably estimated as of December 31, 2017. We are in the process of determining the actual effect of the 2017 U.S. Tax Act. Our reasonable estimates are based on provisional amounts that may be adjusted upon obtaining, preparing or analyzing additional information. We could make adjustments to the provisional amounts of the tax effects during subsequent periods in 2018.

SAB 118 provides that the measurement period is complete when a company's accounting is complete and in no circumstances should the measurement period extend beyond one year from the enactment date. Due to the timing of enactment of this new tax legislation, certain details of the 2017 U.S. Tax Act may not be fully understood or operationalized by the time we issue this Annual Report on Form 10-K. Further guidance could be forthcoming from the U.S. Treasury, the SEC or the accounting profession that could give rise to further effects of the 2017 U.S. Tax Act on our consolidated financial statements in future periods. The effect of the 2017 U.S. Tax Act on our consolidated financial statements and the status of our accounting for its effects is further described along with other disclosures required by SAB 118 in "Note 9—Income Taxes" of the notes to the accompanying consolidated financial statements.


We believe our tax return positions are fully supportable; however, we recognize the benefit for tax positions only when it is more likely than not that the position will be sustained based on its technical merits. Issues raised by a tax authority may be resolved at an amount different than the related benefit recognized. When facts and circumstances change (including an effective settlement

of an issue or statute of limitations expiration), the effect is recognized in the period of change. A portion of theThe unrecognized tax benefits that exist at December 31, 20172023 would affect our provision for income taxes in the future, if recognized.

Judgment is required to determine whether or not some portion or all of our deferred tax assets will not be realized. To the extent that we determine that we will not realize the benefit of some or all of our deferred tax assets, then these deferred tax assets are adjusted via a valuation allowance through our provision for income taxes in the period in which this determination is made.


See "Note 12—Income Tax" in the notes to the accompanying consolidated financial statements for further information regarding the changes in the amount of unrecognized tax benefits and deferred tax valuation allowances during the year ended December 31, 2023.

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Redeemable noncontrolling interests

Redeemable noncontrolling interests in our subsidiaries in Poland, Greece, and Chile relate to the portion of equity in each of those subsidiaries not attributable, directly or indirectly, to us, which is redeemable upon the occurrence of an event that is not solely within our control. The redeemable noncontrolling interest for each subsidiary is reflected at the higher of: (i) the initial carrying amount, increased or decreased for the noncontrolling interest's share of comprehensive income (loss), capital contributions and distributions or (ii) the redemption price. Estimates of redemption price are based on projected operating performance of each subsidiary, including key assumptions - revenue growth rates, current and expected market conditions and weighted-average cost of capital. Refer to “Note 16—Noncontrolling Interests” in the notes to the accompanying consolidated financial statements for further information.

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


As more fully described inFrom time-to-time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standards setting bodies that may affect our current and/or future financial statements. See "Note 1—Basis of Presentation and Summary of Significant Accounting Policies" in the notes to the accompanying consolidated financial statements effective January 1, 2018, we will adoptfor a new revenuediscussion of recently adopted accounting standard that will change the presentation of certain fees that we pay to third partiespronouncements and currently present as an operating expense. Effective January 1, 2018, our revenues will be presented net of such payments, including payment network fees, which represented approximately 23% of our total consolidated revenues in 2017. We expect a similar amount of payment network fees in 2018. This change in presentation of fees paid to third parties will reduce our reported revenues and operating expenses by the same amount and will have no effect on operating income.

The application of the new standard will also change the amount and timing of revenue and expenses to be recognized under certain of our customer arrangements for periods after December 31, 2017. Further, we will also be required to capitalize additional costs to obtain contracts with customers, as well as certain implementation and set-up costs, and in some cases, will be required to amortize these costs and costs that we currently capitalize (such as capitalized customer acquisition costs) over a longer time period. We currently estimate that the net effect of applying the provision of the new accounting standard will be an increase of less than 1% of our operating income in 2018.

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


ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Foreign Currency Exchange Rate Risk


Certain of our operations are conducted in foreign currencies. Consequently, a portion of our revenues and expenses may be affected by fluctuations in foreign currency exchange rates. We have not historically hedged our translation risk on foreign currency exposure, but we may do so in the future. For the year ended December 31, 2017,2023, currency exchange rate fluctuations increased our consolidated revenues by approximately $6.1 million and increased our operating income by approximately $8.6 million compared to the prior year, calculated by converting revenues and expensesoperating income, respectively, for the current year, ended December 31, 2017 in local currency using prior-year period rates had an immaterial effect on ourexcluding revenues and operating income. 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 convertingfrom current period revenues and expensesyear acquisitions, in local currencycurrencies using the prior-year period rates. For the year ended May 31, 2016, currency rate fluctuations reduced our revenues by $117.0 million and our operating income by $43.6 million as compared to the prior-year period, calculated by converting revenues and expensesexchange rates for the year ended May 31, 2016 in local currency using prior-year period rates.prior year.


Generally, the functional currency of our various subsidiaries is their local currency. We are exposed to currency fluctuations on transactions that are not denominated in the functional currency. Gains and losses on such transactions are included in determining net income for the period. We seek to mitigate our foreign currency risk through timely settlement of transactions and cash flow matching, when possible. For the year ended December 31, 2017, the 2016 fiscal transition period and the years ended May 31, 2016 and 2015,2023, our transaction gains and losses were insignificant.


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


We are also affected by fluctuations in exchange rates on our investments in foreign operations. Relative to our net investment in foreign operations, the assets and liabilities of subsidiaries whose functional currency is a foreign currency are translated at the period-end rate of exchange. The resulting translation adjustment is recordedrecognized as a component of other comprehensive income and

is included in shareholders' equity. We have designated our aggregate €800 million Euro-denominated senior notes due March 2031 as a hedge of our net investment in our Euro-denominated operations. The purpose of the net investment hedge is to offset the volatility of our net investment in our Euro-denominated operations due to changes in foreign currency exchange rates, and the foreign currency remeasurement gains and losses associated with the Euro-denominated senior notes are presented within the same components of other comprehensive income and accumulated comprehensive income.

Transaction gains and losses on intercompany balances of a long-term investment nature are also recordedrecognized as a component of other comprehensive income. When a foreign subsidiary is divested in its entirety, the associated accumulated foreign currency translation gains or losses are reclassified from the separate component of equity into our consolidated statement of income.


53
Interest Rate Risk


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


We have a Credit Facility for general corporate purposes,an unsubordinated unsecured $5.75 billion revolving credit facility, as well as a $2.0 billion commercial paper program and various lines of credit that we use to fund settlement in certain of our markets. Interestmarkets, each of which bears interest at rates on these debt instruments and settlement lines of creditthat are based on market rates and fluctuate accordingly. As of December 31, 2017, $4.7 billion was2023, the amount outstanding under these variable-rate debt arrangements and settlement lines of credit.credit was$3,922.4 million.


The interest earned on our invested cash and the interest paid on a portion of our debt are based on variable interest rates; therefore, the exposure of our net income to a change in interest rates is partially mitigated as an increase in rates would increase both interest income and interest expense, and a reduction in rates would decrease both interest income and interest expense. Under our current policies, we may selectively use derivative instruments, such as interest rate swaps or forward rate agreements, to manage all or a portion of our exposure to interest rate changes. We have entered into interest rate swaps that reduce a portion of our exposure to market interest rate risk on certain of our LIBOR-basedvariable-rate debt as discussed in "Note 7—Long-Term Debt10—Derivatives and Lines of Credit"Hedging Instruments" 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, 2017,2023, a hypothetical increase of 50 basis points in applicable interest rates as of December 31, 20172023 would increase our annual interest expense by approximately $20.2$11.6 million and increase our annual interest income by approximately $3.5$4.8 million.



54



ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Global Payments Inc.


Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Global Payments Inc. and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with 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, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 14, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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

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

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition - Issuer Solutions - Refer to Notes 1 and 4 to the financial statements.

Critical Audit Matter Description

The Company enters into long-term revenue contracts with its Issuer Solutions customers. Issuer Solutions customer contracts may include multiple promises, including processing services, loyalty redemption services and professional services to financial institutions and other financial services providers. The Company has determined that the processing services and loyalty redemption services represent stand-ready performance obligations comprising a series of distinct days of services that are substantially the same and have the same pattern of transfer to the customer. Professional services representing performance obligations are satisfied over time.

We identified the determination of performance obligations for Issuer Solutions revenue contracts as a critical audit matter, given the judgment required to determine whether any unusual and/or complex terms within the contract are identified and
55
evaluated appropriately. A high degree of auditor judgment was required to evaluate the Company's identification of the performance obligations in the contract.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company's Issuer Solutions revenue transactions, specifically its identification of the performance obligations in contracts with its customers, included the following, among others:

•We evaluated the effectiveness of controls over Issuer Solutions contract revenues, including controls over the identification of performance obligations.
•We selected a sample of Issuer Solutions contracts and evaluated whether the performance obligations were appropriately identified in each of the selected contracts, including whether the promised services are capable of being distinct and are distinct in the context of the contract.

Revenues - Payment processing solutions and services - Refer to Note 1 to the financial statements.

Critical Audit Matter Description

The Company's revenues from its payment processing solutions and services consist of activity-based fees made up of a significant volume of low-dollar transactions, sourced from multiple systems and applications. The processing of transactions and recording of revenues is highly automated and is based on contractual terms with merchants, financial institutions, financial service providers, payment networks, and other parties.

We identified payment processing solutions and services revenues as a critical audit matter given the increased extent of effort, including the need for us to involve professionals with expertise in information technology (IT), to identify, test, and evaluate the Company's systems, software applications, and automated controls.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company's systems to process payment services revenues included the following, among others:

•With the assistance of our IT specialists, we:
◦Identified the significant systems used to process revenue transactions and tested the general IT controls over each of these systems, including testing of user access controls, change management controls, and IT operations controls.
◦Tested system interface controls and automated controls within the relevant revenue streams, as well as the controls designed to ensure the accuracy and completeness of revenues.
•We tested controls within the relevant revenue business processes, including those in place to reconcile the various reports extracted from the IT systems to the Company’s general ledger.
•We evaluated trends in recorded revenues, including interchange fees and payment network fees.
•For a sample of revenue transactions, we tested selected transactions by agreeing the amounts of revenue recognized to source documents and tested the mathematical accuracy of the recorded revenues.
•We developed independent expectations of certain revenue streams and compared these to amounts recorded by the Company.

/s/ Deloitte & Touche LLP

Atlanta, Georgia
February 14, 2024

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

56
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Global Payments Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Global Payments Inc. and subsidiaries (the "Company") as of December 31, 2017,2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.


We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2017,2023, of the Company and our report dated February 22, 2018,14, 2024, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company changing its fiscal year end from May 31 to December 31 in 2016.statements.

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, and whose financial statements constitute less than 1.5% of consolidated revenues, and 4.3% of consolidated assets (excluding goodwill related to the ACTIVE Network transaction which was integrated into the Company's systems and control environment), as of and for the year ended December 31, 2017. ACTIVE Network did not contribute to net income for the year ended December 31, 2017. Accordingly, our audit did not include the internal control over financial reporting at ACTIVE Network that is excluded from management’s assessment.


Basis for Opinion

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


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


Definition and Limitations of Internal Control over Financial Reporting

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


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because

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



/s/ DELOITTEDeloitte & TOUCHETouche LLP
Atlanta, Georgia
February 22, 201814, 2024

57
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board

Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Global Payments Inc. and subsidiaries (the "Company") as of December 31, 2017 and 2016, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year ended December 31, 2017, the seven months ended December 31, 2016, and the years ended May 31, 2016 and 2015, 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, 2017 and 2016, and the results of its operations and its cash flows for the year ended December 31, 2017, the seven months ended December 31, 2016, and the years ended May 31, 2016 and 2015, 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, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2018 expressed an unqualified opinion on the Company's internal control over financial reporting.

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

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

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


/s/ DELOITTE & TOUCHE LLP

Atlanta, Georgia

February 22, 2018

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

GLOBAL PAYMENTS INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
 Year Ended
December 31,		 
Seven Months
Ended
December 31,
 Year Ended May 31,
 2017 2016 2016 2015
        
Revenues$3,975,163
 $2,202,896
 $2,898,150
 $2,773,718
Operating expenses:       
Cost of service1,928,037
 1,094,593
 1,147,639
 1,022,107
Selling, general and administrative1,488,258
 870,352
 1,325,567
 1,295,014
 3,416,295
 1,964,945
 2,473,206
 2,317,121
        
Operating income558,868
 237,951
 424,944
 456,597
        
Interest and other income8,662
 44,382
 5,284
 4,949
Interest and other expense(174,847) (108,989) (69,316) (44,436)
 (166,185) (64,607) (64,032) (39,487)
        
Income before income taxes392,683
 173,344
 360,912
 417,110
Income tax benefit (provision)101,387
 (35,661) (70,695) (107,995)
Net income494,070
 137,683
 290,217
 309,115
Less: Net income attributable to noncontrolling interests(25,645) (12,752) (18,551) (31,075)
Net income attributable to Global Payments$468,425
 $124,931
 $271,666
 $278,040
        
Earnings per share attributable to Global Payments:       
Basic earnings per share$3.03
 $0.81
 $2.05
 $2.07
Diluted earnings per share$3.01
 $0.81
 $2.04
 $2.06
Years Ended December 31,
202320222021
Revenues$9,654,419 $8,975,515 $8,523,762 
Operating expenses:
Cost of service3,727,521 3,778,617 3,773,725 
Selling, general and administrative4,073,768 3,524,578 3,391,161 
Impairment of goodwill— 833,075 — 
Net loss on business dispositions136,744 199,094 — 
 7,938,033 8,335,364 7,164,886 
Operating income1,716,386 640,151 1,358,876 
Interest and other income113,711 33,604 19,320 
Interest and other expense(660,150)(449,433)(333,651)
 (546,439)(415,829)(314,331)
Income before income taxes and equity in income of equity method investments1,169,947 224,322 1,044,545 
Income tax expense209,020 166,694 169,034 
Income before equity in income of equity method investments960,927 57,628 875,511 
Equity in income of equity method investments, net of tax67,896 85,685 112,353 
Net income1,028,823 143,313 987,864 
Net income attributable to noncontrolling interests(42,590)(31,820)(22,404)
Net income attributable to Global Payments$986,233 $111,493 $965,460 
Earnings per share attributable to Global Payments:
Basic earnings per share$3.78 $0.41 $3.30 
Diluted earnings per share$3.77 $0.40 $3.29 
See Notes to Consolidated Financial Statements.

58
GLOBAL PAYMENTS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)

Years Ended December 31,
202320222021
Net income$1,028,823 $143,313 $987,864 
Other comprehensive income (loss):
Foreign currency translation adjustments211,310 (276,559)(79,550)
Reclassification of accumulated foreign currency translation losses to net loss as a result of the sale of a foreign entity— 62,925 — 
Income tax benefit related to foreign currency translation adjustments4,131 2,698 455 
Net unrealized gains (losses) on hedging activities(19,683)12,915 3,425 
Reclassification of net unrealized (gains) losses on hedging activities to interest expense(4,609)21,327 40,094 
Income tax benefit (expense) related to hedging activities5,853 (8,172)(10,466)
Other, net of tax439 (222)3,760 
Other comprehensive income (loss)197,441 (185,088)(42,282)
Comprehensive income (loss)1,226,264 (41,775)945,582 
Comprehensive income attributable to noncontrolling interests92,987 18,519 12,123 
Comprehensive income (loss) attributable to Global Payments$1,133,277 $(60,294)$933,459 
 
Year Ended
December 31,
 Seven Months Ended December 31, Year Ended May 31,
 2017 2016 2016 2015
        
Net income$494,070
 $137,683
 $290,217
 $309,115
Other comprehensive income (loss):       
   Foreign currency translation adjustments146,401
 (92,229) (55,858) (220,641)
   Income tax benefit related to foreign currency translation adjustments—
 —
 —
 12,152
Net unrealized gains (losses) on hedging activities4,549
 5,532
 (12,859) (10,116)
Reclassification of net unrealized losses on hedging activities to interest expense5,673
 4,222
 8,240
 3,958
Income tax (provision) benefit related to hedging activities(2,583) (3,639) 1,738
 2,284
   Other comprehensive income (loss), net of tax(660) 1,030
 (848) (450)
Other comprehensive income (loss)153,380
 (85,084) (59,587) (212,813)
Comprehensive income647,450
 52,599
 230,630
 96,302
   Less: comprehensive income attributable to noncontrolling interests(39,452) (4,335) (19,022) (2,478)
Comprehensive income attributable to Global Payments$607,998
 $48,264
 $211,608
 $93,824
See Notes to Consolidated Financial Statements.





59
GLOBAL PAYMENTS INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 December 31, 2023December 31, 2022
ASSETS 
Current assets: 
Cash and cash equivalents$2,088,887 $1,997,566 
Accounts receivable, net1,120,078 998,332 
Settlement processing assets4,097,417 2,519,114 
Current assets held for sale6,451 138,815 
Prepaid expenses and other current assets760,926 660,321 
Total current assets8,073,759 6,314,148 
Goodwill26,743,523 23,320,736 
Other intangible assets, net10,168,046 9,658,374 
Property and equipment, net2,190,005 1,838,809 
Deferred income taxes111,712 37,907 
Noncurrent assets held for sale327 1,295,799 
Notes receivable713,123 — 
Other noncurrent assets2,569,691 2,343,241 
Total assets$50,570,186 $44,809,014 
LIABILITIES AND EQUITY
Current liabilities:
Settlement lines of credit$981,244 $747,111 
Current portion of long-term debt620,585 1,169,330 
Accounts payable and accrued liabilities2,823,638 2,442,560 
Settlement processing obligations3,698,921 2,413,799 
Current liabilities held for sale1,341 125,891 
Total current liabilities8,125,729 6,898,691 
Long-term debt15,692,297 12,289,248 
Deferred income taxes2,242,105 2,428,412 
Noncurrent liabilities held for sale— 4,478 
Other noncurrent liabilities722,540 647,975 
Total liabilities26,782,671 22,268,804 
Commitments and contingencies
Redeemable noncontrolling interests507,965 — 
Equity:
Preferred stock, no par value; 5,000,000 shares authorized and none issued— — 
Common stock, no par value; 400,000,000 shares authorized at December 31, 2023 and 2022; 260,382,746 shares issued and outstanding at December 31, 2023 and 263,081,872 shares issued and outstanding at December 31, 2022— — 
Paid-in capital19,800,953 19,978,095 
Retained earnings3,457,182 2,731,380 
Accumulated other comprehensive loss(258,925)(405,969)
Total Global Payments shareholders’ equity22,999,210 22,303,506 
Nonredeemable noncontrolling interests280,340 236,704 
Total equity23,279,550 22,540,210 
Total liabilities, redeemable noncontrolling interests and equity$50,570,186 $44,809,014 
 December 31, 2017 December 31, 2016
    
ASSETS   
Current assets:   
Cash and cash equivalents$1,335,855
 $1,162,779
Accounts receivable, net of allowances for doubtful accounts of $1,827 and $1,092, respectively301,887
 275,032
Settlement processing assets2,459,292
 1,546,854
Prepaid expenses and other current assets206,545
 131,341
Total current assets4,303,579
 3,116,006
Goodwill5,703,992
 4,807,594
Other intangible assets, net2,181,707
 2,085,292
Property and equipment, net588,348
 526,370
Deferred income taxes13,146
 15,789
Other noncurrent assets207,297
 113,299
Total assets$12,998,069
 $10,664,350
LIABILITIES AND EQUITY   
Current liabilities:   
Settlement lines of credit$635,166
 $392,072
Current portion of long-term debt100,308
 177,785
Accounts payable and accrued liabilities1,039,607
 804,887
Settlement processing obligations2,040,509
 1,477,212
Total current liabilities3,815,590
 2,851,956
Long-term debt4,559,408
 4,260,827
Deferred income taxes436,879
 676,472
Other noncurrent liabilities220,961
 95,753
Total liabilities9,032,838
 7,885,008
Commitments and contingencies

 

Equity:   
Preferred stock, no par value; 5,000,000 shares authorized and none issued—
 —
Common stock, no par value; 200,000,000 shares authorized; 159,180,317 issued and outstanding at December 31, 2017 and 152,185,616 issued and outstanding at December 31, 2016—
 —
Paid-in capital2,379,774
 1,816,278
Retained earnings1,597,897
 1,137,230
Accumulated other comprehensive loss(183,144) (322,717)
Total Global Payments shareholders’ equity3,794,527
 2,630,791
Noncontrolling interests170,704
 148,551
Total equity3,965,231
 2,779,342
Total liabilities and equity$12,998,069
 $10,664,350
See Notes to Consolidated Financial Statements.

60
GLOBAL PAYMENTS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Year Ended
December 31,		 Seven Months Ended December 31, Year Ended May 31,
 2017 2016 2016 2015
Cash flows from operating activities:       
Net income$494,070
 $137,683
 $290,217
 $309,115
Adjustments to reconcile net income to net cash provided by operating activities:    

 

Depreciation and amortization of property and equipment113,273
 53,242
 74,192
 64,918
Amortization of acquired intangibles337,878
 194,329
 113,689
 72,587
Share-based compensation expense39,095
 18,707
 30,809
 21,056
Provision for operating losses and bad debts48,443
 24,074
 27,202
 14,506
Amortization of capitalized customer acquisition costs45,098
 14,982
 1,776
 —
Deferred income taxes(250,670) (33,523) (18,162) 81,079
Gain on sale of investments—
 (41,150) —
 —
Other, net44,070
 32,718
 15,370
 8,249
Changes in operating assets and liabilities, net of the effects of acquisitions:    

 

Accounts receivable(14,096) 2,189
 (14,542) 1,248
Settlement processing assets and obligations, net(361,673) 35,599
 218,061
 (78,794)
Prepaid expenses and other assets(46,439) 13,997
 (52,254) 5,426
Capitalized customer acquisition costs(82,988) (58,161) (11,962) —
Accounts payable and other liabilities146,327
 121,140
 (81,506) (69,513)
Net cash provided by operating activities512,388
 515,826
 592,890
 429,877
Cash flows from investing activities:       
Acquisitions, net of cash acquired(562,688) (33,865) (2,034,406) (355,971)
Capital expenditures(181,905) (88,913) (91,591) (92,550)
Net proceeds from sale of investments—
 37,717
 —
 —
Net proceeds from sales of property and equipment37,565
 —
 —
 10,597
Other, net(28,997) (1,622) (1,251) (2,997)
Net cash used in investing activities(736,025) (86,683) (2,127,248) (440,921)
Cash flows from financing activities:       
Net proceeds from (repayments of) settlement lines of credit221,532
 20,582
 (206,009) 198,884
Proceeds from long-term debt1,994,324
 1,299,000
 6,078,230
 2,496,842
Repayments of long-term debt(1,781,541) (1,381,161) (3,691,608) (2,148,907)
Payment of debt issuance costs(9,520) (9,279) (63,382) —
Repurchase of common stock(34,811) (178,165) (135,954) (372,387)
Proceeds from stock issued under share-based compensation plans10,115
 6,093
 8,480
 22,550
Common stock repurchased - share-based compensation plans(31,761) (20,390) (12,236) (15,690)
Purchase of subsidiary shares from noncontrolling interest—
 —
 (7,550) —
Proceeds from sale of subsidiary shares to noncontrolling interest—
 —
 16,374
 —
Distributions to noncontrolling interests(9,301) (12,365) (23,308) (39,753)
Dividends paid(6,732) (3,069) (5,439) (5,340)
Net cash provided by (used in) financing activities352,305
 (278,754) 1,957,598
 136,199
Effect of exchange rate changes on cash44,408
 (32,338) (29,251) (56,288)
Increase in cash and cash equivalents173,076
 118,051
 393,989
 68,867
Cash and cash equivalents, beginning of the period1,162,779
 1,044,728
 650,739
 581,872
Cash and cash equivalents, end of the period$1,335,855
 $1,162,779
 $1,044,728
 $650,739
Years Ended December 31,
202320222021
Cash flows from operating activities:
Net income$1,028,823 $143,313 $987,864 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment458,157 399,486 396,342 
Amortization of acquired intangibles1,318,535 1,262,969 1,295,042 
Amortization of capitalized contract costs123,405 109,701 93,328 
Share-based compensation expense208,994 163,261 180,779 
Provision for operating losses and credit losses97,103 116,879 90,208 
Noncash lease expense65,307 78,935 107,775 
Deferred income taxes(499,974)(315,495)(189,050)
Equity in income of equity method investments, net of tax(67,896)(85,685)(112,353)
Facilities exit charges5,994 30,437 51,349 
Distributions received on investments18,267 45,521 36,914 
Impairment of goodwill— 833,075 — 
Net loss on business dispositions136,744 199,094 — 
Other, net18,545 993 10,810 
Changes in operating assets and liabilities, net of the effects of business combinations:
Accounts receivable(78,647)(111,974)(165,543)
Settlement processing assets and obligations, net(345,898)(313,333)128,584 
Prepaid expenses and other assets(289,826)(295,980)(264,009)
Accounts payable and other liabilities51,108 (17,157)132,785 
Net cash provided by operating activities2,248,741 2,244,040 2,780,825 
Cash flows from investing activities:
Business combinations and other acquisitions, net of cash and restricted cash acquired(4,225,610)(65,672)(1,811,432)
Capital expenditures(658,142)(615,652)(493,216)
Issuance of notes receivable(50,000)— — 
Repayment of notes receivable50,000 — — 
Net cash from sales of businesses479,067 (29,755)— 
Proceeds from sale of investments42,135 33,046 — 
Other, net1,438 2,496 10,822 
Net cash used in investing activities(4,361,112)(675,537)(2,293,826)
Cash flows from financing activities:
Net borrowings from settlement lines of credit220,682 285,644 149,528 
Net borrowings from commercial paper notes1,367,859 — — 
Proceeds from long-term debt10,336,850 9,812,289 7,057,668 
Repayments of long-term debt(9,099,938)(7,895,131)(4,826,769)
Payments of debt issuance costs(12,735)(48,635)(21,320)
Repurchases of common stock(418,272)(2,921,307)(2,533,629)
Proceeds from stock issued under share-based compensation plans60,345 44,127 49,545 
Common stock repurchased - share-based compensation plans(41,225)(38,601)(90,649)
Distributions to noncontrolling interests(32,997)(23,031)— 
Proceeds and contributions from noncontrolling interests26,205 — 69,987 
Payment of contingent consideration in business combination(5,222)(15,726)— 
Purchase of capped calls related to issuance of convertible notes— (302,375)— 
Dividends paid(260,431)(273,955)(259,726)
Net cash provided by (used in) financing activities2,141,121 (1,376,701)(405,365)
Effect of exchange rate changes on cash, cash equivalents and restricted cash12,519 (99,219)(48,382)
Increase in cash, cash equivalents and restricted cash41,269 92,583 33,252 
Cash, cash equivalents and restricted cash, beginning of the period2,215,606 2,123,023 2,089,771 
Cash, cash equivalents and restricted cash, end of the period$2,256,875 $2,215,606 $2,123,023 
See Notes to Consolidated Financial Statements.

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GLOBAL PAYMENTS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands, except per share data)

Shareholders' Equity
 Number of SharesPaid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Global Payments Shareholders’ EquityNonredeemable Noncontrolling InterestsTotal EquityRedeemable Noncontrolling Interests
Balance at December 31, 2022263,082 $19,978,095 $2,731,380 $(405,969)$22,303,506 $236,704 $22,540,210 $— 
Net income986,233 986,233 41,104 1,027,337 1,486 
Other comprehensive income147,044 147,044 8,745 155,789 41,652 
Stock issued under share-based compensation plans1,733 60,345 60,345 60,345 
Common stock repurchased - share-based compensation plans(367)(41,011)(41,011)(41,011)
Share-based compensation expense208,994 208,994 208,994 
Redeemable noncontrolling interests acquired in a business combination— — 471,119 
Share-based awards granted in connection with a business combination2,484 2,484 2,484 
Repurchases of common stock(4,065)(413,667)(413,667)(413,667)
Distributions to noncontrolling interests— (26,705)(26,705)(6,292)
Sale of subsidiary shares to noncontrolling interest5,713 5,713 20,492 26,205 
Cash dividends declared ($1.00 per common share)(260,431)(260,431)(260,431)
Balance at December 31, 2023260,383 $19,800,953 $3,457,182 $(258,925)$22,999,210 $280,340 $23,279,550 $507,965 

Shareholders' Equity
 Number of SharesPaid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Global Payments Shareholders’ EquityNonredeemable Noncontrolling InterestsTotal Equity
Balance at December 31, 2021284,750 $22,880,261 $2,982,122 $(234,182)$25,628,201 $241,216 $25,869,417 
Net income111,493 111,493 31,820 143,313 
Other comprehensive loss(171,787)(171,787)(13,301)(185,088)
Stock issued under share-based compensation plans1,883 44,127 44,127 44,127 
Common stock repurchased - share-based compensation plans(285)(38,423)(38,423)(38,423)
Share-based compensation expense163,261 163,261 163,261 
Repurchases of common stock(23,266)(2,841,534)(88,280)(2,929,814)(2,929,814)
Distributions to noncontrolling interests— (23,031)(23,031)
Purchase of capped calls related to issuance of convertible notes, net of taxes of $72,778(229,597)(229,597)(229,597)
Cash dividends declared ($1.00 per common share)(273,955)(273,955)(273,955)
Balance at December 31, 2022263,082 $19,978,095 $2,731,380 $(405,969)$22,303,506 $236,704 $22,540,210 
See Notes to Consolidated Financial Statements.
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GLOBAL PAYMENTS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands, except per share data)


 Number  of Shares Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Global Payments Shareholders’ Equity Noncontrolling Interests Total Equity
Balance at December 31, 2016152,186
 $1,816,278
 $1,137,230
 $(322,717) $2,630,791
 $148,551
 $2,779,342
Net income    468,425
   468,425
 25,645
 494,070
Other comprehensive income, net of tax      139,573
 139,573
 13,807
 153,380
Stock issued under share-based compensation plans1,350
 10,115
     10,115
   10,115
Common stock repurchased - share-based compensation plans(338) (32,006)     (32,006)   (32,006)
Share-based compensation expense  39,095
     39,095
   39,095
Issuance of common stock in connection with a business combination6,358
 572,079
     572,079
   572,079
Dissolution of a subsidiary    7,998
   7,998
 (7,998) —
Distributions to noncontrolling interest        

 (9,301) (9,301)
Repurchase of common stock(376) (25,787) (9,024)   (34,811)   (34,811)
Dividends paid ($0.04 per share)    (6,732)   (6,732)   (6,732)
Balance at December 31, 2017159,180
 $2,379,774
 $1,597,897
 $(183,144) $3,794,527
 $170,704
 $3,965,231


 Number  of Shares Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Global Payments Shareholders’ Equity Noncontrolling Interests Total Equity
Balance at May 31, 2016154,422
 $1,976,715
 $1,015,811
 $(246,050) $2,746,476
 $130,928
 $2,877,404
Net income    124,931
   124,931
 12,752
 137,683
Other comprehensive loss, net of tax      (76,667) (76,667) (8,417) (85,084)
Stock issued under share-based compensation plans549
 6,093
     6,093
   6,093
Common stock repurchased - share-based compensation plans(267) (20,532)     (20,532)   (20,532)
Tax benefit from employee share-based compensation  13,017
     13,017
   13,017
Share-based compensation expense  18,707
     18,707
   18,707
Contribution of subsidiary shares to noncontrolling interest related to a business combination  

     

 25,653
 25,653
Distributions to noncontrolling interests        

 (12,365) (12,365)
Repurchase of common stock(2,518) (177,722) (443)   (178,165)   (178,165)
Dividends paid ($0.02 per share)    (3,069)   (3,069)   (3,069)
Balance at December 31, 2016152,186
 $1,816,278
 $1,137,230
 $(322,717) $2,630,791
 $148,551
 $2,779,342
Shareholders' Equity
 Number of SharesPaid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Global Payments Shareholders’ EquityNonredeemable Noncontrolling InterestsTotal Equity
Balance at December 31, 2020298,332 $24,963,769 $2,570,874 $(202,273)$27,332,370 $154,674 $27,487,044 
Net income965,460 965,460 22,404 987,864 
Other comprehensive loss(32,001)(32,001)(10,281)(42,282)
Stock issued under share-based compensation plans2,085 49,545 49,545 49,545 
Common stock repurchased - share-based compensation plans(498)(90,165)(90,165)(90,165)
Share-based compensation expense180,779 180,779 180,779 
Contributions from noncontrolling interests— 69,987 69,987 
Change in ownership attributable to a noncontrolling interest(4,524)92 (4,432)4,432 — 
Repurchases of common stock(15,169)(2,219,143)(294,486)(2,513,629)(2,513,629)
Cash dividends declared ($0.89 per common share)(259,726)(259,726)(259,726)
Balance at December 31, 2021284,750 $22,880,261 $2,982,122 $(234,182)$25,628,201 $241,216 $25,869,417 
See Notes to Consolidated Financial Statements.

GLOBAL PAYMENTS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands, except per share data)


63
 Number  of Shares Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Global Payments Shareholders’ Equity Noncontrolling Interests Total Equity
Balance at May 31, 2015130,558
 $148,742
 $795,226
 $(185,992) $757,976
 $105,577
 $863,553
Net income

 

 271,666
 

 271,666
 18,551
 290,217
Other comprehensive (loss) income

 

 

 (60,058) (60,058) 471
 (59,587)
Stock issued under share-based compensation plans591
 8,480
 

 

 8,480
 

 8,480
Common stock repurchased - share-based compensation plans(220) (12,193) 

 

 (12,193) 

 (12,193)
Tax benefit from share-based compensation plans  7,889
 

 

 7,889
 

 7,889
Share-based compensation expense  30,809
 

 

 30,809
 

 30,809
Issuance of common stock in connection with a business combination25,645
 1,879,458
     1,879,458
   1,879,458
Purchase of subsidiary shares from noncontrolling interest  (11)     (11) (7,539) (7,550)
Sale of subsidiary shares to noncontrolling interest  

     

 16,374
 16,374
Distributions to noncontrolling interests

 

 

 

 

 (23,308) (23,308)
Contribution of subsidiary shares to noncontrolling interest related to a business combination

 3,853
 

 

 3,853
 20,802
 24,655
Repurchase of common stock(2,152) (90,312) (45,642) 

 (135,954) 

 (135,954)
Dividends paid ($0.04 per share)

 

 (5,439) 

 (5,439) 

 (5,439)
Balance at May 31, 2016154,422
 $1,976,715
 $1,015,811
 $(246,050) $2,746,476
 $130,928
 $2,877,404

 Number  of Shares Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Global Payments Shareholders’ Equity Noncontrolling Interests Total Equity
Balance at May 31, 2014137,692
 $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)
Stock issued under share-based compensation plans2,065
 22,550
     22,550
   22,550
Common stock repurchased - share-based compensation plans(197) (7,435)     (7,435)   (7,435)
Tax benefit from share-based compensation plans  5,176
     5,176
   5,176
Share-based compensation expense  21,056
     21,056
   21,056
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)
Dividends paid ($0.04 per share)  

 (5,340)   (5,340)   (5,340)
Balance at May 31, 2015130,558
 $148,742
 $795,226
 $(185,992) $757,976
 $105,577
 $863,553
See Notes to Consolidated Financial Statements.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1—BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Business, consolidation and presentation— We are a leading worldwide provider of paymentpayments technology andcompany delivering innovative software solutions delivering innovativeand services to our customers globally. Our technologies, services and employeeteam member expertise enableallow us to provide a broad range of solutions that allowenable our customers to accept various payment types and operate their businesses more efficiently. We distribute our servicesefficiently across a variety of channels to customers in 30 countries throughout North America, Europe,around the Asia-Pacific region and Brazil and operate in three reportable segments: North America, Europe and Asia-Pacific.

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


We operate in two reportable segments: Merchant Solutions and Issuer Solutions. As described in "Note 3—Business Dispositions," during the second quarter of 2023, we completed the sale of the consumer portion of our Netspend business, which comprised our former Consumer Solutions segment. Our consolidated financial statements include the results of our former Consumer Solutions segment for periods prior to disposition. See "Note 18—Segment Information" in the notes to the accompanying consolidated financial statements for additional information about our segments.

These consolidated financial statements include our accounts and those of our majority-owned subsidiaries, and all intercompany balances and transactions have been eliminated in consolidation. Investments in entities that we do not control are accounted for using the equity or cost method, based on whether or not we have the ability to exercise significant influence over operating and financial policies. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and present our financial position, results of operations and cash flows. On July 27, 2016, the board of directors authorized a change in our fiscal year end from May 31 to December 31. As a result, we refer to the period consisting of the seven months ended December 31, 2016 as the "2016 fiscal transition period.".


Use of estimates— The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates. In particular, uncertainty resulting from global events and other macroeconomic conditions are difficult to predict at this time, and the ultimate effect could result in additional charges related to the recoverability of assets, including financial assets, long-lived assets and goodwill and other losses. These consolidated financial statements reflect the financial statement effects based upon management’s estimates and assumptions utilizing the most currently available information.


Recently adopted accounting pronouncements

Accounting Standards Update ("ASU") 2021-08— In October 2021, the Financial Accounting Standards Board ("FASB") issued ASU 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers." We elected to early adopt ASU 2021-08 during the year ended December 31, 2022, with application to any business combinations for which the acquisition date occurred after January 1, 2022.Prior to the adoption of this update, an acquirer generally recognized assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts that are accounted for in accordance with Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("Topic 606" or "ASC 606"), at fair value on the acquisition date. ASU 2021-08 requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts, which should generally result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements. This update also provides certain practical expedients for acquirers when recognizing and measuring acquired contract assets and contract liabilities from revenue contracts in a business combination.

ASU 2020-04— In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides optional expedients and exceptions to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference London Inter-bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. The amendments in this update also include a general principle that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting
64
determination. If elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions within the relevant ASC Topic or Industry Subtopic that contains the guidance that otherwise would be required to be applied. The amendments in this update were effective upon issuance and, as further updated by ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848,”may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2024. We elected to apply the expedients under ASU 2020-04 to a debt facility amendment completed in December 2021, the application of which did not result in any effect on our consolidated financial statements. As a result of changes in our debt structure during 2022, which did not qualify for the optional expedients under ASU 2020-04, we no longer have any significant indebtedness or borrowings that bear interest at a variable rate based on LIBOR. Therefore, we do not expect the discontinuance of LIBOR or the related effects of ASU 2020-04 will have a material effect on our consolidated financial statements. See "Note 9—Long-Term Debt and Lines of Credit" in the notes to the accompanying consolidated financial statements for further information about our borrowing agreements.

ASU 2019-12— In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which is intended to enhance and simplify various aspects of the accounting for income taxes. The amendments in this update remove certain exceptions to the general principles in ASC Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarifies and amends existing guidance to improve consistency in application of the accounting for franchise taxes, enacted changes in tax laws or rates and transactions that result in a step-up in the tax basis of goodwill. The adoption of ASU 2019-12 on January 1, 2021 did not have a material effect on our consolidated financial statements.

Revenue recognition— WeAt contract inception, we assess the goods and services promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a good or service that is distinct. In accordance with ASC 606, we recognize revenue when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these services.

Merchant Solutions. Our customers in the Merchant Solutions segment contract with us for payment services, which we provide in exchange for consideration for completed transactions. Our payment technologysolutions are similar around the world in that we enable our customers to accept card, check and digital-based payments. Our comprehensive offerings include, but are not limited to, authorization, settlement and funding services, customer support, chargeback resolution, payment security services, consolidated billing and reporting. In addition, we may sell or lease point-of-sale terminals or other equipment to customers.

For our payment services, the nature of our promise to the customer is that we stand ready to process transactions the customer requests on a daily basis over the contract term. Since the timing and quantity of transactions to be processed by us is not determinable, we view payment services to comprise an obligation to stand ready to process as many transactions as the customer requests. Under a stand-ready obligation, the evaluation of the nature of our performance obligation is focused on each time increment rather than the underlying activities. Therefore, we view payment services to comprise a series of distinct days of service that are substantially the same and have the same pattern of transfer to the customer. Accordingly, the promise to stand ready is accounted for 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 isas a single series performance obligation.

In order to provide our payment services, enterprise software solutionswe route and other value-addedclear each transaction through the applicable payment network. We obtain authorization for the transaction and request funds settlement from the card issuing financial institution through the payment network. When third parties are involved in the transfer of goods or services directly to our customers.customer, we consider the nature of each specific promised good or service and apply judgment to determine whether we control the good or service before it is transferred to the customer or whether we are acting as an agent of the third party. To determine whether or not we control the good or service before it is transferred to the customer, we assess indicators including which party is primarily responsible for fulfillment and which party has discretion in determining pricing for the good or service, as well as other considerations. Based on our assessment of these indicators, we have concluded that our promise to our customer to provide our payment services is distinct from the services provided by the card issuing financial institutions and payment networks in connection with payment transactions. We also provide certaindo not have the ability to direct the use of and obtain substantially all of the benefits of the services provided by the card issuing financial institutions and payment networks before those services are transferred to our customer, and on that basis, we do not control those services prior to being transferred to our customer. As a result, we present our revenues net of the interchange fees retained by the card issuing financial institutions and the fees charged by the payment networks.
65

The majority of our payment services through a wholesale distribution channel comprised of independent sales organizations ("ISOs"). The majority of our revenues is generated by servicesare priced as a percentage of transaction value or a specified fee per transaction, depending on the card type or the vertical.type. We also charge software licensing and subscriptionother per occurrence fees and other fees based onfor specific services that aremay be unrelated to the number of transactions or the transaction value. Revenue from credit cards

Given the nature of the promise and signature debit cards is generallythe underlying fees based on unknown quantities or outcomes of services to be performed over the contract term, the total consideration is determined to be variable consideration. The variable consideration for our payment service is usage-based and, therefore, it specifically relates to our efforts to satisfy our payment services performance obligation. The variability is satisfied each day the service is provided to the customer. We directly ascribe variable fees to the distinct day of service to which it relates, and we consider the services performed each day in order to ascribe the appropriate amount of total fees to that day. Therefore, we measure revenues for our payment service on a percentage of transaction value along with other related fees, while revenue from PIN-based debit cards is typicallydaily basis based on a fee per transaction.the services that are performed on that day.


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

Once we determine the performance obligations and the transaction price, including an estimate of any variable consideration, we then allocate considerationthe transaction price to each elementperformance obligation in the contract using a relative standalone selling price method. We determine standalone selling price based on the relative-selling-price method.price at which the good or service is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price by considering all reasonably available information, including market conditions, trends or other company- or customer-specific factors.

Substantially all of the performance obligations within our SaaS arrangements described above are satisfied over time. We satisfy the combined SaaS performance obligation by standing ready to provide access to the SaaS. Consideration for SaaS arrangements may consist of fixed or usage-based fees. Revenue is recognized over the period for which the services are provided or by directly ascribing any variable fees to the distinct day of service based on the services that are performed on that day. The performance obligations associated with equipment sales, perpetual software licenses and certain professional services are generally satisfied at a point in time when they are transferred to the customer. For certain other professional services that represent separate performance obligations, we generally use the input method and recognize revenue based on the number of hours incurred or services performed to date in relation to the total services expected to be required to satisfy the performance obligation.

Issuer Solutions. Issuer Solutions segment revenues are primarily derived from long-term contracts with financial institutions and other financial service providers. Issuer Solutions customer contracts typically include an obligation to provide processing services to financial institutions and other financial services providers. Payment processing services revenues are generated primarily from charges based on the number of accounts on file, transactions and authorizations processed, statements generated and/or mailed, managed services, cards embossed and mailed, and other processing services for cardholder accounts on file. Most of the customer contracts have prescribed annual minimums, penalties for early termination, and service level agreements that may affect contractual fees if specific service levels are not achieved. We have determined that these processing services represent a stand-ready obligation comprising a series of distinct days of services that are substantially the same and have the same pattern of transfer to the customer.

Issuer Solutions contracts may also include additional performance obligations relating to loyalty redemption services and other professional services. Similar to processing services, we have determined that loyalty redemption services represent a stand-ready obligation comprising a series of distinct days of service that are substantially the same and have the same pattern of transfer to the customer.

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To the extent a contract includes multiple promised services, we must apply judgment to determine whether promised services are capable of being distinct and are distinct in the context of the contract. If these criteria for being distinct are not met, the promised services are combined and accounted for as a single performance obligation.

The performance obligations to provide processing services and loyalty redemption services include variable consideration. The variable consideration for our services is usage-based and, therefore, it specifically relates to our efforts to satisfy our services performance obligation. The variability is satisfied each day the service is provided to the customer. We directly ascribe variable fees to the distinct day of service to which it relates, and we consider the services performed each day in order to ascribe the appropriate amount of total fees to that day. Therefore, we measure revenues for our services on a daily basis based on the services that are performed on that day.

Professional services performance obligations are satisfied over time. For professional services, we recognize revenue based on the labor hours incurred for time and materials projects or on a straight-line basis for fixed-fee projects.

In some cases, we pay certain of our customers a signing incentive at contract inception or renewal. Consideration paid to customers is accounted for as a reduction of the transaction price and recognized as a reduction in revenues as the related services are provided to the customer, typically over the contract term. The deferred portion of consideration paid to customers is classified within other assets in our consolidated balance sheets.

Other Issuer Solutions customer arrangements customers pay in advance, butprovide business-to-business ("B2B") payment services, consisting of a stand-ready obligation to process financial transactions for which revenue is recognized on a daily basis based on the services that are performed on that day. Customer contracts may also include subscription based SaaS arrangements that automate key procurement processes and enable virtual cards and integrated payments options, for which revenue is recognized over time on a ratable basis over the service period.  In multiple element arrangements where more-than-incidental software elementscontract term beginning on the date that the services are included,first made available to the entire amountcustomer.

Consumer Solutions. During the second quarter of revenue under2023, we completed the arrangement is deferred until all elements have been delivered or objective evidencesale of the fair valueconsumer portion of our Netspend business, which comprised our former Consumer Solutions segment. For the undelivered items can be established. The amounts paidperiods prior to disposition, our Consumer Solutions arrangements included a stand-ready performance obligation to provide account access and facilitate purchase transactions. Revenues principally consisted of fees collected from cardholders and fees generated by cardholder activity in advance by customersconnection with the programs that we managed. Customers were typically charged a fee for each purchase transaction made using their cards, unless the customer was on a monthly or annual service plan, in which case the customer was instead charged a monthly or annual subscription fee, as applicable. Customers were also charged a monthly maintenance fee after a specified period of inactivity. We also charged fees associated with additional services offered in connection with our accounts, including the use of overdraft features, a variety of bill payment options, card replacement, foreign exchange and amounts deferred for software arrangements are reflected as unearnedcard-to-card transfers of funds initiated through our call centers.

We determined that we had a right to consideration from a customer in an amount that corresponded directly with our performance completed to date. As a result, we recognized revenue in the consolidated balance sheets withamount to which we had a right to invoice. Revenues were recognized net of fees charged by the portion estimated to be recognized as revenue within the next twelve months reflectedpayment networks for services they provided in current liabilitiesprocessing transactions routed through them.

Cash, cash equivalents and the remainder reflected in other noncurrent liabilities.

Cash andrestricted cash equivalents— Cash and cash equivalents include cash on hand and all liquid investments with a maturity of three months or less when purchased. We consider certain portions of our cash and cash equivalents to be unrestricted but not available for general purposes. The amount of cash that we consider to be available for general purposes, $703.3 million and $713.0 million as of December 31, 2023 and 2022, respectively, does not include the following: (i) settlement-related cash balances, (ii) funds held as collateral for merchant losses ("Merchant Reserves") and (iii) funds held for customers. Settlement-related cash balances represent funds that we hold when the incoming amount from the card networks precedes the funding obligation to the merchant. Settlement-related cash balances are not restricted;restricted in their use; however, these funds are generally paid out in satisfaction of settlementa processing obligationsobligation the following day. Merchant Reserves serve as collateral

to minimize contingent liabilities associated with any losses that may occur under the merchant agreement. We recordrecognize a corresponding liability in settlement processing assets and settlement processing obligations in our consolidated balance sheet.sheets. While this cash is not restricted in its use, we believe that designating this cash as Merchant Reserves strengthens our fiduciary standing with financial institutions that sponsor us and is in accordance with guidelines set by the card networks. See "Note 3—Settlement Processing Assets and Obligations" and discussion below for further information.us. Funds held for customers, which are not restricted in their use, include amounts collected before the corresponding obligation is due to be settled to or at the direction of our customers.
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Restricted cash includes amounts that cannot be withdrawn or used for general operating activities under legal or regulatory restrictions. Restricted cash consists of amounts deposited by customers for prepaid card transactions and funds held as a liquidity reserve that are subject to local regulatory restrictions requiring appropriate segregation and restriction in their use. Restricted cash is included in prepaid expenses and other current assets in the consolidated balance sheets with a corresponding liability in accounts payable and accrued liabilities.

We regularly maintain cash balances with financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit or the equivalent outside the U.S. As of December 31, 2023, approximately 75% of our total balance of cash and cash equivalents was held within a small group of financial institutions, primarily large money center banks. Although we currently believe that the financial institutions with whom we do business will be able to fulfill their commitments to us, there is no assurance that those institutions will be able to continue to do so. We have not experienced any losses associated with our balances in such accounts for the year ended December 31, 2023, 2022 or 2021.

A reconciliation of the amounts of cash and cash equivalents and restricted cash in the consolidated balance sheets to the amount in the consolidated statements of cash flows is as follows:

December 31,
20232022
(in thousands)
Cash and cash equivalents$2,088,887 $1,997,566 
Restricted cash167,190 147,422 
Cash included in assets held for sale798 70,618 
Cash, cash equivalents and restricted cash shown in the statement of cash flows$2,256,875 $2,215,606 

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

Allowance for credit losses on accounts receivable— We are exposed to credit losses on accounts receivable balances. We utilize a combination of aging and loss-rate methods to develop an estimate of current expected credit losses, depending on the nature and risk profile of the underlying asset pool. A broad range of information is considered in the estimation process, including historical loss information adjusted for current conditions and expectations of future trends. The estimation process also includes consideration of qualitative and quantitative risk factors associated with the age of asset balances, expected timing of payment, contract terms and conditions, changes in specific customer risk profiles or mix of customers, geographic risk, industry or economic trends and relevant environmental factors. Accounts receivable is presented net of an allowance for credit losses of $19.0 million and $21.0 million as of December 31, 2023 and 2022, respectively, including $3.3 million presented within assets held for sale in the consolidated balance sheet as of December 31, 2022 as further discussed in "Note 3—Business Dispositions."

The measurement of the allowance for credit losses on accounts receivable is recognized through credit loss expense and is included as a component of selling, general and administrative expense in our consolidated statements of income. We recognized credit loss expense of $23.3 million, $15.0 million and $12.8 million for the years ended December 31, 2023, 2022 and 2021, respectively. Write-offs are recognized in the period in which the asset is deemed to be uncollectible. Recoveries are recognized when received as a direct credit to the credit loss expense.

Revenues are recognized net of estimated billing adjustments. Adjustments to customer invoices are charged against the allowance for billing adjustments.
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Contract costs— We capitalize certain costs to obtain contracts with customers, including employee sales commissions and fees to business partners. At contract inception, we capitalize costs incurred that we expect to recover and that would not have been incurred if the contract had not been obtained. In certain instances in which costs related to obtaining customers are incurred after the inception of the customer contract, such costs are capitalized as the corresponding liability is recognized. We also capitalize certain costs incurred to fulfill our contracts with customers that (i) relate directly to the contract, (ii) are expected to generate resources that will be used to satisfy our performance obligation under the contract and (iii) are expected to be recovered through revenues generated under the contract. Capitalized costs to obtain and to fulfill contracts are included in other noncurrent assets.

Contract costs are amortized to operating expense in our consolidated statements of income on a systematic basis consistent with the transfer to the customer of the goods or services to which the asset relates. Amortization of capitalized costs to obtain customer contracts is included in selling, general and administrative expenses in the consolidated statements of income, while amortization of capitalized costs to fulfill customer contracts is included in cost of services. We utilize a straight-line or proportional amortization method depending upon which method best depicts the pattern of transfer of the goods or services to the customer. We amortize these assets over the expected period of benefit, which, based on the factors noted above, is typically three to seven years. In order to determine the appropriate amortization period for capitalized contract costs, we recordconsider a combination of factors, including customer attrition rates, estimated terms of customer relationships, the useful lives of technology we use to provide goods and services to our customers, whether future contract renewals are expected and if there is any incremental commission expected to be paid associated with a contract renewal. Costs to obtain a contract with an expected period of benefit of one year or less are recognized as an expense when incurred. We evaluate contract costs for impairment by comparing, on a pooled basis, the expected future net cash flows from underlying customer relationships to the carrying amount of the capitalized contract costs.

Up-front distributor and partner payments— We capitalize certain up-front contractual payments to third-party distributors and partners and recognize the capitalized amount as expense ratably over the period of benefit, which is generally the contract period. If the contract requires the distributor or partner to perform specific acts and no other conditions exist for the distributor or partner to earn or retain the up-front payment, then we recognize the capitalized amount as an expense when the performance conditions have been met. Up-front distributor and partner payments are classified in "customer deposits" include amounts collected prior to remittance on our customers' behalf.consolidated balance sheets within prepaid expenses and other current assets and other noncurrent assets and the related expense is reported within selling, general and administrative expenses in our consolidated statements of income.


Settlement processing assets and obligations—Settlement processing assets Funds settlement refers to the process in our Merchant Solutions segment of transferring funds between card issuers and obligations representmerchants for merchant sales and credits processed on our systems. We use our internal network to provide funding instructions to financial institutions that in turn fund the merchants. We process funds settlement under two models, a sponsorship model and a direct membership model.

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

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

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

Settlement processing assets and obligations include the following components:

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

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

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

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

•Merchant Reserves. Reserves held to minimize contingent liabilities associated with Accounting Standards Codification ("ASC") Subtopic 210-20, Offsetting,losses that may occur under the merchant agreement.

•Liability to Members. Our liability to the Members for transactions that have not yet been funded to the merchants.

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

•Allowance for credit and other merchant losses on settlement assets. Allowances, charges or expected credit losses on chargebacks, merchant fraud or other merchant-related reason.

We apply offsetting to our settlement processing assets and obligations where a right of setoff exists. See "Note 3—Settlement Processing AssetsIn the sponsorship model, we apply offsetting by Member agreement because the Member is ultimately responsible for funds settlement. With these Member transactions, we do not have access to the gross proceeds of the receivable from the payment networks and, Obligations"thus, do not have a direct obligation or any ability to satisfy the payable to fund the merchant. In these situations, we apply offsetting to determine a net position for further information.each Member agreement. If that net position is an asset, we reflect the net amount in settlement processing assets in our consolidated balance sheet. If that net position is a liability, we reflect the net amount in settlement processing obligations in our consolidated balance sheet. In the direct membership model, offsetting is not applied, and the individual components are presented as an asset or obligation based on the nature of that component.


ReserveAllowance for operatingcredit and other merchant losses on settlement assets— Our merchant customers are liable for any charges or losses that occur under the merchant agreement. We experience losseshave a risk of loss in our card processing services when we are unableassociated with the liability to collect amounts from merchant customers for any charges properly reversed by the card issuing financial institutions. WhenWe are therefore exposed to credit losses on these settlement processing assets. We utilize a combination of aging and loss-rate methods to develop an estimate of current expected credit losses, depending on the nature and risk profile of the underlying asset pool. A broad range of information is considered in the estimation process, including historical loss information adjusted for current conditions and expectations of future trends. The estimation process also includes consideration of qualitative and quantitative risk factors associated with the age of asset balances, expected timing of payment, contract terms and conditions, changes in specific customer risk profiles or mix of customers, geographic risk, industry or economic trends and relevant environmental factors. We require cash deposits, guarantees, letters of credit and other types of collateral from certain merchants to minimize the risk of loss, and we also utilize a number of systems and procedures to manage merchant risk. The allowance for credit losses on settlement processing assets was $9.7 million and $2.3 million as of December 31, 2023 and 2022, respectively.

The measurement of the allowance for credit losses on settlement assets is recognized through credit loss expense and is included as a component of cost of service in our consolidated statements of income. We recognized credit loss expense of $19.2 million, $13.0 million and $3.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. Write-offs
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are recognized in the period in which the asset is deemed to be uncollectible. Recoveries are recognized when received as a direct credit to the credit loss expense.

Additionally, when we are not able to collect these amounts from the merchants due to merchant fraud, insolvency, bankruptcy or any other reason, we may be liable for the reversed charges. We require cash deposits, guarantees, letters of credit and other types of collateral from certain merchants to minimize any such contingent liability, and we also utilize a number of systems and procedures to manage merchant risk. We experience check guarantee losses when we are unable to collect the full amount of a guaranteed check from the checkwriter. We refer to both merchant credit losses and check guarantee losses as "operating losses." We recordrecognize an estimated liability for operatingmerchant losses comprised of estimated known losses and estimated incurred but not reported losses.losses, which is included in accrued liabilities in our consolidated balance sheet. The provision for merchant losses is included as a component of cost of service in our consolidated statements of income.


CapitalizedReserve for contract contingencies and processing errors— A significant number of our customer acquisition costs— Capitalized customer acquisition costs, whichcontracts in our Issuer Solutions segment contain service level agreements that can result in performance penalties payable by us if we do not meet contractually required service levels. We recognize an accrual for estimated performance penalties and processing errors. When providing for these accruals, we consider such factors as our history of incurring performance penalties and processing errors, actual contractual penalty charge rates in our contracts, progress towards milestones and known processing errors. These accruals are included in accrued liabilities in our consolidated balance sheets. Depending on the nature of item, transaction processing provisions are either included as a reduction of the transaction price and recognized as a reduction in revenues as the related services are provided to the customer, or recognized as a component of cost of service, in our consolidated statements of income.

Reserve for cardholder losses— Through services offered in our former Consumer Solutions segment, we were exposed to losses due to cardholder fraud, payment defaults and other noncurrent assets, consistforms of (1) up-front signing bonus payments madecardholder activity as well as losses due to certain salespersonsnonperformance of third parties who received cardholder funds for transmittal to the establishmentissuing financial institutions. We established a reserve for losses we estimated would arise from processing customer transactions, debit card overdrafts, chargebacks for unauthorized card use and merchant-related chargebacks due to nondelivery of certaingoods and services. These reserves were established based upon historical loss and recovery rates and cardholder activity for which specific losses could be identified. Prior to the disposition of our new merchant relationships and (2)consumer business, the provision for cardholder losses was included as a deferred acquisition cost representing the estimatedcomponent of cost of buying out the residual commissionsservice in our consolidated statements of certain vested salespersons. Capitalized customer acquisition costs represent incremental, direct customer acquisition costs that are recoverable through merchant profitability. The capitalized customer acquisition costs are amortized using a method which approximates a proportional revenue approach over the initial term of the related merchant contract.income.


Up-front signing bonuses paid for certain new accounts are based on the estimated profitability for the first year of the merchant contract. The signing bonus, amount capitalized, and related amortization are adjusted after the first year to reflect the actual profitability generated by the merchant contract during that year. The deferred customer acquisition cost asset is accrued over the first year of merchant processing, consistent with the build-up in the accrued buyout liability, as described below.

We evaluate the capitalized customer acquisition costs for impairment on an annual basis by comparing, on a pooled basis by vintage month of origination, the expected future net cash flows from underlying merchant relationships to the carrying amount of the capitalized customer acquisition costs. 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.

Property and equipment— Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are generally calculated using the straight-line method, except for certain technology assets discussed below.method. Leasehold improvements are amortized over the lesser of the remaining term of the lease and the useful life of the asset.


We develop software that is used to provide services to customers. Capitalization of internal-use software costs, primarily associated with operating platforms, occurs when we have completed the preliminary project stage, management authorizes the project, management commits to funding the project, and it is probable the project will be completed and the project will be used to perform the function intended. The preliminary project stage consists of the conceptual formulation of alternatives, the evaluation of alternatives, the determination of existence of needed technology and the final selection of alternatives. Costs incurred during the preliminary project stage are expensedrecognized as expense as incurred. Internal-useCapitalized internal-use software is amortized over its estimated useful life, which is typically 2five to 10ten years, in a manner that best reflects the pattern of economic use of the assets.



Goodwill— We have historically performed our annual goodwill impairment test as of January 1. 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.

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


Factors we consider in the qualitative assessment include general macroeconomic conditions, industry and market conditions, cost factors, overall financial performance of our reporting units, events or changes affecting the composition or carrying amount of the net assets of our reporting units, sustained decrease in our share price, and other relevant entity-specific events. If we elect to bypass the qualitative assessment or if we determine, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, a quantitative test would be required. The quantitative assessment compares the estimated fair value of the reporting unit to its carrying amount, and recognizes an impairment loss for the amount by which a reporting unit’s carrying amount exceeds its estimated fair value, without exceeding the total amount of goodwill allocated to that reporting unit.


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During the firstsecond quarter of 2017, we revised2022, a sustained decline in our share price and increases in discount rates, primarily resulting from increased economic uncertainty, indicated a potential decline in fair value and triggered a requirement to evaluate our Issuer Solutions and former Business and Consumer Solutions reporting units for potential impairment as of June 30, 2022. Furthermore, the estimated sales price for the consumer business portion of our former Business and Consumer Solutions reporting unit structure withinalso indicated a potential decline in fair value as of June 30, 2022. We determined on the basis of the quantitative assessment that the fair value of our North America segment to reflect changes made in connection with the integration of Heartland Payment Systems, Inc. ("Heartland"). Under the revisedIssuer Solutions reporting unit structure,was still greater than its carrying amount as of June 30, 2022, indicating no impairment. Based on the quantitative assessment of our former Business and Consumer Solutions reporting unit, including consideration of the consumer business disposal group and the remaining assets of the reporting unit, we operate two reporting unitsrecognized a goodwill impairment charge of $833.1 million in our North America segment: (i) Payments and (ii) Integrated Solutions and Vertical Markets. We reassignedconsolidated statement of income during the three months ended June 30, 2022. The estimated fair value used in the goodwill previously allocatedimpairment assessment was considered to North America merchant services and Heartland tobe a nonrecurring Level 3 measurement of the two new reporting units using a relative fair value approach. Asvaluation hierarchy.

During the third quarter of 2022, as a result of the pending divestiture of our consumer business and changes in how our business is managed, we realigned the businesses previously comprising our former Business and Consumer Solutions segment to include the B2B portion within our Issuer Solutions segment and the consumer portion forming our Consumer Solutions segment. In connection with the change in presentation of segment information, the B2B portion of our former Business and Consumer Solutions reporting unit was realigned into the Issuer Solutions reporting unit, including a reallocation of goodwill. During the second quarter of 2023, we completed the sale of our consumer business. In addition, during 2023, we realigned our reporting units we performed goodwill impairment tests immediately beforebased on organizational changes and after this change in reporting units and determined that there was no impairment.the acquired operations of EVO.

Following the revision described above, we now have seven reporting units: North America Payments, North America Integrated Solutions and Vertical Markets, U.K. merchant services, Asia-Pacific merchant services, Central and Eastern Europe merchant services, Russia merchant services and Spain merchant services. As of October 1, 2017,2023, our reporting units consisted of the following: North America Payments Solutions, Vertical Market Software Solutions, Europe Merchant Solutions, Spain Merchant Solutions, Asia-Pacific Merchant Solutions, Latin America Merchant Solutions and Issuer Solutions. As of October 1, 2023, we elected to performperformed a qualitativequantitative assessment of impairment for each of our Issuer Solutions, Asia-Pacific Merchant Solutions and Latin America Merchant Solutions reporting units and a qualitative assessment for all other reporting units. We determined on the basis of qualitative factorsthe quantitative assessments of our Issuer Solutions, Asia-Pacific Merchant Solutions and Latin America Merchant Solutions reporting units that the fair value of each reporting unit was greater than its respective carrying amount, indicating no impairment. Additionally, we determined on the basis of the qualitative factors that the fair value of other reporting units was not more likely than not less than the respective carrying amount. We believe that the fair value of each of our reporting units is substantially in excess of its carrying amount.amounts.


Other intangible assets— Other intangible assets include customer-related intangible assets (such as customer lists, merchant contracts and merchant contracts)referral agreements), contract-based intangible assets (such as noncompete agreements, referraldistributor agreements and processing rights), acquired technologies, trademarks and trade names associated with acquisitions.business combinations. These assets are amortized over their estimated useful lives. The useful lives for customer-related intangible assets are determined based primarily on forecasted cash flows, which include estimates for the revenues, expenses, and customer attrition associated with the assets. The useful lives of contract-based intangible assets are equal to the terms of the agreements. The useful lives of acquired technologies are based on an estimate of the period over which we expect to receive economic benefit. The useful lives of amortizable trademarks and trade names are based on ouran estimate of the period over which we will earn revenues for the related assets, including contemplation of any future plans to use the trademarks and trade names in the applicable markets. Acquired technology is amortized on a

We use the straight-line basis over its estimated useful life.

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

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Implementation costs incurred in a cloud computing arrangement— We capitalize implementation costs associated with cloud computing arrangements that are service contracts, and we amortize these capitalized implementation costs to expense on a straight-line basis over the term of the applicable hosting arrangement. Our cloud computing arrangements involve services we use to support certain internal corporate functions as well as technology associated with revenue-generating activities. As of December 31, 2023 and 2022, capitalized implementation costs, net of accumulated amortization, were $206.5 million and $142.9 million, respectively, and are presented within other noncurrent assets in the consolidated balance sheets. Amortization expense for the years ended December 31, 2023, 2022 and 2021 was $3.8 million, $3.1 million and $3.0 million, respectively, and is presented in the same line item in the consolidated statements of income as the expense for the associated cloud services arrangement.

Leases— We evaluate each of our lease and service arrangements at inception to determine if the arrangement is, or contains, a lease and the appropriate classification of each identified lease. A lease exists if we obtain substantially all of the economic benefits of, and have the right to control the use of, an asset for a period of time. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the acquired customer relationships.lease agreement. We recognize right-of-use assets and lease liabilities at the lease commencement date based on the present values of fixed lease payments over the term of the lease. Right-of-use assets may also be adjusted to reflect any prepayments made or any incentive payments received. Operating lease costs and depreciation expense for finance leases are recognized as expense on a straight-line basis over the lease term. We consider a termination or renewal option in the determination of the lease term when it is reasonably certain that we will exercise that option. Because our leases generally do not provide a readily determinable implicit interest rate, we use an incremental borrowing rate to measure the lease liability and associated right-of-use asset at the lease commencement date. The incremental borrowing rate used is a fully collateralized rate that considers our credit rating, market conditions and the term of the lease at the lease commencement date. We have made an accounting policy election to not recognize assets or liabilities for leases with a term of less than 12 months and to account for all components in a lease arrangement as a single combined lease component for all asset classes with the exception of computer equipment, for which we account for lease and nonlease components separately.


We use the straight-line method of amortization for our contract-based intangibles, amortizable trademarks and trade names and acquired technologies.

Impairment of long-lived assets— We regularly evaluate whether events and circumstances have occurred that indicate the carrying amount of property and equipment, capitalized software, lease right-of-use assets and finite-life intangible assets may not be recoverable. When factors indicate that these long-lived assets should be evaluated for possible impairment, we assess the potential impairment by determining whether the carrying amount of such long-lived assets will be recovered through the future undiscounted cash flows expected from use of

the asset and its eventual disposition. The evaluation is performed at the asset group level, which is the lowest level of identifiable cash flows. If the carrying amount of the asset group is determined not to be not recoverable, a write-down to fair value is recorded.recognized. Fair values are determined based on quoted market prices or discounted cash flow analysis as applicable. We regularly evaluate whether events and circumstances have occurred that indicate the useful lives of property and equipment and finite-life intangible assets may warrant revision. The

Assets held for sale— We classify an asset or business as a held for sale disposal group if we have committed to a plan to sell the asset or business within one year and are actively marketing the asset or business in its current condition for a price that is reasonable in comparison to its estimated fair value. Disposal groups held for sale are reported at the lower of carrying amountsamount or fair value less costs to sell. Long-lived assets classified as held for sale are not subject to depreciation or amortization, and both the assets and any liabilities directly associated with the disposal group are presented net within separate current and noncurrent held for sale line items in our consolidated balance sheet. Subsequent changes to the estimated selling price of an asset or disposal group held for sale are recognized as gains or losses in our consolidated statement of income and any subsequent gains are limited to the cumulative losses previously recognized.

Notes receivable and allowance for credit losses— During 2023, we provided seller financing in connection with the sale of our long-lived assets,former consumer and gaming businesses. We classify notes receivable as held for investment based on the intent and ability to hold for the foreseeable future or until maturity or payoff, and the notes are presented at amortized cost within notes receivable in our consolidated balance sheet. Interest income is recognized using the effective interest method, which includes the accretion of the difference between the fair value at inception and the face value of the notes.

We are exposed to credit losses on the notes. We utilize a probability-of-default and loss given default method to develop an estimate of current expected credit losses applied at the loan level. A variety of factors are considered to estimate the expected credit loss, including propertythe probability of default (representing the probability the asset will default within a given time
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frame), the loss given default (representing the percentage of the asset that is not expected to be collected due to default), leverage ratios, interest rates, market and equipmentindustry data, and finite-life intangible assets, were not impaired atforecasts that affect the collectibility of the reported amount. The estimation process also includes consideration of qualitative and quantitative risk factors associated with expected timing of payment, industry trends and current and anticipated future economic conditions. Expected credit losses are estimated over the life of the loans, adjusted for expected prepayments when appropriate. Notes receivable are presented net of an allowance for credit losses of $15.2 million as of December 31, 20172023. We recognized a noncash credit loss of $15.2 million for the year ended December 31, 2023, which is included as a component of interest and 2016.other expenses in our consolidated statements of income.


Equity method investments— We have certain investments, including a 45% interest in China UnionPay Data Co., Ltd. that we account for using the equity method of accounting. Equity method investments are recognized initially at cost and subsequently adjusted for our portion of equity in earnings, cash contributions and distributions, and foreign currency translation adjustments. As of December 31, 2023 and 2022, we had total equity method investments of $989.6 million and $957.2 million, respectively, presented within other noncurrent assets in the consolidated balance sheets.

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

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.

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


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

Accounting Standards Codification ("ASC") Topic 740, "Income Taxes" ("ASC 740") requires companies to recognize the effect of tax law changes in the period of enactment. To address the application of GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed in reasonable detail to complete the accounting for certain income tax effects of the U.S. Tax Cuts and Jobs Act of 2017 (the "2017 U.S. Tax Act"), which was enacted on December 22, 2017, the U.S. Securities and Exchange Commission (the "SEC") issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides guidance for registrants regarding the application of ASC Topic 740 in the reporting period that includes December 22, 2017 under three scenarios:

Measurement of certain income tax effects is complete. Registrants must reflect the tax effects of the 2017 U.S. Tax Act for which the accounting is complete.

Measurement of certain income tax effects can be reasonably estimated. Registrants must report provisional amounts for those specific income tax effects of the 2017 U.S. Tax Act for which the accounting is incomplete but a reasonable estimate can be determined. Provisional amounts or adjustments to provisional amounts identified in the measurement period, as defined, should be included as an adjustment to tax expense or benefit from continuing operations in the period the amounts are determined.

Measurement of certain income tax effects cannot be reasonably estimated. Registrants are not required to report provisional amounts for any specific income tax effects of the 2017 U.S. Tax Act for which a reasonable estimate cannot be determined, and would continue to apply ASC 740 based on the provisions of the tax laws that were in effect immediately prior to the enactment of the 2017 U.S. Tax Act. Registrants would report the provisional amounts of the tax effects of the 2017 U.S. Tax Act in the first reporting period in which a reasonable estimate can be determined.


SAB 118 provides that the measurement period is complete when a company's accounting is complete and in no circumstances should the measurement period extend beyond one year from the enactment date. Due to the timing of enactment of this new tax legislation, certain details of the 2017 U.S. Tax Act were not fully understood or operationalized by the time we issued this Annual Report on Form 10-K.

In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02 "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." ASU 2018-02. The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 U.S. Tax Act and require certain disclosures about stranded tax effects. This update is effective January 1, 2019, and we are still evaluating the effect of the update on our consolidated financial statements. Further guidance could be forthcoming from the FASB, the U.S. Treasury or the SEC that could give rise to further effects of the 2017 U.S. Tax Act on our consolidated financial statements in future periods.


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


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


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


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We formally assess, both at inception and at least quarterly, whether the financial instruments used in hedging transactions are effective at offsetting changes in cash flows of the related underlying exposure. Fluctuations in the value of these instruments generally are offset by changes in the forecasted cash flows of the underlying exposures being hedged. This offset is driven by the high degree of effectiveness between the exposure being hedged and the hedging instrument. We designated each of our active interest rate swap agreements as a cash flow hedge of interest payments on variable rate borrowings. Any ineffective portion

In addition, we designated our Euro-denominated senior notes as a hedge of a changeour net investment in our Euro-denominated operations. The purpose of the fair valuenet investment hedge is to offset the volatility of a qualifying instrument would be immediately recognizedour net investment in earnings. our Euro-denominated operations due to changes in foreign currency exchange rates. The foreign currency remeasurement gains and losses associated with the Euro-denominated senior notes and our Euro-denominated operations are presented within the same components of other comprehensive income and accumulated comprehensive income.

See "Note 710—Long-Term DebtDerivatives and Lines of Credit"Hedging Instruments" for more information about our interest rate swaps.derivative instruments.


Fair value measurements— Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the reporting date. GAAP establishes a fair value hierarchy that categorizes the inputs to valuation techniques into three broad levels. Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities. Level 2 inputs are based on other observable market data, such as quoted prices for similar assets and liabilities, and inputs other than quoted prices that are observable such as interest rates and yield curves. Level 3 inputs are developed from unobservable data reflecting our assumptions and include situations where there is little or no market activity for the asset or liability.


Fair value of financial instruments— The carrying amounts of cash and cash equivalents, restricted cash, receivables, settlement lines of credit, accounts payable and accrued liabilities approximate their fair value given the short-term nature of these items. Our long-term debt includes variable interest rates

The estimated fair value of our senior notes was based on quoted market prices in an active market and is considered to be a Level 1 measurement of the London Interbank Offered Rate ("LIBOR"), the Federal Funds Effective Rate (as defined in the debt agreements) or the prime rate, plus a marginvaluation hierarchy. The estimated fair value of our convertible notes was based on our leverage position. At December 31, 2017,a lattice pricing model and is considered to be a Level 3 measurement of the carrying amountvaluation hierarchy. Certain of our long-term debt arrangements include variable interest rates. The fair value of long-term debt with variable interest rates was determined using Level 2 inputs, and approximated carrying amount, exclusive of debt issuance costs approximated fair value, which is calculated using

Level 2 inputs.costs. The fair values of our swap agreements were determined based on the present value of the estimated future net cash flows using implied rates in the applicable yield curve as of the valuation date and classified within Level 2 of the valuation hierarchy. See "Note 79—Long-Term Debt and Lines of Credit" and "Note 10—Derivatives and Hedging Instruments" for further information.


The estimated fair value of our notes receivable was based on a discounted cash flow approach and is considered to be a Level 3 measurement of the valuation hierarchy. See "Note 3—Business Dispositions" for further information.

We also have investments in equity instruments without readily determinable fair values. As permitted, we have elected a measurement alternative for equity instruments that do not have readily determinable fair values. Under such alternative, these instruments are measured at cost plus or minus any changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer less any impairments. Any resulting change in carrying amount would be reflected in net income.

Redeemable Noncontrolling Interests— Redeemable noncontrolling interests refers to noncontrolling interests that are redeemable upon the occurrence of an event that is not solely within our control and is reported in the mezzanine section between total liabilities and shareholders' equity, as temporary equity in our consolidated balance sheets. The redeemable noncontrolling interests for each subsidiary are adjusted each reporting period to the higher of: (i) the initial carrying amount, increased or decreased for the noncontrolling interest's share of comprehensive income (loss), capital contributions and distributions or (ii) the redemption price. Certain of our redeemable noncontrolling interests are redeemable at fair value and are considered to be a Level 3 measurement of the valuation hierarchy. Refer to "Note 16—Noncontrolling Interests," for further information.

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


Gains and losses on transactions denominated in currencies other than the functional currency are generally included in determining net income for the period. For the yearyears ended December 31, 2017, the 2016 fiscal transition period2023, 2022 and the years ended May 31, 2016 and 2015,2021, our transaction gains and losses were insignificant. Transaction gains and losses on intercompany balances of a long-term investment nature are recordedpresented as a component of other comprehensive income (loss) and included in accumulated comprehensive income (loss) within equity in our consolidated balance sheets. When a foreign subsidiary is divested in its entirety, the associated accumulated foreign currency translation gains or losses are reclassified from the separate component of equity into our consolidated statement of income.


Earnings per share— Basic earnings per share ("EPS") is computed by dividing reported net income attributable to Global Payments by the weighted-average number of shares outstanding during the period. Earnings available to common shareholders is the same as reported net income attributable to Global Payments for all periods presented.
 
Diluted EPS is computed by dividing net income attributable to Global Payments by the weighted-average number of shares outstanding during the period, including the effect of share-based awards, convertible notes or other potential securities that would have a dilutive effect on earnings per share.EPS. All stock options with an exercise price lower than the average market share price of our common stock for the period are assumed to have a dilutive effect on EPS. There were noThe dilutive share base for the years ended December 31, 2023, 2022 and 2021 excluded approximately 191,353, 700,119 and 234,813, respectively, shares related to stock options that would have an antidilutive effect on the computation of diluted earnings per share.

The effect of the potential shares needed to settle the conversion spread on our convertible notes is included in diluted EPS if the effect is dilutive. The effect depends on the market share price of our common stock at the time of conversion and would be dilutive if the average market share price of our common stock for the yearperiod exceeds the conversion price. For the years ended December 31, 2017,2023 and 2022, the 2016 fiscal transition period or forconvertible notes were not included in the years ended May 31, 2016 and 2015.computation of diluted EPS as the effect would have been anti-dilutive. Furthermore, the effect of the related capped call transactions is not included in the computation of diluted EPS as it is always anti-dilutive.


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

Years Ended December 31,Years Ended December 31,
2023202320222021
(in thousands)
(in thousands)
(in thousands)
Year Ended December 31, Seven Months Ended December 31, Years Ended May 31,
2017 2016 2016 2015
       
(in thousands)
Basic weighted-average number of shares outstanding
Basic weighted-average number of shares outstanding
Basic weighted-average number of shares outstanding154,652
 153,342
 132,284
 134,072
Plus: Dilutive effect of stock options and other share-based awards876
 889
 883
 850
Diluted weighted-average number of shares outstanding155,528
 154,231
 133,167
 134,922


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


Reclassifications— To conform to the presentation as
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Recently Adopted Accounting Pronouncementsissued accounting pronouncement not yet adopted


ASU 2023-07 - In March 2016,November 2023, the FASB issued ASU 2016-09, "Compensation - Stock Compensation2023-07, "Segment Reporting (Topic 718)280): Improvements to Employee Share-Based Payment Accounting.Reportable Segment Disclosures," which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, inclusion of all annual disclosures in interim periods and disclosure of the title and position of the chief operating decision maker. The amendments in this update changed how companies accountare effective for certain aspects of share-based payments to employees. We adopted the various amendments in ASU 2016-09 in our consolidated financial statements effective January 1, 2017 with no material effect at the date of adoption. On a prospective basis, as required, we recognize the income tax effects of the excess benefits or deduction deficiencies of share-based awards in the statement of income when the awards vest or are settled. Previously, these amounts were recorded as an adjustment to additional paid-in capital. In addition, these excess tax benefits or deduction deficiencies from share-based compensation plans, which were previously presented as a financing activity in our consolidated statement of cash flows, are now presented as an operating activity using a retrospective transition method for all periods presented. Finally, we elected to account for forfeitures of share-based awards with service conditions as they occur, which had no material effect on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," which makes clarifications to how cash receipts and cash payments in certain transactions are presented and classified in the statement of cash flows. We adopted ASU 2016-15 on a retrospective basis effective January 1, 2017 with no effect on our consolidated statements of cash flows for any period presented.

In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The ASU eliminates Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. We adopted ASU 2017-04 on a prospective basis effective January 1, 2017 with no effect on our consolidated financial statements.

Recently Issued Pronouncements Not Yet Adopted

ASC 606 - New Revenue Accounting Standard

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)." The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP and permits the use of either the retrospective or modified retrospective transition method. The update requires significant additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU 2014-09, as amended by ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," is effective forfiscal years beginning after December 15, 2017, including2023, and for interim periods with early adoption permitted forwithin fiscal years beginning after December 15, 2016. Since2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the issuancefinancial statements. We are evaluating how the enhanced disclosure requirements of ASU 2014-09, the FASB has issued additional interpretive guidance, including new accounting standards updates, that clarifies certain points of the standard2023-07 will affect our presentation, and modifies certain requirements.

We have performed a review of the requirements of the new revenue standard and have monitored the activity of the FASB and the transition resource group as it relates to specific interpretive guidance. We established a cross-functional implementation team to assess the effects of the new revenue standard in a multi-phase approach. In the first phase, we analyzed customer contracts for our most significant contract categories, applied the five-step model of the new standard to each contract category and compared the results to our current accounting practices. In the second phase, we quantified the potential effects, assessed additional contract categories and principal agent considerations, revised accounting policies and considered the effects on related disclosures and/or internal control over financial reporting. The third phase, which will complete our adoption and implementation of the new revenue standard, includes activities such as implementing parallel accounting and reporting for areas affected by the new standard, quantifying the cumulative-effect adjustment (including tax effects), evaluating and testing modified and newly implemented internal controls and revising financial statement disclosures.


The new standard will change the amount and timing of revenue and expenses to be recognized under certain of our arrangement types. In addition, it could increase the administrative burden on our operations to properly account for customer contracts and provide the more expansive required disclosures. More judgment and estimates will be required when applying the requirements of the new standard than are required under existing GAAP, such as identifying performance obligations in contracts, estimating the amount of variable consideration to include in transaction price, allocating transaction price to each separate performance obligation and estimating expected periods of benefit for certain costs. We expect the timing of revenue to be recognized under ASU 2014-09 for our most significant contract category, core payment services, will be similar to the timing of revenue recognized under our current accounting practices. However, under the new standard, we will reflect revenue net of certain fees that we pay to third parties, including payment network fees, that we currently recognize as a component of operating expense under existing standards. This change in presentation will have no effect oninclude the reported amount of operating income. We will also capitalize additional costs to obtain contracts with customers, as well as certain implementation and set-up costs, and, in some cases, may be required to amortize these costs and costs that we currently capitalize (such as capitalized customer acquisition costs) over a longer period. Finally,incremental disclosures upon the new standard requires additional disclosures regarding our revenues and related capitalized contract costs.effective date.


We plan to adopt ASU 2014-09, as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard, effective as of January 1, 2018 applying the modified retrospective transition method, which will result in an adjustment to equity for the cumulative-effect of applying the standard to active customer contracts for which certain performance obligations were not completed at the date of initial application. Under this transition method, we would not recast the prior financial statements presented, therefore the new standard requires us to provide additional disclosures of the amount by which each financial statement line item is affected in the current reporting period during 2018, as compared to the guidance that was in effect before the change, and an explanation of the reasons for significant changes, if any.

Our preliminary estimate is that we will record a net increase to retained earnings of approximately $50 million as of January 1, 2018, primarily due to the requirement to utilize longer amortization periods for signing bonuses and other sales commissions that are capitalized in connection with obtaining customer contracts. Previously, we amortized these capitalized costs over the term of the related contract. Under ASU 2014-09, we now expect to amortize these capitalized costs over the expected period of benefit, which is generally longer. The expected increase in retained earnings also reflects the capitalization of sales commissions and certain implementation and setup costs for new customers that were not previously capitalized. The expected adjustment to retained earnings is net of the estimated effect of income taxes related to the adjustments described above.

ASC 8422023-09 - New Lease Accounting Standard

In February 2016,December 2023, the FASB issued ASU 2016-02, "Leases.2023-09, "Income Taxes (Topic 740): Improvement to Income Tax Disclosures," which is intended to enhance the transparency and decision usefulness of income tax information through improvements to income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. The amendments in this update require lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases. In addition, several new disclosures will be required. In September 2017, the FASB issued ASU 2017-13, "Revenue Recognition" (Topic 605), "Revenue from Contracts with Customers" (Topic 606), "Leases" (Topic 840) and "Leases" (Topic 842), which provides additional implementation guidance on the previously issued ASU 2016-02.

Although early adoption is permitted, we expect to adopt ASU 2016-02 when it becomesare effective for us on January 1, 2019. As written, the standard would require a modified retrospective transition under which lessees must recognize and measure leases at thefiscal years beginning of the earliest period presented. The FASB is currently considering an option to allow these entities to choose that transition method or to recognize the effects of applying the new standard as a cumulative-effect adjustment to retained earnings as of the adoption date, which would not require a recast of comparative periods. We have not completed our evaluation of the effect of ASU 2016-02 or ASU 2017-13 on our consolidated financial statements; however, we expect to recognize right of use assets and liabilities for our operating leases in the balance sheet upon adoption.

To evaluate the potential effects of this new accounting standard on our consolidated financial statements, we are currently gathering information about our existing leases, which primarily include real estate leases for office space throughout the various global markets in which we conduct business. We expect that we will have to implement new accounting processes and internal controls to meet the requirements for financial reporting and disclosures of our leases and are coordinating with various internal stakeholders to evaluate, design and implement these new processes and controls. We are also evaluating the process by which we will maintain the necessary information about our leases and make the required calculations to support the requirements of the new accounting standard. We further expect these evaluation and implementation activities will continue throughout most of 2018 prior to the effective date of adoption on January 1, 2019.

Other Accounting Standards Updates

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

In January 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business." The ASU clarifies the definition of a business, which affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. The new standard is intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses, with the expectation that fewer will qualify as acquisitions (or disposals) of businesses. The ASU became effective for us on January 1, 2018. These amendments will be applied prospectively from the date of adoption. The effect of ASU 2017-01 will be dependent upon the nature of future acquisitions or dispositions that we make, if any.

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

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." The amendments in this update change how companies measure and recognize credit impairment for many financial assets. The new expected credit loss model will require companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are in the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The guidance will become effective for us on January 1, 2020.after December 15, 2024. Early adoption is permitted for periods beginningpermitted. The amendments should be applied on or after January 1, 2019.a prospective basis with the option to apply the standard retrospectively. We are evaluating how the effectenhanced disclosure requirements of ASU 2016-13 on2023-09 will affect 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." The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments in this update supersedewe will include the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and require equity securities (including other ownership interests, such as partnerships, unincorporated joint ventures and limited liability companies) to be measured at fair value with changes in the fair value recognized through earnings. Equity investments that are accounted for under the equity method of accounting or result in consolidation of an investee are not included within the scope of this update. The amendments allow equity investments that do not have readily determinable fair values to be remeasured at fair value eitherincremental disclosures upon the occurrence of an observable price change or upon identification of an impairment. The amendments also require enhanced disclosures about those investments. We will adopt ASU 2016-01 effective January 1, 2018 with no expected effect on our consolidated financial statements.date.


NOTE 2— ACQUISITIONS


ACTIVE NetworkEVO Payments, Inc.


WeOn March 24, 2023, we acquired all of the communities and sports divisionsoutstanding common stock of Athlaction Topco, LLC ("ACTIVE Network"EVO Payments, Inc. (“EVO”) on September 1, 2017, for total purchase consideration of $1.2 billion. ACTIVE Network delivers cloud-based enterprise software, including. EVO is a payment technology and services provider, offering payment solutions to event organizers inmerchants ranging from small and middle market enterprises to multinational companies and organizations across the communitiesAmericas and health and fitness markets. ThisEurope. The acquisition aligns with our technology-enabled payments strategy, expands our geographic presence in attractive markets and augments our business-to-business software driven strategy and adds an enterprise software business operating in two additional vertical markets that we believe offer attractive growth fundamentals.payment solutions business.



The following table summarizes the cash and non-cash componentsTotal purchase consideration was $4.3 billion, which consisted of the consideration transferred on September 1, 2017following (in thousands):

Cash paid to EVO shareholders (1)
$3,273,951 
Cash paid for equity awards attributable to purchase consideration (2)
58,510 
Value of replacement awards attributable to purchase consideration (3)
2,484 
Total purchase consideration transferred to EVO shareholders3,334,945 
Repayment of EVO's unsecured revolving credit facility (including accrued interest and fees)665,557 
Payment of certain acquiree transaction costs and other liabilities on behalf of EVO (4)
269,118 
Total purchase consideration$4,269,620 

(1) Holders of EVO common stock, convertible preferred stock and common units received $34 for each share of EVO common stock held at the effective time of the transaction.

(2) Pursuant to the merger agreement, we cash settled vested options and certain unvested equity awards of EVO equity award holders.

(3) Pursuant to the merger agreement, we granted equity awards for approximately 0.3 million shares of Global Payments common stock to certain EVO equity award holders. Each such replacement award is subject to the same terms and conditions (including vesting and exercisability) that applied to the corresponding EVO equity award. We apportioned the fair value of the replacement awards between purchase consideration (the portion attributable to pre-acquisition services in relation to the total vesting term of the award) and amounts to be recognized in periods following the acquisition as share-based compensation expense over the requisite service period of the replacement awards.

(4) Certain acquiree transaction costs and liabilities, including amounts outstanding under EVO’s tax receivable agreement, were required to be repaid by us upon consummation of the acquisition.
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Cash consideration paid to ACTIVE Network stockholders $599,497
Fair value of Global Payments common stock issued to ACTIVE Network stockholders 572,079
Total purchase consideration $1,171,576


We funded theThe cash portion of the total purchase consideration primarily by drawingwas funded through cash on hand and borrowings under our Revolving Credit Facility (described in "Note 7—Long-term Debt and Lines of Credit"). The acquisition-date fair value of 6,357,509 shares of our common stock issued to the sellers was determined based on the share price of our common stock as of the acquisition date and the effect of certain transfer restrictions.revolving credit facility.


This transaction wasWe accounted for the EVO acquisition as a business combination, which generally requires that we recordrecognize the assets acquired and liabilities assumed at fair value as of the acquisition date. The accounting for this acquisition was not complete as of December 31, 2017. The fair values of the assets acquired and the liabilities assumed have been determined provisionally and are subject to adjustment as we obtain additional information. In particular, additional time is needed to refine and review the results of the valuation of assets and liabilities and to evaluate the basis differences for assets and liabilities for financial reporting and tax purposes.

The provisional estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed, provisionally determined as of September 30, 2017 and as subsequently revised for measurement-period adjustments, including a reconciliation to the total purchase consideration, arewere as follows:

Provisional Amounts at Acquisition DateProvisional Amounts at Acquisition DateMeasurement-period AdjustmentsProvisional Amounts at December 31, 2023
Provisional at September 30, 2017 Measurement- Period Adjustments Provisional at December 31, 2017
     
(in thousands)
(in thousands)
(in thousands)
(in thousands)
Cash and cash equivalents$42,866
 $47
 $42,913
Accounts receivable
Settlement processing assets
Deferred income tax assets
Property and equipment22,889
 (904) 21,985
Identified intangible assets471,120
 (60,575) 410,545
Identifiable intangible assets
Other assets80,485
 6,755
 87,240
Deferred income taxes(26,757) (4,886) (31,643)
Accounts payable and accrued liabilities
Settlement lines of credit
Settlement processing obligations
Deferred income tax liabilities
Other liabilities(123,047) (21,085) (144,132)
Total identifiable net assets467,556
 (80,648) 386,908
Redeemable noncontrolling interests
Goodwill704,020
 80,648
 784,668
Total purchase consideration$1,171,576
 $—
 $1,171,576


The measurement-period adjustments were the result of continued refinement of certain estimates, particularly regarding the valuation of identified intangible assets, certain tax positions and deferred income taxes. As of December 31, 2017,2023, we still considerconsidered these balancesamounts to be provisional because we arewere still in the process of gathering and reviewing information to support the valuationvaluations of the assets acquired, liabilities assumed and related tax positions. During the year ended December 31, 2023, we made measurement-period adjustments as shown in the table above, and the effects of the measurement-period adjustments on our consolidated statements of income for the year ended December 31, 2023 were not material.

Goodwill arising from the acquisition was included in the Merchant Solutions segment as of December 31, 2023 and was attributable to expected growth opportunities, potential synergies from combining the acquired business into our existing businesses and an assembled workforce. We expect that approximately $1.1 billion of the goodwill from this acquisition will be deductible for income tax purposes.

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The following table reflects the provisional estimated acquisition-date fair values of the identified intangible assets certain tax positionsof EVO and deferred income taxes.their respective weighted-average estimated amortization periods:


Estimated Fair ValueWeighted-Average Estimated Amortization Periods
(in thousands)(years)
Customer-related intangible assets$916,000 11
Contract-based intangible assets470,000 12
Acquired technologies86,995 7
Trademarks and trade names6,000 2
Total estimated identifiable intangible assets$1,478,995 11

From the acquisition date through December 31, 2023, the acquired operations of EVO contributed less than 10% to our consolidated revenues and operating income. The historical revenue and earnings of EVO were not material for the purpose of presenting pro forma information. In addition, transaction costs associated with this business combination were not material.

Zego

On June 10, 2021, we acquired Zego, a real estate technology company that provides comprehensive resident experience management software and digital commerce solutions to property managers, primarily in the United States, for cash consideration of approximately $933 million, which we funded with cash on hand and by drawing on our revolving credit facility. We accounted for this transaction as a business combination, which generally requires that we recognize the assets acquired and liabilities assumed at fair value as of the acquisition date. The final estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed, including a reconciliation to the total purchase consideration, were as follows (in thousands):

Cash and cash equivalents$67,374 
Accounts receivable1,017 
Identifiable intangible assets473,000 
Property and equipment575 
Other assets9,051 
Accounts payable and accrued liabilities(71,006)
Deferred income tax liabilities(10,749)
Other liabilities(8,010)
Total identifiable net assets461,252 
Goodwill471,994 
Total purchase consideration$933,246 

Goodwill of $784.7$472.0 million arising from the acquisition, included in the North America operatingMerchant Solutions segment, wasis attributable to expected growth opportunities, potential synergies from combining our existing businesses and an assembled workforce. We expect that approximately 80%Substantially all of the goodwill will beis deductible for income tax purposes.



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The following table reflects the provisional estimated fair values of the identified intangible assets of Zego and thetheir respective weighted-average estimated amortization periods:

 Provisional Estimated Fair Values Weighted-Average Estimated Amortization Periods
    
 (in thousands) (years)
Customer-related intangible assets$189,000
 17
Acquired technology153,300
 9
Trademarks and trade names59,400
 15
Covenants-not-to-compete8,845
 3
Total estimated acquired intangible assets$410,545
 13
Estimated Fair ValueWeighted-Average Estimated Amortization Periods
(in thousands)(years)
Customer-related intangible assets$208,000 13
Contract-based intangible assets119,000 20
Acquired technologies124,000 6
Trademarks and trade names22,000 15
Total estimated identifiable intangible assets$473,000 14


Other Business Acquisitions

During the years ended December 31, 2023, 2022 and 2021, we completed other business acquisitions that were insignificant, individually and in the aggregate, to the consolidated financial statements. During the year ended December 31, 2021, we paid an aggregate purchase price of $963 million for such business acquisitions. The assets acquired and liabilities assumed in the 2021 acquisitions were recognized based on the estimated fair valuevalues, including intangible assets of $438 million and goodwill of $514 million. See "Note 6—Goodwill and Other Intangible Assets" for the aggregate allocation of goodwill to the respective segments. The operating results of each acquisition have been included in the consolidated financial statements since the respective acquisition dates.

Valuation of Identified Intangible Assets

For the acquisitions discussed above, the estimated fair values of customer-related and contract-based intangible assets waswere generally determined using the income approach, which iswas based on projected cash flows discounted to their present value using discount rates that consider the timing and risk of the forecasted cash flows. The discount raterates used is the average estimated value ofrepresented a risk adjusted market participant’sparticipant weighted-average cost of capital, and debt, derived using customary market metrics. Acquired technology wastechnologies were valued using the replacement cost method, which required us to estimate the costcosts to construct an asset of equivalent utility at prices available at the time of the valuation analysis, with adjustments in value for physical deterioration and functional and economic obsolescence. Trademarks and trade names were valued using the relief-from-royalty"relief-from-royalty" approach. This method assumes that trademarks and trade names have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. This method required us to estimate the future revenuerevenues for the related brands,assets, the appropriate royalty rate and the weighted-average cost of capital.

NOTE 3—BUSINESS DISPOSITIONS

Gaming Business - On April 1, 2023, we completed the sale of our gaming business for approximately $400 million, subject to certain closing adjustments. The discount rate used isgaming business was included in our Merchant Solutions segment prior to disposition, and had been presented as held for sale in our consolidated balance sheet since December 31, 2022. In connection with the average estimated valuesale, we provided $32 million of seller financing as described below. We recognized a market participant’s costgain on sale of capital and debt, derived using customary market metrics.

Heartland

We merged with Heartland$106.9 million during the year ended December 31, 2023 presented within net loss on April 22, 2016 for total purchase consideration of $3.9 billion. The merger significantly expanded our small and medium-sized enterprise distribution, customer base and vertical reachbusiness dispositions in the United States. The following table summarizesconsolidated statements of income.

Consumer Business - On April 26, 2023, we completed the cash and non-cash componentssale of the consideration transferredconsumer portion of our Netspend business for approximately $1 billion, subject to certain closing adjustments. The consumer business comprised our former Consumer Solutions segment prior to disposition, and had been presented as held for sale with certain adjustments to report the disposal group at fair value less costs to sell in our consolidated balance sheet since June 30, 2022. In connection with the sale, we provided $675 million of seller financing as described below. As further discussed in "Note 1—Summary of Significant Accounting Policies," we recognized a goodwill impairment charge of $833.1 million during the year ended December 31, 2022 related to our former Business and Consumer Solutions reporting unit. We also recognized charges within net loss on April 22, 2016 (in thousands):business dispositions in our consolidated statements of income of $71.9 million during the year ended December 31, 2022 to reduce the
80
Cash consideration paid to Heartland stockholders $2,043,362
Fair value of Global Payments common stock issued to Heartland stockholders 1,879,458
Total purchase consideration $3,922,820

The merger datedisposal group to estimated fair value less costs to sell, which related primarily to estimated costs to sell and changes in the estimated fair value of common stock issuedthe fixed rate seller financing commitment. We recognized an incremental loss on business dispositions in our consolidated statement of income of $243.6 million during the year ended December 31, 2023, which included the effects of incremental negotiated closing adjustments, changes in the estimated fair value of the seller financing and the effects of the final tax structure of the transaction.

Notes Receivable and Allowance for Credit Losses

In connection with the sale of our consumer business, we provided seller financing consisting of the following: (1) a first lien seven-year secured term loan facility with an aggregate principal amount of $350 million bearing interest at a fixed annual rate of 9.0%, including 3.5% payable quarterly in cash and 5.5% settled quarterly via the issuance of additional paid-in-kind ("PIK") notes with the same terms as the original notes until December 2024, after which interest will be payable quarterly in cash along with quarterly principal payments of $4.375 million with the remaining balance due at maturity; and (2) a second lien twenty-five year secured term loan facility with an aggregate principal amount of $325 million bearing interest at a fixed annual rate of 13.0% PIK due at maturity. The aggregate fair value of the first and second lien term loans upon the closing of the transaction was $653.9 million, calculated using a discounted cash flow approach. In addition, we provided the purchasers a five-year $50 million secured revolving facility available from the date of closing of the sale, bearing interest at a fixed annual rate of 9.0% payable quarterly in cash. There was no outstanding balance on the revolving facility as of December 31, 2023. In connection with the sale of our gaming business, we also provided seller financing consisting of an unsecured promissory note due April 1, 2030 with an aggregate principal amount of $32 million bearing interest at a fixed annual rate of 11.0%.

We recognized interest income related to Heartland stockholdersthese notes of $58.3 million during the year ended December 31, 2023, as a component of interest and equity award holdersother income in the consolidated statement of income. The issuance of the notes in connection with the sale transactions was determineda noncash investing activity in our consolidated statement of cash flows for the year ended December 31, 2023.

As of December 31, 2023, there was an aggregate principal amount of $753.5 million outstanding on the notes, including PIK, and the notes are presented net of the allowance for credit losses of $15.2 million within notes receivable in our consolidated balance sheet. The estimated fair value of the notes receivable was $735.6 million as of December 31, 2023. The estimated fair value of notes receivable was based on 38.4 million sharesa discounted cash flow approach and is considered to be a Level 3 measurement of Heartland common stock, including common stock outstandingthe valuation hierarchy.

Assets and equity awardsLiabilities Held for which vesting acceleratedSale - The assets and liabilities of our consumer and gaming businesses were classified as held for sale in accordance with the Merger Agreement, multiplied by the exchange ratio of 0.6687 and the closing share price of Global Payments common stockour consolidated balance sheets as of April 22, 2016 of $73.29 per share.


This transaction was accounted for as a business combination, which requires that we record the assets acquired and liabilities assumed at fair value as of the acquisition date.December 31, 2022. The estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed provisionally determinedpresented as held for sale in the consolidated balance sheet as of December 31, 20162022, included cash of $70.6 million, accounts receivable of $18.4 million, other current assets of $42.3 million, goodwill of $529.5 million, other intangible assets of $717.9 million, property and equipment of $82.9 million, other noncurrent assets of $44.9 million and an asset group valuation allowance of $71.9 million. The major classes of liabilities presented as subsequently revisedheld for measurement-period adjustments, including a reconciliation to the total purchase consideration, are as follows:
 Provisional at December 31, 2016 Measurement- Period Adjustments Final
      
 (in thousands)
Cash and cash equivalents$304,747
 $—
 $304,747
Accounts receivable70,385
 —
 70,385
Prepaid expenses and other assets103,090
 (5,131) 97,959
Identified intangible assets1,639,040
 —
 1,639,040
Property and equipment106,583
 —
 106,583
Debt(437,933) —
 (437,933)
Accounts payable and accrued liabilities(457,763) (65) (457,828)
Settlement processing obligations(36,578) (3,727) (40,305)
Deferred income taxes(518,794) 18,907
 (499,887)
Other liabilities(64,938) (33,495) (98,433)
Total identifiable net assets707,839
 (23,511) 684,328
Goodwill3,214,981
 23,511
 3,238,492
Total purchase consideration$3,922,820
 $—
 $3,922,820

The measurement-period adjustments were the result of continued refinement of certain estimates, particularly regarding certain tax positions and deferred income taxes.

Goodwill of $3.2 billion arising from the merger, includedsale in the North America segment, was attributable to expected growth opportunities, potential synergies from combiningconsolidated balance sheet as of December 31, 2022 included accounts payable and accrued liabilities of $125.9 million and other noncurrent liabilities of $4.5 million.

Sale of Merchant Solutions Business in Russia - We sold our existing businesses and an assembled workforce, and is not deductibleMerchant Solutions business in Russia effective April 29, 2022 for income tax purposes.cash proceeds of $9 million. During the year ended December 31, 2016,2022, we incurred transaction costs in connectionrecognized a loss of $127.2 million associated with the mergersale, comprised of $24.7the difference between the consideration received and the net carrying amount of the business and the reclassification of $62.9 million which were recordedof associated accumulated foreign currency translation losses from the separate component of equity. The loss was presented within net loss on business dispositions in selling, general and administrative expenses in theour consolidated statementsstatement of income.


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NOTE 4—REVENUES

The following reflectstables present a disaggregation of our revenues from contracts with customers by geography for each of our reportable segments for the estimated fair valuesyears ended December 31, 2023, 2022 and 2021:

Year Ended December 31, 2023
Merchant SolutionsIssuer SolutionsConsumer SolutionsIntersegment EliminationsTotal
(in thousands)
Americas$5,867,308 $1,849,638 $182,740 $(37,094)$7,862,592 
Europe1,023,546 507,342 — — 1,530,888 
Asia Pacific260,939 41,890 — (41,890)260,939 
$7,151,793 $2,398,870 $182,740 $(78,984)$9,654,419 
Year Ended December 31, 2022
Merchant SolutionsIssuer SolutionsConsumer SolutionsIntersegment EliminationsTotal
(in thousands)
Americas$5,236,728 $1,739,620 $620,482 $(58,916)$7,537,914 
Europe720,660 469,412 — — 1,190,072 
Asia Pacific247,529 36,591 — (36,591)247,529 
$6,204,917 $2,245,623 $620,482 $(95,507)$8,975,515 
Year Ended December 31, 2021
Merchant SolutionsIssuer SolutionsConsumer SolutionsIntersegment EliminationsTotal
(in thousands)
Americas$4,735,505 $1,644,765 $783,625 $(65,781)$7,098,114 
Europe684,760 495,597 — — 1,180,357 
Asia Pacific245,292 25,385 — (25,386)245,291 
$5,665,557 $2,165,747 $783,625 $(91,167)$8,523,762 

The following table presents a disaggregation of our Merchant Solutions segment revenues by distribution channel for the identified intangible assetsyears ended December 31, 2023, 2022 and 2021:
202320222021
(in thousands)
Relationship-led$3,738,536 $3,189,046 $3,031,873 
Technology-enabled3,413,257 3,015,871 2,633,684 
$7,151,793 $6,204,917 $5,665,557 

ASC 606 requires that we determine for each customer arrangement whether revenue should be recognized at a point in time or over time. For the respective weighted-average estimated amortization periods:
 Estimated Fair Values Weighted-Average Estimated Amortization Periods
    
 (in thousands) (years)
Customer-related intangible assets$977,400
 15
Acquired technology457,000
 5
Trademarks and trade names176,000
 7
Covenants-not-to-compete28,640
 1
Total estimated acquired intangible assets$1,639,040
 11


FIS Gaming Business

On June 1, 2015, we acquired certain assets of Certegy Check Services, Inc., a wholly-owned subsidiary of Fidelity National Information Services, Inc. ("FIS"). Under the purchase arrangement, we acquiredyears ended December 31, 2023, 2022 and 2021, substantially all of the assetsour revenues were recognized over time.

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Supplemental balance sheet information related to licensed gaming operators (the "FIS Gaming Business"), including relationships with gaming clients in approximately 260 locationscontracts from customers as of December 31, 2023 and 2022 was as follows:

Balance Sheet LocationDecember 31, 2023December 31, 2022
(in thousands)
Assets:
Capitalized costs to obtain customer contracts, netOther noncurrent assets$360,684 $329,785 
Capitalized costs to fulfill customer contracts, netOther noncurrent assets197,355 152,520 
Liabilities:
Contract liabilities, net (current)Accounts payable and accrued liabilities229,686 226,254 
Contract liabilities, net (noncurrent)Other noncurrent liabilities54,246 45,613 

Net contract assets were not material at December 31, 2023 or December 31, 2022. Revenue recognized for the acquisition date, for $237.5years ended December 31, 2023 and 2022 from contract liability balances at the beginning of each period was $199.7 million fundedand $209.4 million, respectively.

ASC 606 requires disclosure of the aggregate amount of the transaction price allocated to unsatisfied performance obligations. The purpose of this disclosure is to provide additional information about the amounts and expected timing of revenue to be recognized from borrowings onthe remaining performance obligations in our revolving credit facility and cash on hand. We acquired the FIS Gaming Businessexisting contracts. The following table includes estimated revenue expected to expand our direct distribution and service offeringsbe recognized in the gaming market.

This transaction was accounted forfuture related to performance obligations that are unsatisfied or partially unsatisfied at December 31, 2023. However, as a business combination. The estimated acquisition-date fair valuespermitted, we have elected to exclude from this disclosure any contracts with an original duration of major classes of assets acquiredone year or less and liabilities assumed, including a reconciliation toany variable consideration that meets specified criteria. Accordingly, the total purchase consideration, are as followsamount of unsatisfied or partially unsatisfied performance obligations related to processing services is significantly higher than the amounts disclosed in the table below (in thousands):

Year ending December 31,
2024$1,099,271 
2025878,093 
2026700,407 
2027536,018 
2028275,222 
2029 and thereafter332,279 
Total$3,821,290 

83
Customer-related intangible assets $143,400
Liabilities (150)
Total identifiable net assets 143,250
Goodwill 94,250
Total purchase consideration $237,500

Goodwill arising from the acquisition, included in the North America segment, was attributable to expected growth opportunities, including cross-selling opportunities at existing and acquired gaming client locations, operating synergies in the gaming business and assembled workforce. Goodwill associated with this acquisition is deductible for income tax purposes. The customer-related intangible assets have an estimated amortization periodTable of 15 years.Contents

Realex Payments

On March 25, 2015, we acquired approximately 95% of the outstanding shares of Pay and Shop Limited, which does business as Realex Payments ("Realex"), for €110.2 million in cash ($118.9 million equivalent as of the acquisition date). Realex is a leading European online payment gateway technology provider. This acquisition furthered our strategy to provide omnichannel solutions that combine gateway services, payment service provisioning and payment technology services across Europe.

This transaction was accounted for as a business combination. We recorded the assets acquired, liabilities assumed and noncontrolling interest at their estimated fair values as of the acquisition date. On October 5, 2015, we paid €6.7 million ($7.5 million equivalent as of October 5, 2015) to acquire the remaining shares of Realex, after which we own 100% of the outstanding shares.


The estimated acquisition date fair values of the assets acquired, liabilities assumed and the noncontrolling interest, including a reconciliation to the total purchase consideration, are as follows (in thousands):
Cash $4,082
Customer-related intangible assets 16,079
Acquired technology 39,820
Trade name 3,453
Other intangible assets 399
Other assets 6,213
Liabilities (3,479)
Deferred income tax liabilities (7,216)
Total identifiable net assets 59,351
Goodwill 66,809
Noncontrolling interest (7,280)
     Total purchase consideration $118,880

Goodwill of $66.8 million arising from the acquisition, included in the Europe segment, was attributable to expected growth opportunities in Europe, potential synergies from combining our existing business with gateway services and payment service provisioning in certain markets and an assembled workforce to support the newly acquired technology. Goodwill associated with this acquisition is not deductible for income tax purposes. The customer-related intangible assets have an estimated amortization period of 16 years. The acquired technology has an estimated amortization of 10 years. The trade name has an estimated amortization period of 7 years.

Ezidebit

On October 10, 2014, we completed the acquisition of 100% of the outstanding stock of Ezi Holdings Pty Ltd ("Ezidebit") for AUD302.6 million in cash ($266.0 million equivalent as of the acquisition date). This acquisition was funded by a combination of cash on hand and borrowings on our revolving credit facility. Ezidebit is a leading integrated payments company focused on recurring payments verticals in Australia and New Zealand. The acquisition of Ezidebit further enhanced our existing integrated solutions offerings. This transaction was accounted for as a business combination. We recorded the assets acquired and liabilities assumed at their estimated fair values as of the acquisition date.

The estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed, including a reconciliation to the total purchase consideration, are as follows (in thousands):
Cash$45,826
Customer-related intangible assets42,721
Acquired technology27,954
Trade name2,901
Other assets2,337
Deferred income tax assets (liabilities)(9,788)
Other liabilities(49,797)
     Total identifiable net assets62,154
Goodwill203,828
     Total purchase consideration$265,982

Goodwill of $203.8 million arising from the acquisition, included in the Asia-Pacific segment, was attributable to expected growth opportunities in Australia and New Zealand, as well as growth opportunities and operating synergies in integrated payments in our existing Asia-Pacific and North America markets. Goodwill associated with this acquisition is not deductible for income

tax purposes. The customer-related intangible assets have an estimated amortization period of 15 years. The acquired technology has an estimated amortization period of 15 years. The trade name has an estimated amortization period of 5 years.

NOTE 3—SETTLEMENT PROCESSING ASSETS AND OBLIGATIONS

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

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

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

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

Interchange reimbursement. Our receivable from merchants for the portion of the discount fee related to reimbursement of the interchange fee.
Receivable from Members. Our receivable from the Members for transactions in which we have advanced funding to the Members to fund merchants in advance of receipt of funding from networks.
Receivable from networks. Our receivable from a payment network for transactions processed on behalf of merchants where we are a direct member of that particular network.
Exception items. Items such as customer chargeback amounts received from merchants.
Merchant Reserves. Reserves held to minimize contingent liabilities associated with losses that may occur under the merchant agreement.
Liability to Members. Our liability to the Members for transactions for which funding from the payment network has been received by the Members but merchants have not yet been funded.
Liability to merchants. Our liability to merchants for transactions that have been processed but not yet funded where we are a direct member of a particular payment network.
Reserve for operating losses and sales allowances. Our reserve for allowances, charges or losses that we do not expect to collect from the merchants due to concessions, merchant fraud, insolvency, bankruptcy or any other merchant-related reason.

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

membership model, offsetting is not applied, and the individual components are presented as an asset or obligation based on the nature of that component.

As of December 31, 2017 and 2016 settlement processing assets and obligations consisted of the following:
 2017 2016
    
 (in thousands)
Settlement processing assets:   
Interchange reimbursement$304,964
 $150,612
Receivable from Members104,339
 71,590
Receivable from networks2,055,390
 1,325,029
Exception items7,867
 6,450
Merchant Reserves(13,268) (6,827)
 $2,459,292
 $1,546,854
    
Settlement processing liabilities:   
Interchange reimbursement$72,053
 $199,202
Liability to Members(20,369) (177,979)
Liability to merchants(1,961,107) (1,358,271)
Exception items6,863
 21,194
Merchant Reserves(133,907) (158,419)
Reserve for operating losses and sales allowances(4,042) (2,939)
 $(2,040,509) $(1,477,212)

NOTE 4—5—PROPERTY AND EQUIPMENT
 
As of December 31, 20172023 and 2016,2022, property and equipment consisted of the following:

Range of Depreciable Lives20232022
Range of Depreciable Lives  
(Years)
(Years)
(Years)(in thousands)
(Years) 2017 2016
     
 (in thousands)
LandN/A $2,742
 $6,159
Software
Software
Software
Equipment
Buildings25-30 29,309
 61,135
Equipment2-20 280,774
 224,460
Software2-10 411,975
 319,214
Leasehold improvements3-15 63,154
 40,158
Furniture and fixtures3-7 24,054
 15,913
 812,008
 667,039
Land
3,335,578
Less accumulated depreciation and amortization (314,336) (226,570)
Work-in-progress 90,676
 85,901
 $588,348
 $526,370
$


As a result of actions taken during the years ended December 31, 2023, 2022 and 2021 to reduce our facility footprint in certain markets around the world, we recognized charges of $1.6 million, $7.5 million and $9.2 million, respectively, in selling, general and administrative expenses in our consolidated statement of income, primarily related to certain leasehold improvements, furniture and fixtures and equipment, to reduce the carrying amount of each asset group to the estimated fair value.

NOTE 5—6—GOODWILL AND OTHER INTANGIBLE ASSETS


As of December 31, 20172023 and 2016,2022, goodwill and other intangible assets consisted of the following: 

 20232022
 (in thousands)
Goodwill$26,743,523 $23,320,736 
Other intangible assets:
Customer-related intangible assets$10,653,036 $9,524,922 
Acquired technologies3,005,576 2,863,731 
Contract-based intangible assets2,254,273 1,741,321 
Trademarks and trade names1,074,631 1,067,745 
16,987,516 15,197,719 
Less accumulated amortization:
Customer-related intangible assets3,866,686 3,155,838 
Acquired technologies2,047,330 1,692,762 
Contract-based intangible assets309,886 197,478 
Trademarks and trade names595,568 493,267 
6,819,470 5,539,345 
$10,168,046 $9,658,374 

84
 2017 2016
    
 (in thousands)
Goodwill$5,703,992
 $4,807,594
Other intangible assets:   
Customer-related intangible assets$2,078,891
 $1,864,731
Acquired technologies722,466
 547,151
Trademarks and trade names247,688
 188,311
Contract-based intangible assets171,522
 157,882
 3,220,567
 2,758,075
Less accumulated amortization:   
Customer-related intangible assets685,869
 487,729
Acquired technologies210,063
 89,633
Trademarks and trade names50,849
 24,142
Contract-based intangible assets92,079
 71,279
 1,038,860
 672,783
 $2,181,707
 $2,085,292


The following table sets forth the changes by reportable segment in the carrying amount of goodwill for the years ended December 31, 2023, 2022 and 2021:

Merchant SolutionsIssuer SolutionsConsumer SolutionsTotal
(in thousands)
Balance at December 31, 2020$13,548,690 $9,481,183 $841,578 $23,871,451 
Goodwill acquired557,044 431,797 — 988,841 
Effect of foreign currency translation(36,192)(4,826)— (41,018)
Measurement-period adjustments(5,860)(140)— (6,000)
Balance at December 31, 202114,063,682 9,908,014 841,578 24,813,274 
Goodwill acquired3,296 — — 3,296 
Effect of foreign currency translation(66,251)(29,009)— (95,260)
Goodwill derecognized in connection with the sale of a business (1)
(17,719)— — (17,719)
Impairment of goodwill (2)
— — (833,075)(833,075)
Reallocation of accumulated impairment losses due to change in reporting units (2)
— (357,933)357,933 — 
Reclassification of goodwill to assets held for sale (3)
(163,105)— (366,436)(529,541)
Measurement-period adjustments(2,958)(17,281)— (20,239)
Balance at December 31, 202213,816,945 9,503,791 — 23,320,736 
Goodwill acquired3,283,285 — — 3,283,285 
Effect of foreign currency translation126,835 12,904 — 139,739 
Measurement-period adjustments(237)— — (237)
Balance at December 31, 2023$17,226,828 $9,516,695 $— $26,743,523 

(1) Reflects goodwill derecognized in connection with the sale of our Merchant Solutions business in Russia. See “Note 3—Business Dispositions” for further discussion.

(2) Reflects a goodwill impairment charge related to our former Business and Consumer Solutions reporting unit. In connection with the change in presentation of segment information during the year ended December 31, 2017, the 2016 fiscal transition period and the years ended May 31, 2016 and 2015:
 North America Europe Asia-Pacific Total
        
 (in thousands)
Balance at May 31, 2015$779,734
 $485,921
 $226,178
 $1,491,833
Goodwill acquired3,318,768
 —
 53,402
 3,372,170
Effect of foreign currency translation(3,872) (13,737) (15,397) (33,006)
Measurement-period adjustments(8,200) (411) 7,019
 (1,592)
Balance at May 31, 20164,086,430
 471,773
 271,202
 4,829,405
Goodwill acquired—
 28,820
 —
 28,820
Effect of foreign currency translation(1,911) (45,265) (2,160) (49,336)
Measurement-period adjustments(1,267) (28) —
 (1,295)
Balance at December 31, 20164,083,252
 455,300
 269,042
 4,807,594
Goodwill acquired784,668
 —
 —
 784,668
Effect of foreign currency translation5,060
 57,838
 18,291
 81,189
Measurement-period adjustments23,511
 —
 7,030
 30,541
Balance at December 31, 2017$4,896,491
 $513,138
 $294,363
 $5,703,992

There was no2022, accumulated impairment loss at any date reflectedlosses associated with our former Business and Consumer Solutions reporting unit were reallocated to our new reporting units based on relative fair value. See "Note 1— Summary of Significant Accounting Policies" for further discussion.

(3) Reflects the reclassification of goodwill in connection with the above table.presentation of the consumer and gaming businesses as held for sale. See “Note 3—Business Dispositions” for further discussion.


Accumulated impairment losses for goodwill as of December 31, 2023 were $357.9 million. Accumulated impairment losses for goodwill as of December 31, 2022 were $833.1 million, of which $475.2 million related to assets held for sale.

Customer-related intangible assets, acquired technologies, contract-based intangible assets, and trademarks and trade names acquired during the year ended December 31, 20172023 had weighted-average amortization periods of 16.810.8 years, 8.86.3 years, 312.0 years, and 152.0 years, respectively. Customer-related intangible assets, acquired during the 2016 fiscal transition period had a weighted-average amortization period of 12.1 years. Customer-relatedtechnologies, contract-based intangible assets, acquired technologies and trademarks and trade names acquired during the year ended MayDecember 31, 20162021 had weighted-average amortization periods of 13.911.9 years, 5.06.0 years, 18.5 years, and 7.015.0 years, respectively. Customer-related intangible assets, acquired technologies and trademarks and trade names acquired during the year ended May 31, 2015 had weighted-average amortization periods of 15.1 years, 9.1 years and 6.1 years, respectively.

Amortization expense of acquired intangibles was $337.9$1,318.5 million for the year ended December 31, 2017, $194.32023, $1,263.0 million for the 2016 fiscal transition periodyear ended December 31, 2022 and $113.7 million and $72.6$1,295.0 million for the yearsyear ended MayDecember 31, 2016 and 2015, respectively.2021.
 
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The estimated amortization expense of acquired intangibles as of December 31, 20172023 for the next five years, calculated using the currency exchange rate at the date of acquisition, if applicable, is as follows (in thousands):

2024$1,348,934 
20251,268,360 
20261,121,414 
2027890,245 
2028820,752 

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2018$345,351
2019323,457
2020298,135
2021216,758
2022177,891

NOTE 6—7—LEASES

Our leases consist primarily of operating real estate leases for office space and data centers in the markets in which we conduct business. We also have operating and finance leases for computer and other equipment. Many of our leases include escalating rental payments and incentives, as well as termination and renewal options. Certain of our lease agreements provide that we pay the cost of property taxes, insurance and maintenance.

As of December 31, 2023 and 2022, right-of-use assets and lease liabilities consisted of the following:

Balance Sheet LocationDecember 31, 2023December 31, 2022
(in thousands)
Assets:
Operating lease right-of-use assets:
Real estateOther noncurrent assets$340,061 $336,993 
Computer equipmentOther noncurrent assets5,352 22,763 
OtherOther noncurrent assets302 727 
Total operating lease right-of-use-assets$345,715 $360,483 
Finance lease right-of-use assets:
Computer equipmentProperty and equipment, net$11,168 $7,280 
Other equipmentProperty and equipment, net52,264 53,410 
OtherProperty and equipment, net6,634 6,090 
70,066 66,780 
Less accumulated depreciation:
Computer equipmentProperty and equipment, net(4,361)(3,331)
Other equipmentProperty and equipment, net(38,338)(29,052)
OtherProperty and equipment, net(4,497)(2,884)
Total accumulated depreciation(47,196)(35,267)
Total finance lease right-of-use assets22,870 31,513 
Total right-of-use assets(1)
$368,585 $391,996 
Liabilities:
Operating lease liabilities (current)Accounts payable and accrued liabilities$81,696 $80,208 
Operating lease liabilities (noncurrent)Other noncurrent liabilities411,227 439,580 
Finance lease liabilities (current)Current portion of long-term debt12,055 12,883 
Finance lease liabilities (noncurrent)Long-term debt12,470 19,552 
Total lease liabilities$517,448 $552,223 

(1) As of December 31, 2023 and 2022, approximately 70% and 73%, respectively, of our right-of-use assets were located in the United States.

The weighted-average remaining lease term for operating and finance leases at December 31, 2023 was 8.4 years and 3.2 years, respectively. The weighted-average remaining lease term for operating and finance leases at December 31, 2022 was 8.8 years and 2.7 years, respectively. As of December 31, 2023, the weighted-average discount rate used in the measurement of operating and finance lease liabilities was 4.0% and 3.7%, respectively. As of December 31, 2022, the weighted-average discount rate used in the measurement of operating and finance lease liabilities was 3.3% and 3.4%, respectively.
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As of December 31, 2023, maturities of lease liabilities were as follows:

Operating LeasesFinance Leases
(in thousands)
Year ending December 31,
2024$99,422 $13,128 
202588,193 7,369 
202677,240 2,955 
202763,918 1,585 
202856,802 835 
2029 and thereafter187,213 — 
Total lease payments572,788 25,872 
Imputed interest(79,865)(1,347)
Total lease liabilities$492,923 $24,525 

Operating lease costs in our consolidated statement of income for the year ended December 31, 2023 were $101.6 million, including $81.6 million in selling, general and administrative expenses and $20.0 million in cost of services.Total lease costs for the year ended December 31, 2023 include variable lease costs of $19.1 million, which are primarily comprised of the cost of property taxes, insurance and maintenance. Finance lease costs for the year ended December 31, 2023 were $14.1 million, including $13.2 million of amortization on right-of use assets and $0.9 million of interest on lease liabilities. Lease costs for leases with a term of less than 12 months were not material for the year ended December 31, 2023.

Operating lease costs in our consolidated statement of income for the year ended December 31, 2022 were $137.8 million, including $105.7 million in selling, general and administrative expenses and $32.1 million in cost of services.Total lease costs for the year ended December 31, 2022 include variable lease costs of $21.0 million, which are primarily comprised of the cost of property taxes, insurance and maintenance. Finance lease costs for the year ended December 31, 2022 were $18.1 million, including $16.7 million of amortization on right-of use assets and $1.4 million of interest on lease liabilities. Lease costs for leases with a term of less than 12 months were not material for the year ended December 31, 2022.

Operating lease costs in our consolidated statement of income for the year ended December 31, 2021 were $195.6 million, including $157.4 million in selling, general and administrative expenses and $38.2 million in cost of services. Total lease costs for the year ended December 31, 2021 include variable lease costs of $18.1 million, which are primarily comprised of the cost of property taxes, insurance and maintenance. Finance lease costs for the year ended December 31, 2021 were $20.5 million, including $18.4 million of amortization on right-of use assets and $2.2 million of interest on lease liabilities. Lease costs for leases with a term of less than 12 months were not material for the year ended December 31, 2021.

Opportunities were identified during the years ended December 31, 2023, 2022 and 2021 to reduce our facility footprint in certain markets around the world. In conjunction with the actions taken to exit certain leased facilities, we assessed the respective asset groups for impairment by comparing the carrying amount of the assets associated with the leased facilities to the discounted cash flows from estimated sublease payments. As a result, we recognized charges of $4.4 million, $22.9 million and $42.1 million in selling, general and administrative expenses in our consolidated statements of income for the years ended December 31, 2023, 2022 and 2021, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities for the years ended December 31, 2023, 2022 and 2021 was $101.7 million, $120.7 million and $123.6 million, respectively, which are included as a component of cash provided by operating activities in the consolidated statements of cash flows. Operating lease liabilities arising from obtaining new or modified right-of-use assets, net of reductions resulting from certain lease modifications, were $31.2 million, $25.8 million and $200.1 million for the years ended December 31, 2023, 2022 and 2021, respectively. Cash paid for amounts included in the measurement of finance lease liabilities that is included as a component of cash used in financing activities in the consolidated statements of cash flows was $12.9 million, $21.2 million and $22.6 million for the years ended December 31,
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2023, 2022 and 2021, respectively. Finance lease liabilities arising from obtaining new or modified right-of-use assets, net of reductions resulting from certain lease modifications, were $4.4 million, $8.2 million and $7.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.

In connection with the EVO acquisition completed during the year ended December 31, 2023, we acquired right-of-use assets and assumed lease liabilities for operating leases of $41.3 million. In connection with business dispositions completed during the year ended December 31, 2023, we disposed of right-of-use assets and lease liabilities for operating leases of $4.9 million and $4.9 million, respectively. In connection with acquisitions completed during the year ended December 31, 2021, we acquired right-of-use assets and assumed lease liabilities for operating and finance leases of $8.8 million and $5.8 million, respectively.

During the years ended December 31, 2023 and 2022, we entered into agreements to acquire hardware, software and related services, including the purchase of certain assets previously leased. During the year ended December 31, 2023, the reduction in operating and finance lease liabilities arising from the termination of the related right-of-use assets was $10.3 million and $0.1 million, respectively. During the year ended December 31, 2022, the reduction in operating and finance lease liabilities arising from the termination of the related right-of-use assets was $44.2 million and $9.7 million, respectively.

NOTE 8 - OTHER ASSETS


Visa Preferred Shares

Through certain of our subsidiaries in Europe, we were a member and shareholder of Visa Europe Limited ("Visa Europe"). On June 21, 2016, Visa Inc. ("Visa") acquired all of the membership interests in Visa Europe, including ours, upon whichand we recorded a gainreceived consideration in the form of $41.2 million included in interest and other income in our consolidated statements of income for the 2016 fiscal transition period. We received up-front consideration comprised of €33.5 million ($37.7 million equivalent at June 21, 2016) in cash and Series B and C convertible preferred shares whose initial conversion rate equates to Visa common shares valued at $22.9 million as of June 21, 2016. However,Visa. We assigned the preferred shares were assignedreceived a value of zero based on transfer restrictions, Visa's ability to adjust the conversion rate and the estimation uncertainty associated with those factors. Based on the outcome of any current or 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,zero.

The Series B and approximately €25.6 million ($28.8 million equivalent at June 21, 2016)C convertible preferred shares become convertible in stages based on developments in the litigation and become fully convertible no later than 2028 (subject to a holdback to cover any then pending claims). In July 2022, in connection with the second mandatory release assessment, a portion of the up-front cash consideration could be refundable.Series B and C convertible preferred shares was converted by Visa representing approximately one quarter of the original potential conversion rate. We accountrecognized a gain of $13.2 million reported in interest and other income in our consolidated statement of income for the year ended December 31, 2022 based on the fair value of the shares received and subsequently sold. The remaining Series B and C convertible preferred shares usingcontinue to be carried at an assigned value of zero based on the cost method. On the third anniversary of the closing ofaforementioned factors.

Through the acquisition byof EVO in 2023, we obtained Series A and C convertible preferred shares of Visa. The Series C preferred shares are carried at an assigned value of zero based on the aforementioned factors. The Series A convertible preferred shares were not restricted and were convertible into a fixed number of Visa we are contractually entitledClass A common shares. In November 2023, the Series A convertible preferred shares were converted into a fixed number of Visa Class A common shares and sold for cash proceeds of $42.1 million. Prior to receive €3.1 million ($3.5 million equivalentsale, the Visa Class A common shares were presented at June 21, 2016)fair value in our consolidated balance sheet with changes in fair value recognized in interest and other income in our consolidated statement of deferred consideration (plus compounded interest at a rateincome.

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NOTE 7—9—LONG-TERM DEBT AND LINES OF CREDIT


As of December 31, 20172023 and 2016,2022, long-term debt consisted of the following:

December 31, 2023December 31, 2022
(in thousands)
Long-term Debt
3.750% senior notes due June 1, 2023$— $552,113 
4.000% senior notes due June 1, 2023— 552,747 
1.500% senior notes due November 15, 2024499,143 498,164 
2.650% senior notes due February 15, 2025998,172 996,485 
1.200% senior notes due March 1, 20261,095,848 1,093,932 
4.800% senior notes due April 1, 2026775,425 786,724 
2.150% senior notes due January 15, 2027746,196 744,945 
4.950% senior notes due August 15, 2027496,444 495,463 
4.450% senior notes due June 1, 2028469,406 473,800 
3.200% senior notes due August 15, 20291,241,169 1,239,588 
5.300% senior notes due August 15, 2029496,063 495,362 
2.900% senior notes due May 15, 2030992,537 991,367 
2.900% senior notes due November 15, 2031743,394 742,555 
5.400% senior notes due August 15, 2032742,908 742,085 
4.150% senior notes due August 15, 2049740,860 740,503 
5.950% senior notes due August 15, 2052738,576 738,177 
4.875% senior notes due March 17, 2031873,747 — 
1.000% convertible notes due August 15, 20291,453,493 1,445,225 
Revolving credit facility1,570,000 — 
Commercial paper notes1,371,639 — 
Finance lease liabilities24,525 32,435 
Other borrowings243,337 96,908 
Total long-term debt16,312,882 13,458,578 
Less current portion620,585 1,169,330 
Long-term debt, excluding current portion$15,692,297 $12,289,248 

The carrying amounts of our senior notes and convertible notes in the table above are presented net of unamortized discount and unamortized debt issuance costs, as applicable. At December 31, 2023, the unamortized discount on senior notes and convertible notes was $46.1 million, and unamortized debt issuance costs on senior notes and convertible notes was $78.4 million. At December 31, 2022, the unamortized discount on senior notes and convertible notes was $50.8 million, and unamortized debt issuance costs on our senior notes and convertible notes were $85.4 million. The portion of unamortized debt issuance costs related to revolving credit facilities is included in other noncurrent assets. At December 31, 2023 and 2022, unamortized debt issuance costs on the unsecured revolving credit facility were $18.5 million and $23.5 million, respectively. The amortization of debt discounts and debt issuance costs is recognized as an increase to interest expense over the terms of the respective debt instruments. Amortization of discounts and debt issuance costs was $27.0 million, $20.5 million and $14.4 million, respectively, for years ended December 31, 2023, 2022 and 2021.

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 2017 2016
    
 (in thousands)
Credit Facility:   
Term loans (face amounts of $3,932,677 and $3,728,857 at December 31, 2017 and 2016, respectively, less unamortized debt issuance costs of $37,961 and $46,282 at December 31, 2017 and 2016, respectively)$3,894,716
 $3,682,575
Revolving Credit Facility765,000
 756,000
Capital lease obligations—
 37
Total long-term debt4,659,716
 4,438,612
Less current portion of Credit Facility (face amounts of $108,979 and $187,274 at December 31, 2017 and 2016, respectively, less unamortized debt issuance costs of $8,671 and $9,526 at December 31, 2017 and 2016, respectively) and current portion of capital lease obligations of $37 at December 31, 2016100,308
 177,785
Long-term debt, excluding current portion$4,559,408
 $4,260,827


Maturity requirements onAt December 31, 2023, future maturities of long-term debt (excluding finance lease liabilities) are as follows by year (in thousands):

Year ending December 31,
2024$610,114 
20251,049,113 
20261,885,419 
20274,226,578 
2028462,962 
2029 and thereafter8,133,894 
Total$16,368,080 

See "Note 7—Leases" for more information about our finance lease liabilities, including maturities.

Senior Notes

We have $10.8 billion in aggregate principal amount of senior unsecured notes outstanding, as presented in the table above, which are comprised of senior notes issued in 2023, 2022, 2021, 2020 and 2019, and senior notes assumed in our merger with Total System Services, Inc. ("TSYS") in September 2019 (the "TSYS Merger"). Interest on the senior notes is payable annually or semi-annually at various dates. Each series of the senior notes is redeemable, at our option, in whole or in part, at any time and from time-to-time at the redemption prices set forth in the related indenture.

On March 17, 2023, we issued €800 million aggregate principal amount of 4.875% senior unsecured notes due March 2031 and received net proceeds of €790.6 million, or $843.6 million based on the exchange rate on the issuance date. We issued the senior notes at a discount of $2.8 million, and we incurred debt issuance costs of $7.2 million, including underwriting fees, professional services fees and registration fees, which were capitalized and reflected as a reduction of the related carrying amount of the notes in our consolidated balance sheet. Interest on the senior unsecured notes is payable annually in arrears on March 17 of each year, commencing March 17, 2024. The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness. The net proceeds from the offering were used for general corporate purposes.

On August 22, 2022, we issued $2.5 billion aggregate principal amount of senior unsecured notes consisting of the following: (i) $500.0 million aggregate principal amount of 4.950% senior notes due August 2027; (ii) $500.0 million aggregate principal amount of 5.300% senior notes due August 2029; (iii) $750.0 million aggregate principal amount of 5.400% senior notes due August 2032; and (iv) $750.0 million aggregate principal amount of 5.950% senior notes due August 2052. We issued the senior notes at a total discount of $5.2 million, and we incurred debt issuance costs of $24.8 million, including underwriting fees, fees for professional services and registration fees, which were capitalized and reflected as a reduction of the related carrying amount of the notes in our consolidated balance sheet. Interest on the senior unsecured notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing February 15, 2023. The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness. The net proceeds from the offering were used to refinance the outstanding indebtedness under our credit facility, to make cash payments and pay transaction fees and expenses in connection with the acquisition of EVO and for general corporate purposes.

On November 22, 2021, we issued $2.0 billion aggregate principal amount of senior unsecured notes consisting of the following: (i) $500.0 million aggregate principal amount of 1.500% senior notes due November 2024; (ii) $750.0 million aggregate principal amount of 2.150% senior notes due January 2027; and (iii) $750.0 million aggregate principal amount of 2.900% senior notes due November 2031. We incurred debt issuance costs of approximately $14.4 million, including underwriting fees, fees for professional services and registration fees, which were capitalized and reflected as a reduction of the related carrying amount of the notes in our consolidated balance sheet. Interest on the senior unsecured notes is payable semi-annually in arrears on May 15 and November 15 for the 2024 and 2031 notes and January 15 and July 15 on the 2027 note, commencing May 15, 2022 for the 2024 note and the 2031 note and July 15, 2022 for the 2027 note. The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and
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unsubordinated indebtedness. We used the net proceeds from the offering to repay the outstanding indebtedness under our prior credit facility and for general corporate purposes.

On February 26, 2021, we issued $1.1 billion aggregate principal amount of 1.200% senior unsecured notes due March 2026. We incurred debt issuance costs of approximately $8.6 million, including underwriting fees, fees for professional services and registration fees, which were capitalized and reflected as a reduction of the related carrying amount of the notes in our consolidated balance sheet. Interest on the notes is payable semi-annually in arrears on March 1 and September 1 of each year, commencing September 1, 2021. The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness. We used the net proceeds from this offering to fund the redemption in full of the 3.800% senior unsecured notes due April 2021, to repay a portion of the outstanding indebtedness under our prior credit facility and for general corporate purposes.

We have $1.0 billion in aggregate principal amount of 2.900% senior unsecured notes due May 2030. Interest on the notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing November 15, 2020. The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness. We issued the senior notes at a total discount of $3.3 million and capitalized related debt issuance costs of $8.4 million.

We have $3.0 billion in aggregate principal amount of senior unsecured notes, consisting of the following: (i) $1.0 billion aggregate principal amount of 2.650% senior notes due 2025; (ii) $1.25 billion aggregate principal amount of 3.200% senior notes due 2029; and (iii) $750.0 million aggregate principal amount of 4.150% senior notes due 2049. Interest on the senior notes is payable semi-annually in arrears on each February 15 and August 15, beginning on February 15, 2020. Each series of the senior notes is redeemable, at our option, in whole or in part, at any time and from time-to-time at the redemption prices set forth in the related indenture. We issued the senior notes at a total discount of $6.1 million and capitalized related debt issuance costs of $29.6 million.

In addition, in connection with the TSYS Merger, we assumed $3.0 billion aggregate principal amount of senior unsecured notes of TSYS, consisting of the following: (i) $750.0 million aggregate principal amount of 3.800% senior notes due 2021, which were redeemed in February 2021; (ii) $550.0 million aggregate principal amount of 3.750% senior notes due 2023, which were redeemed in June 2023; (iii) $550.0 million aggregate principal amount of 4.000% senior notes due 2023, which were redeemed in June 2023; (iv) $750 million aggregate principal amount of 4.800% senior notes due 2026; and (v) $450 million aggregate principal amount of 4.450% senior notes due 2028. For the 4.800% senior notes due 2026, interest is payable semi-annually each April 1 and October 1. For the 4.450% senior notes due 2028, interest is payable semi-annually each June 1 and December 1. The difference between the acquisition-date fair value and face value of senior notes assumed in the TSYS Merger is recognized over the terms of the respective notes as a reduction of interest expense. The amortization of this fair value adjustment was $15.7 million, $27.4 million, and $29.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Convertible Notes

On August 8, 2022, we issued $1.5 billion in aggregate principal amount of 1.000% convertible unsecured senior notes due August 2029 in a private placement pursuant to an investment agreement with Silver Lake Partners. The net proceeds from this offering were approximately $1.44 billion, reflecting an issuance discount of $37.5 million and $20.4 million of debt issuance costs, which were capitalized and reflected as a reduction of the related carrying amount of the convertible notes in our consolidated balance sheet. Interest on the convertible notes is payable semi-annually in arrears on February 15 and August 15 of each year, beginning on February 15, 2023, to the holders of record on the preceding February 1 and August 1, respectively.

The notes are convertible at the option of the holder at any time after the date that is 18 months after issuance (or earlier, upon the occurrence of certain corporate events) until the scheduled trading day prior to the maturity date. The notes are convertible into cash and shares of our common stock based on a conversion rate of 7.1421 shares of common stock per $1,000 principal amount of the convertible notes (which is equal to a conversion price of approximately $140.01 per share), subject to customary anti-dilution and other adjustments upon the occurrence of certain events. Upon conversion, the principal amount of, and interest due on, the convertible notes are required to be settled in cash and any other amounts may be settled in shares, cash or a combination of shares and cash at our election.
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The notes are not redeemable by us. If certain corporate events that constitute a fundamental change (as defined in the indenture governing the notes) occur, any holder of the notes may require that we repurchase all or any portion of their notes for cash at a purchase price of par plus accrued and unpaid interest to, but excluding, the repurchase date. In addition, if certain corporate events that constitute a make-whole fundamental change (as defined in the indenture governing the notes) occur, then the conversion rate will in certain circumstances be increased for a specified period of time. The notes include customary covenants for notes of this type, as well as customary events of default, which may result in the acceleration of the maturity of the convertible notes.

On August 8, 2022, in connection with the issuance of the notes, we entered into privately negotiated capped call transactions with certain financial institutions to cover, subject to customary adjustments, the number of shares of common stock initially underlying the notes. The economic effect of the capped call transactions is to hedge the potential dilutive effect upon conversion of the notes, or offset our cash obligation if the cash settlement option is elected, up to a cap price determined based on a hedging period that commenced on August 9, 2022 and concluded on August 25, 2022. The capped call had an initial strike price of $140.67 per share and a cap price of $229.26 per share. The capped call transactions meet the accounting criteria to be reflected in stockholders’ equity and not accounted for as derivatives. The cost of $302.4 million incurred in connection with the capped call transactions was reflected as a reduction to paid-in-capital in our consolidated balance sheet at December 31, 2022, net of applicable income taxes.

Revolving Credit Facility

On August 19, 2022, we entered into a credit agreement with Bank of America, N.A., as administrative agent, and a syndicate of financial institutions, as lenders and other agents. The revolving credit agreement provides for an unsubordinated unsecured $5.75 billion revolving credit facility. We capitalized debt issuance costs of $12.3 million in connection with the issuances under the revolving credit facility. The revolving credit facility matures in August 2027. Borrowings under the revolving credit facility may be repaid prior to maturity without premium or penalty, subject to payment of certain customary expenses of lenders and customary notice provisions.

Borrowings under the revolving credit facility will be available to be made in US dollars, euros, sterling, Canadian dollars and, subject to certain conditions, certain other currencies at our option. Borrowings under the revolving credit facility will bear interest, at our option, at a rate equal to (i) for SOFR based currencies or certain alternative currencies, a secured overnight financing rate (subject to a 0.00% floor) plus a 0.10% credit spread adjustment or an alternative currency term rate (subject to a 0.00% floor), as applicable, (ii) for US dollar borrowings, a base rate, (iii) for US dollar borrowings, a daily floating secured overnight financing rate (subject to a 0.00% floor on or after January 1, 2023) plus a 0.10% credit spread adjustment or (iv) for certain alternative currencies, a daily alternative currency rate (subject to a 0.00% floor), in each case, plus an applicable margin. The applicable margin for borrowings under the revolving credit facility will range from 1.125% to 1.875% depending on our credit rating. In addition, we are required to pay a quarterly commitment fee with respect to the unused portion of the revolving credit facility at an applicable rate per annum ranging from 0.125% to 0.300% depending on our credit rating.

We may issue standby letters of credit of up to $250 million in the aggregate under the revolving credit facility. Outstanding letters of credit under the revolving credit facility reduce the amount of borrowings available to us. The amounts available to borrow under the revolving credit facility are also determined by a financial leverage covenant. As of December 31, 20172023, there were borrowings of $1,570.0 million outstanding under the revolving credit facility with an interest rate of 6.84%, and the total available commitments under the revolving credit facility were $2.8 billion.

Commercial Paper

In January 2023, we established a $2.0 billion commercial paper program under which we may issue senior unsecured commercial paper notes with maturities of up to 397 days from the date of issue. Commercial paper notes are expected to be issued at a discount from par, or they may bear interest, each at commercial paper market rates dictated by year are as follows (in thousands):market conditions at the time of their issuance. The proceeds from issuances of commercial paper notes will be used primarily for general corporate purposes but may also be used for acquisitions, to pay dividends, for debt refinancing or for other purposes.

As of December 31, 2023, we had net borrowings under our commercial paper program of $1,371.6 million outstanding, presented within long-term debt in our consolidated balance sheet based on our intent and ability to continually refinance on a
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Years ending December 31, 
2018$108,979
2019141,912
2020161,144
2021180,376
20223,021,391
2023 and thereafter1,083,875
Total$4,697,677
long-term basis, with a weighted average annual interest rate of 6.06%. The commercial program is backstopped by our revolving credit agreement, in that the amount of commercial paper notes outstanding cannot exceed the undrawn portion of our revolving credit facility. As such, we could draw on the revolving credit facility to repay commercial paper notes that cannot be rolled over or refinanced with similar debt.


We arePrior Credit Facility

Prior to the revolving credit facility, we were party to a prior credit facility agreement with Bank of America, N.A., as administrative agent, and a syndicate of financial institutions, as lenders and other agents (as amended from time to time, the "Credit Facility")time-to-time). On May 2, 2017, we entered into the Fourth Amendment to the Credit Facility (the "Fourth Amendment"), which increased the total financing capacity availableThe prior credit facility provided for a senior unsecured $2.0 billion term loan facility and a senior unsecured $3.0 billion revolving credit facility. In August 2022, all borrowings outstanding and other amounts due under the Credit Facility to $5.2 billion; however, the aggregate outstanding debt under the Credit Facility did not change as weprior credit facility were repaid certain outstanding amounts under the Term A Loan, the Term A-2 Loan and the Revolving Creditprior credit facility was terminated.

Bridge Facility (each as defined below)

On August 1, 2022, in connection with our entry into the Fourth Amendment. EVO merger agreement, we obtained commitments for a $4.3 billion, 364-day senior unsecured bridge facility. Upon the execution of permanent financing, including the issuance of our senior unsecured notes and entry into the revolving credit facility described above, the aggregate commitments under the bridge facility were reduced to zero and terminated. For the year ended December 31, 2022, we recognized expense of $17.3 million related to commitment fees associated with the bridge facility, which was presented within interest and other expense in our consolidated statement of income.

Fair Value of Long-Term Debt

As of December 31, 2017, the Credit Facility provided for secured financing comprised2023, our senior notes had a total carrying amount of (i)$11.6 billion and an estimated fair value of $11.1 billion. The estimated fair value of our senior notes was based on quoted market prices in an active market and is considered to be a $1.25 billion revolving credit facility (the "Revolving Credit Facility"); (ii) a $1.5 billion term loan (the "Term A Loan"), (iii) a $1.3 billion term loan (the "Term A-2 Loan"); and (iv) a $1.2 billion term loan facility, which replaced the Term B Loan (the "Term B-2 Loan"). Substantially allLevel 1 measurement of the assets of our domestic subsidiaries are pledged as collateral under the Credit Facility.valuation hierarchy.


The Credit Facility provides for an interest rate, at our election, of either London Interbank Offered Rate ("LIBOR") or a base rate, in each case plus a leverage-based margin. As of December 31, 2017,2023, our convertible notes had a total carrying amount of $1.5 billion and an estimated fair value of $1.7 billion. The estimated fair value of our convertible notes was based on a lattice pricing model and is considered to be a Level 3 measurement of the interest rates on the Term A Loan, the Term A-2 Loan and the Term B Loan were 3.32%, 3.24% and 3.57%, respectively.valuation hierarchy.


The Term A Loan and the Term A-2 Loan mature, and the Revolving Credit Facility expires, on May 2, 2022. The Term B-2 Loan matures on April 22, 2023. The Term A Loan principal must be repaid in quarterly installments in thefair value of other long-term debt approximated its carrying amount of 1.25% of principal through June 2019, increasing to 1.875% of principal through June 2021, and increasing to 2.50% of principal through March 2022, with the remaining principal balance due upon maturity in May 2022. The Term A-2 Loan principal must be repaid in quarterly installments of $1.7 million through June 2018, increasing to quarterly installments of $8.6 million through March 2022, with the remaining balance due upon maturity in May 2022. The Term B-2 Loan principal must be repaid in quarterly installments in the amount of 0.25% of principal through March 2023, with the remaining principal balance due upon maturity in April 2023.

The Credit Facility allows us to issue standby letters of credit of up to $100 million in the aggregate under the Revolving Credit Facility. Outstanding letters of credit under the Revolving Credit Facility reduce the amount of borrowings available to us. Borrowings available to us under the Revolving Credit Facility are further limited by the covenants described below under "Compliance with Covenants." The total available commitments under the Revolving Credit Facility at December 31, 2017 were $473.3 million.2023.

Compliance with Covenants

The convertible notes include customary covenants and events of default for convertible notes of this type. The revolving credit agreement contains customary affirmative covenants and restrictive covenants, including, among others, financial covenants based on net leverage and interest coverage ratios, and customary events of default. The required leverage ratio was increased to 4.50 to 1.00 as a result of the acquisition of EVO, and will gradually step-down over eight quarters to the original required ratio of 3.75 to 1.00. As of December 31, 2017,2023, the interest rate on the Revolving Credit Facility was 3.24%. In addition, we are required leverage ratio is 4.50 to pay a quarterly commitment fee on the unused portion of the Revolving Credit Facility at an applicable rate per annum ranging from 0.20% to 0.30% depending on our leverage ratio.

The portion of deferred debt issuance costs related to the Revolving Credit Facility is included in other noncurrent assets,1.00, and the portionrequired interest coverage ratio is 3.00 to 1.00. We were in compliance with all applicable covenants as of deferred debt issuance costs related to the term loans is reported as a reduction to the carrying amount of the term loans. Debt issuance costs are amortized as an adjustment to interest expense over the terms of the respective facilities.December 31, 2023.


Settlement Lines of Credit


In various markets where we doour Merchant Solutions segment does business, we have specialized lines of credit, which are restricted for use in funding settlement. The settlement lines of credit generally have variable interest rates, are subject to annual review and are denominated in local currency but may, in some cases, facilitate borrowings in multiple currencies. For certain of our settlement lines of credit, the available credit is increased by the amount of cash we have on deposit in specific accounts with the lender. Accordingly, the amount

of the outstanding line of credit may exceed the stated credit limit. As of December 31, 2017 and 2016,2023, a total of $59.3$88.5 million and $51.0 million, respectively, of cash on deposit was used to determine the available credit.


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As of December 31, 2017 and 2016, respectively,2023, we had $635.2 million and $392.1$981.2 million outstanding under these lines of credit with additional capacity of $689.4 million as of December 31, 2017 to fund settlement. The weighted-average interest rate on these borrowings was 1.97% and 1.90% at December 31, 2017 and 2016, respectively.settlement of $1,852.5 million. During the year ended December 31, 2017,2023, the maximum and average outstanding balances under these lines of credit were $863.6$1,506.5 million and $334.0$515.7 million, respectively.

Compliance with Covenants

The Credit Facility contains customary affirmative and restrictive covenants, including, among others, financial covenants basedweighted-average interest rate on our leverage and fixed charge coverage ratios, as defined in the agreement. As ofthese borrowings was 5.95% at December 31, 2017, financial covenants under2023.

Interest Expense

Interest expense was $629.8 million, $437.0 million and $328.0 million for the Credit Facility requiredyears ended December 31, 2023, 2022 and 2021, respectively.

NOTE 10—DERIVATIVES AND HEDGING INSTRUMENTS

Net Investment Hedge

We have designated our aggregate €800 million Euro-denominated senior notes due March 2031 as a leverage ratio no greater than: (i) 4.50 to 1.00 ashedge of our net investment in our Euro-denominated operations. The purpose of the end of any fiscal quarter ending duringnet investment hedge is to reduce the period from July 1, 2017 through June 30, 2018; (ii) 4.25 to 1.00 as of the end of any fiscal quarter ending during the period from July 1, 2018 through June 30, 2019; and (iii) 4.00 to 1.00 as of the end of any fiscal quarter ending thereafter. The fixed charge coverage ratio is required to be no less than 2.25 to 1.00.

The Credit Facility and settlement lines of credit also include various other covenants that are customary in such borrowings. The Credit Facility includes covenants, subject in each case to exceptions and qualifications that may restrict certain payments, including, in certain circumstances, the payment of cash dividends in excessvolatility of our currentnet investment in our Euro-denominated operations due to changes in foreign currency exchange rates.

Investments in foreign operations with functional currencies other than the reporting currency are subject to foreign currency risk as the assets and liabilities of these subsidiaries are translated into the reporting currency at the period-end rate of $0.01 per share per quarter.exchange with the resulting foreign currency translation adjustment presented as a component of other comprehensive income and included in accumulated comprehensive income within equity in our consolidated balance sheets. Under net investment hedge accounting, the foreign currency remeasurement gains and losses associated with the Euro-denominated senior notes are presented within the same components of other comprehensive income and accumulated comprehensive income, partially offsetting the foreign currency translation adjustment for our foreign subsidiaries.


The Credit Facility also includes customary eventsWe recognized a loss on the net investment hedge of default, the occurrence$27.0 million within foreign currency translation adjustments in other comprehensive income in our consolidated statements of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations to be immediately due and payable. We were in compliance with all applicable covenants as of and forcomprehensive income during the year ended December 31, 2017.2023.


Interest Rate Swap AgreementsSwaps


We have interest rate swap agreements with financial institutions to hedge changes in cash flows attributable to interest rate risk on a portion of our variable-rate debt instruments. In the first quarter of 2023, we entered into new interest rate swap agreements with an aggregate notional amount of $1.5 billion to convert eligible borrowings under our revolving credit facility from a floating term Secured Overnight Financing Rate to a fixed rate. Net amounts to be received or paid under the swap agreements arewere reflected as adjustments to interest expense. Since we havehad designated the interest rate swap agreements as portfolio cash flow hedges, unrealized gains or losses resulting from adjusting the swaps to fair value are recordedrecognized as components of other comprehensive income, except for any ineffective portion of the change in fair value, which would be immediately recorded in interest expense. During the year ended December 31, 2017, the 2016 fiscal transition period and the years ended May 31, 2016 and 2015, there was no ineffectiveness.income. The fair values of theour interest rate swaps were determined based on the present value of the estimated future net cash flows using implied rates in the applicable yield curve as of the valuation date. These derivative instruments were classified within Level 2 of the valuation hierarchy.



In August 2022, in connection with entry into the revolving credit agreement and repayment of amounts outstanding under our prior credit facility, we terminated and settled our interest rate swap agreements existing at that time. The termination resulted in the recognition of a net gain of $1.2 million, including the reclassification of $0.5 million of accumulated losses from the separate component of equity. The net gain was presented in interest and other expense in our consolidated statement of income for the year ended December 31, 2022.

Upon issuance of our senior unsecured notes in August 2019, we made settlement payments of $48.3 million related to the termination of forward-starting interest rate swap agreements designated as cash flow hedges, for which the effective portion of the unrealized losses on the swaps was included in other comprehensive loss. We have and will continue to reclassify the effective portion of the realized loss from accumulated other comprehensive loss into interest expense over the terms of the related senior notes.

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The table below presents the fair values ofinformation about our derivative financial instrumentsinterest rate swaps, designated as cash flow hedges, included in the consolidated balance sheets:

    Weighted-Average Fixed Rate of Interest at Range of Maturity Dates at December 31,
Derivative Financial Instruments Balance Sheet Location  December 31, 2017 December 31, 2017 2017 2016
        (in thousands)
Interest rate swaps (Notional of $1,300 and $250 million at December 31, 2017 and 2016, respectively) Other noncurrent assets 1.59% February 28, 2019 - March 31, 2021 $9,202
 $2,147
Interest rate swaps (Notional of $0 million and $750 million at December 31, 2017 and 2016, respectively) Accounts payable and accrued liabilities NA NA $—
 $3,175
Fair Values
Derivative Financial InstrumentsBalance Sheet LocationWeighted-Average Fixed Rate of Interest at December 31, 2023Ranges of Maturity Dates at December 31, 2023December 31, 2023December 31, 2022
(in thousands)
Interest rate swaps (Notional of $1.5 billion at December 31, 2023)Other noncurrent liabilities4.26 %April 17, 2027 - August 17, 2027$28,187 $— 

NA = Not applicable.

As of December 31, 2017, the interest rate swap agreements effectively convert $1.3 billion of our variable-rate debt to the weighted-average fixed rates shown in the table above plus a leverage-based margin.


The table below presents the effects of our interest rate swaps on the consolidated statements of income and statements of comprehensive income for the periods presented:
 Year Ended December 31, Seven Months Ended December 31, Year Ended May 31,
 2017 2016 2016 2015
 (in thousands)
Amount of net unrealized gain (loss) recognized in other comprehensive income$4,549
 $5,532
 $(12,859) $(10,116)
Amount of net losses reclassified out of other comprehensive income to interest expense$5,673
 $4,222
 $8,240
 $3,958

Atyears ended December 31, 2017,2023, 2022 and 2021:

Years Ended December 31,
202320222021
(in thousands)
Net unrealized gains (losses) recognized in other comprehensive loss$(19,683)$12,915 $3,425 
Net unrealized gains (losses) reclassified out of other comprehensive loss to interest expense$4,609 $(21,327)$(40,094)

As of December 31, 2023, the amount of gainnet unrealized gains in accumulated other comprehensive loss related to our interest rate swaps that is expected to be reclassified into interest expense during the next 12 months was approximately $2.4$1.9 million.


Interest Expense
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Interest expense was $174.3 million, $108.6 million, $67.9 million and $39.9 million for the year ended December 31, 2017, the 2016 fiscal transition period and the years ended May 31, 2016 and 2015, respectively.


NOTE 8—11—ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
 
As of December 31, 20172023 and 2016,2022, accounts payable and accrued liabilities consisted of the following:
20232022
2017 2016
   
(in thousands)
Customer deposits$397,085
 $303,353
(in thousands)
Funds held for customers
Funds held for customers
Funds held for customers
Trade accounts payable
Compensation and benefits102,187
 94,190
Unearned revenue101,029
 69,437
Payment network fees97,304
 87,591
Trade accounts payable47,391
 28,178
Commissions payable to third parties35,855
 39,370
Income taxes payable(1)
35,405
 16,810
Contract liabilities
Interest
Income taxes
Third-party commissions
Operating leases
Miscellaneous taxes and withholdings
Third-party processing fees
Audit and legal
Unclaimed property26,468
 15,156
Third-party processing fees24,267
 24,971
Current portion of accrued buyout liability(2)
20,739
 19,392
Current portion of accrued buyout liability(1)
Other151,877
 106,439
$1,039,607
 $804,887
$


(1) The 2017 U.S. Tax Act creates a territorial tax system (with a one-time mandatory "transition" tax on previously deferred foreign earnings), effective January 1, 2018. The transition tax on those deemed repatriated earnings may be paid over eight years. We recorded income taxes payable of $63.7 million on previously deferred foreign earnings, of which $55.7 million is included in other noncurrent liabilities on the consolidated balance sheet as of December 31, 2017 since those payments are not due within the next 12 months.

(2) The noncurrent portion of accrued buyout liability of $64.1$69.1 million and $58.6$45.4 million is included in other noncurrent liabilities onin the consolidated balance sheets as of December 31, 20172023 and 2016,2022, respectively.


NOTE 9—12—INCOME TAX


The income tax provision (benefit)expense for the yearyears ended December 31, 2017, the 2016 fiscal transition period2023, 2022 and the years ended May 31, 2016 and 20152021 consisted of the following:

Years Ended December 31,Years Ended December 31,
2023202320222021
(in thousands)
(in thousands)
(in thousands)
Year Ended
December 31,
 Seven Months Ended December 31, Year Ended May 31,
2017 2016 2016 2015
       
(in thousands)
Current income tax provision (benefit):       
Current income tax expense (benefit):
Current income tax expense (benefit):
Current income tax expense (benefit): 
Federal$79,903
 $22,859
 $26,493
 $25,022
State3,468
 3,443
 5,454
 3,905
Foreign67,851
 42,681
 56,689
 (10,346)
151,222
 68,983
 88,636
 18,581
Deferred income tax provision (benefit):       
Deferred income tax expense (benefit):
Federal
Federal
Federal(266,869) (36,447) (18,205) 14,822
State9,678
 (1,842) (3,620) 3,606
Foreign4,582
 4,967
 3,884
 70,986
(252,609) (33,322) (17,941) 89,414
$(101,387) $35,661
 $70,695
 $107,995
$
 
The incomeIncome tax provisionexpense allocated to noncontrolling interests was $8.6$12.9 million, for the year ended December 31, 2017, $4.4 million for the 2016 fiscal transition period and $7.3$9.8 million and $8.6$6.8 million for the years ended MayDecember 31, 20162023, 2022 and 2015,2021, respectively.

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The following table presents income (loss) before income taxes for the yearyears ended December 31, 2017, the 2016 fiscal transition period2023, 2022 and the years ended May 31, 2016 and 2015:2021:

Years Ended December 31,
Years Ended December 31,
Years Ended December 31,
2023202320222021
Year Ended
December 31,		 Seven Months Ended December 31, Year Ended May 31,
2017 2016 2016 2015
       
(in thousands)
(in thousands)
(in thousands)
(in thousands)
United States$29,692
 $(55,279) $59,876
 $135,901
United States
United States
Foreign362,991
 228,623
 301,036
 281,209
$392,683
 $173,344
 $360,912
 $417,110
$

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

As of December 31, 2017, pursuant to guidance provided in SAB 118, we have not completed our accounting for the effects of the 2017 U.S. Tax Act; however, we have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. For these items, which are further described below, we have recognized a provisional net income tax benefit of $158.7 million, which is included as a component of income tax benefit in our consolidated statement of income for the year ended December 31, 2017. To the extent that any other provisions of the 2017 U.S. Tax Act are determined to affect our December 31, 2017 provision, we have not recorded provisional amounts.

We remeasured our U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse, which is now 21% instead of 35%. We are still analyzing certain aspects of the 2017 U.S. Tax Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts during the measurement period. The provisional income tax benefit recorded as a result of remeasuring our deferred tax assets and liabilities at the lower income tax rate was $222.4 million.

The one-time transition tax established by the 2017 U.S. Tax Act is based on our total post-1986 foreign earnings and profits, offset by allowable foreign tax credits. The transition tax rate applied to our foreign earnings is based on the amount of those earnings held in cash and cash equivalents, as well as other assets. We recorded a provisional income tax expense of $63.7 million for the transition tax on our previously deferred foreign earnings. We have not yet finalized our calculation of the post-1986 earnings and profits for our foreign subsidiaries, on which the transition tax is based. We are continuing to gather additional information to more precisely compute the amount of the transition tax.


Prior to the enactment of the 2017 U.S. Tax Act, the undistributed earnings of all foreign subsidiaries were considered to be indefinitely reinvested outside the United States (approximately $1.4 billion at December 31, 2016). As a result of the enactment of the 2017 U.S. Tax Act, our provisional position is that we now only consider approximately $60Approximately $64.3 million of our undistributed foreign earnings are considered to be indefinitely reinvested outside the United States as of December 31, 2017.2023. Because those earnings are considered to be indefinitely reinvested, no deferred income taxes have been provided thereon. If we were to make a distribution of any portion of those earnings in the form of dividends or otherwise, any such amounts would be subject to withholding taxes payable to various foreign jurisdictions; however, the amounts would not be subject to any additional U.S. income tax.


Our effective tax rates for periods presentedthe years ended December 31, 2023, 2022 and 2021 differ from the federal statutory rate for the year ended December 31, 2017, the 2016 fiscal transition period and the years ended May 31, 2016 and 2015those periods as follows:

Years Ended December 31,
202320222021
Federal U.S. statutory rate21.0 %21.0 %21.0 %
Net gain on dispositions and liquidations4.3 12.1 — 
Foreign inclusion, net of foreign tax credits3.4 8.2 1.0 
Foreign income taxes2.2 1.4 0.3 
State income taxes, net of federal income tax benefit0.9 9.0 3.4 
Nondeductible executive compensation0.9 4.7 1.0 
Share-based compensation expense0.9 2.0 (0.2)
Deemed royalty0.7 1.2 — 
Uncertain tax positions0.5 (0.7)(0.3)
Goodwill impairment— 78.0 — 
Equity method investment partnership income(0.1)0.1 0.9 
Valuation allowance(0.4)(0.2)(1.7)
Foreign-derived intangible income deduction(3.8)(12.4)(1.9)
Tax credits(3.8)(19.5)(3.3)
Foreign interest income not subject to tax(9.5)(29.9)(4.2)
Other0.7 (0.7)0.2 
Effective tax rate17.9 %74.3 %16.2 %

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 Year Ended
December 31,		 Seven Months Ended December 31, Year Ended May 31,
 2017 2016 2016 2015
Federal U.S. statutory rate35.0 % 35.0 % 35.0 % 35.0 %
State income taxes, net of federal income tax benefit1.9
 0.6
 0.4
 1.1
Federal U.S. transition tax16.2
 —
 —
 —
Federal U.S. rate reduction(55.6) —
 —
 —
Foreign income taxes (primarily U.K.)(12.0) (12.6) (10.1) (8.5)
Foreign interest income not subject to tax(2.2) (2.3) (2.6) (1.8)
Taxes on unremitted earnings—
 —
 (3.5) —
Share-based compensation expense(4.2) —
 —
 —
Valuation allowance(3.2) —
 —
 —
Other(1.7) (0.1) 0.4
 1.0
Effective tax rate attributable to Global Payments(25.8) 20.6
 19.6
 26.8
Effective tax rate allocated to noncontrolling interests—
 —
 —
 (0.9)
Effective tax rate(25.8)% 20.6 % 19.6 % 25.9 %


Deferred income taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax laws and rates. Deferred income taxes as of December 31, 20172023 and 20162022 reflect the effect of temporary differences between the amounts of assets and liabilities for financial accounting and income tax purposes. As of December 31, 20172023 and 2016,2022, principal components of deferred tax items were as follows:

202320232022
2017 2016
   
(in thousands)
(in thousands)
(in thousands)
(in thousands)
Deferred income tax assets:   
Basis difference - U.K. business$8,961
 $11,145
Deferred income tax assets:
Deferred income tax assets:
Research and development costs
Research and development costs
Research and development costs
Foreign net operating loss carryforwards
Credits
Financial instruments
Lease liabilities
Accrued expenses
Share-based compensation expense
Domestic net operating loss carryforwards17,228
 12,723
Foreign income tax credit carryforwards—
 7,140
Foreign net operating loss carryforwards3,819
 2,559
Share-based compensation expense7,856
 11,656
Accrued expenses34,582
 54,030
Other18,502
 9,101
90,948
 108,354
Less valuation allowance(16,550) (16,611)
74,398
 91,743
982,534
Valuation allowance
771,485
Deferred tax liabilities:   
Acquired intangibles410,563
 663,922
Acquired intangibles
Acquired intangibles
Property and equipment77,481
 86,548
Partnership interests
Right-of-use assets
Other10,087
 1,956
498,131
 752,426
2,901,878
Net deferred income tax liability$(423,733) $(660,683)


The net deferred income taxes reflected onin our consolidated balance sheets as of December 31, 20172023 and 20162022 are as follows:

20232022
(in thousands)
Noncurrent deferred income tax asset$(111,712)$(37,907)
Noncurrent deferred income tax liability2,242,105 2,428,412 
Net deferred income tax liability$2,130,393 $2,390,505 

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 2017 2016
    
 (in thousands)
Noncurrent deferred income tax asset$13,146
 $15,789
Noncurrent deferred income tax liability(436,879) (676,472)
 $(423,733) $(660,683)


A valuation allowance is provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Changes to our valuation allowance during the yearyears ended December 31, 2017, the 2016 fiscal transition period2023, 2022 and the years ended May 31, 2016 and 20152021 are summarized below (in thousands):

Balance at May 31, 2014$(7,199)
Utilization of foreign net operating loss carryforwards3,387
Other(11)
Balance at May 31, 2015(3,823)
Allowance for foreign income tax credit carryforward(7,140)
Allowance for domestic net operating loss carryforwards(4,474)
Allowance for domestic net unrealized capital loss(1,526)
Release of allowance of domestic capital loss carryforward1,746
Other98
Balance at May 31, 2016(15,119)
Allowance for domestic net operating loss carryforwards(1,504)
Release of allowance of domestic net unrealized capital loss12
Balance at December 31, 2016(16,611)
Allowance for foreign net operating loss carryforwards(6,469)
Allowance for domestic net operating loss carryforwards(3,793)
Allowance for state credit carryforwards(685)
Rate change on domestic net operating loss and capital loss carryforwards3,868
Utilization of foreign income tax credit carryforward7,140
Balance at December 31, 2017$(16,550)
Balance at December 31, 2020$(132,531)
Allowance for foreign net operating losses5,804 
Allowance for foreign tax credits12,656 
Allowance for state tax credits(1,995)
Allowance for domestic net operating losses3,807 
Balance at December 31, 2021(112,259)
Allowance for foreign net operating losses(122)
Allowance for foreign tax credits60 
Allowance for state tax credits2,282 
Allowance for domestic net operating losses(4)
Balance at December 31, 2022(110,043)
Allowance for foreign net operating losses(674)
Allowance for foreign tax credits(101,271)
Allowance for state tax credits3,079 
Allowance for state interest limitation(2,335)
Allowance for domestic net operating losses195 
Balance at December 31, 2023$(211,049)


The increasechange in the valuation allowance related to net operating loss carryforwards of $10.3 million for the year ended December 31, 2017 relates2023 is primarily related to carryforward assetsanticipatory foreign tax credits and state interest deduction carryforwards recorded as partin acquisition accounting offset by recognition of the acquisition of ACTIVE Network.state tax credit carryforwards determined more likely than not to be realized. The increase decrease in the valuation allowance for the year ended December 31, 2022 is primarily related to domesticthe utilization of state tax credit carryforwards. The decrease in the valuation allowance for the year ended December 31, 2021 is primarily related to the foreign net operating loss carryforwards of $1.5 million and $4.5 million for the 2016 fiscal transition period and the year ended May 31, 2016, respectively, relatesforeign tax credit carryforwards which the Company determined are more likely than not to acquired carryforwards from the merger with Heartland.be realized.


Foreign net operating loss carryforwards of $43.2$109.4 million will expire between December 31, 2024 and domesticDecember 31, 2043, if not utilized. Foreign net operating loss carryforwards of $28.9$77.8 million at December 31, 2017have indefinite carryforward periods. Domestic net operating loss carryforwards of $34.1 million and tax credit carryforwards of $66.5 million will expire between December 31, 20262024 and December 31, 20372043, if not utilized.


We conduct business globally and file income tax returns in the domesticU.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities around the world. We are no longer subjectedsubject to state income tax examinations for years ended on or before MayDecember 31, 2008,2014, U.S. federal income tax examinations for years ended on or before December 31, 20132016 and U.K. federal incomecorporation tax examinations for years ended on or before MayDecember 31, 2014.2019.



100
A reconciliation of the beginning and ending amounts of unrecognized income tax benefits, excluding penalties and interest, for the yearyears ended December 31, 2017, the 2016 fiscal transition period2023, 2022 and the years ended May 31, 2016 and 20152021 is as follows:

Years Ended December 31,Years Ended December 31,
2023202320222021
Year Ended
December 31,		 Seven Months Ended December 31, Year Ended May 31,
2017 2016 2016 2015
       
(in thousands)
(in thousands)
(in thousands)
(in thousands)
Balance at the beginning of the year$17,916
 $7,803
 $2,559
 $67,576
Additions based on income tax positions related to the current year7,537
 4,626
 287
 6,311
Additions related to acquisition13,061
 6,149
 6,151
 —
Additions for income tax positions of prior years411
 247
 753
 512
Effect of foreign currency fluctuations on income tax positions27
 (3) 2
 (5,713)
Balance at the beginning of the year
Balance at the beginning of the year
Additions related to acquisitions
Reductions for income tax positions of prior years(7,285) (906) (123) (32)
Settlements with income tax authorities(449) —
 (1,826) (504)
Changes in judgment regarding tax position—
 —
 —
 (65,591)
Additions for income tax positions of prior years
Additions based on income tax positions related to the current year
Balance at the end of the year$31,218
 $17,916
 $7,803
 $2,559


As of December 31, 2017,2023, the total amount of gross unrecognized income tax benefits that, if recognized, would affect the provision for income taxes is $24.1$40.9 million.


NOTE 10—13—SHAREHOLDERS’ EQUITY


We make repurchases ofrepurchase our common stock mainly through the use of open market purchasesrepurchase plans and, at times, through accelerated share repurchase programs ("ASR's"ASR"). As of programs. Information about shares repurchased and retired was as follows for the years ended December 31, 2017, we were authorized to2023, 2022 and 2021:

Years Ended December 31,
202320222021
(in thousands, except per share amounts)
Number of shares repurchased and retired4,065 23,266 15,169 
Cost of shares repurchased, including commissions and applicable excise taxes$413,667 $2,929,814 $2,513,629 
Average cost per share$101.77 $125.93 $165.72 

The share repurchase up to $264.9 million of our common stock. On February 6, 2018, the board increased its authorization to repurchase shares to $600 million.

Year Ended December 31, 2017

Duringactivity for the year ended December 31, 2017, through open market2021 included the repurchase plans, we repurchased and retired 376,309of 2,491,161 shares of our common stock at a cost of $34.8 million, or an average costprice of $92.51$200.71 per share including commissions.

2016 Fiscal Transition Period

During the 2016 fiscal transition period, through open market repurchase plans, we repurchased and retired 2.5 million shares of our common stock at a cost of $178.2 million, orunder an average cost of $70.77 per share, including commissions.

Year Ended May 31, 2016

On April 25, 2016,ASR agreement we entered into an ASRon February 10, 2021 with a financial institution to repurchase an aggregate of $50$500 million of our common stock. In exchange for an up-front payment of $50 million, the financial institution committed to deliver a number of sharesstock during the ASR'sASR program purchase period, which ended on June 23, 2016. March 31, 2021.

On April 26, 2016, 545,777 shares were initially delivered to us. At May 31, 2016, we accounted forAugust 16, 2022, the variable component of remaining shares to be delivered underU.S. government enacted the ASR asInflation Reduction Act into law, which, among other things, implemented a forward contract indexed to our common stock which met all of the applicable criteria for equity classification. On June 23, 2016, an additional 127,435 shares were delivered to us. The total number of shares delivered under this ASR was 673,212 shares at an average price of $74.27 per share.

In addition to shares repurchased under the ASR during1% excise tax on share repurchases effective beginning January 1, 2023. During the year ended MayDecember 31, 2016,2023, we repurchased and retired 1.5reflected excise taxes of $3.9 million shareswithin equity as part of ourthe cost of common stock atrepurchased, net of share issuances, during the period.

As of December 31, 2023, the amount available under our share repurchase program was $1,090.2 million. On January 25, 2024, our board of directors approved an increase to our existing share repurchase program authorization, which raised the total available authorization to $2.0 billion.

On January 25, 2024, our board of directors declared a costcash dividend of $85.9 million, or an average cost of $58.12$0.25 per share including commissions, through open market repurchase plans.payable on March 29, 2024 to common shareholders of record on March 15, 2024.


Year Ended May 31, 2015
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On April 10, 2015, we entered into an ASR with a financial institution to repurchase an aggregate

NOTE 11—14—SHARE-BASED AWARDS AND OPTIONS


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


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

Years Ended December 31,Years Ended December 31,
2023202320222021
Year Ended
December 31,		 Seven Months Ended December 31, Year Ended May 31,
2017 2016 2016 2015
       
(in thousands)
(in thousands)
(in thousands)
(in thousands)
Share-based compensation expense$39,095
 $18,707
 $30,809
 $21,056
Share-based compensation expense
Share-based compensation expense
Income tax benefit$13,849
 $6,582
 $9,879
 $6,907


Restricted Stock


Restricted stock awards vest in approximately equal annual installments, over a three-generally on each of the first three or four-year period andfour anniversaries of the grant date or, in some cases, vest atin one installment on the endthird anniversary of a three-yearthe grant date, in either case subject to the holder's continued service period.on each applicable vesting date. Restricted shares cannot be sold or transferred until they have vested. The grant date fair value of restricted stock awards, which is based on the quoted market value of our common stock on the grant date, is recognized as share-based compensation expense on a straight-line basis over the vesting period. Our restricted stock agreements provide for accelerated vesting under certain conditions.


Performance Units


Certain of our executives have been granted performance units under our long-term incentive plan. Performance units are performance-based restricted stock units ("performance units") that, after a performance period, may convert on a 1-for-1 basis into shares of our common shares, which may be restricted. The number of shares is dependentstock based upon the level of achievement of certain pre-established performance measures during the performance period.period and subject to the holders' continued service on the vesting date. The target number of performance units and any market-based performance measures ("at threshold," "target," and "maximum") are set by the compensation committeeCompensation Committee of our board of directors. Performance units are converted only after the compensation committee certifiesdirectors ("Compensation Committee") establishes performance based on pre-established goals.

The compensation committeemeasures and may set a range of possible performance-based outcomes for performance units. The performance periods generally range from one to three years. Performance units are converted into shares of common stock only after the Compensation Committee certifies the level of achievement against the performance measures. Our performance unit agreements provide for accelerated vesting under certain conditions.

For these awards, with only performance conditions, we recognize compensation expense on a straight-line basis over the applicable performance or service period using the grant date fair value of the award which is based onand the number of shares expected to be earned according to the level of achievement of performance goals. Ifmeasures. When the estimated number of common shares expected to be earned were to change at any timeis changed during the performance period, we would make a cumulative adjustment to share-based compensation expense based on the revised number of shares expected to be earned.estimate. The performance periodperiods for awards granted generally range from 28 monthsone to three years.

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Leveraged Performance Units

During the year ended May 31, 2015, certain executives were granted performance units that we refer to as "leveraged performance units," or "LPUs." LPUs contain a market condition based on our relative stock price growth over a three-year performance period. The LPUs contain a minimum threshold performance which, if not met, would result in no payout. The LPUs also contain a maximum award opportunity set as a fixed dollar and fixed number of shares. After the three-year performance period, which concluded in October 2017, one-third of the earned units converted to unrestricted common stock. The remaining two-thirds converted to restricted stock that will vest in equal installments on each of the first two anniversaries of the conversion date. We recognize share-based compensation expense based on the grant date fair value of the LPUs, as determined by use of a Monte Carlo model, on a straight-line basis over the requisite service period for each separately vesting portion of the LPU award.


The following table summarizes the changes in unvested restricted stock awards and performance awards for the year ended December 31, 2017, the 2016 fiscal transition period andunits for the years ended MayDecember 31, 20162023, 2022 and 2015:2021:

SharesSharesWeighted-Average
Grant-Date
Fair Value
(in thousands)
(in thousands)
(in thousands)
 Shares Weighted-Average
Grant-Date
Fair Value
Unvested at December 31, 2020
 (in thousands)  
Unvested at May 31, 2014 1,754
 $22.72
Unvested at December 31, 2020
Unvested at December 31, 20201,546 $176.71
Granted 954
 36.21
Granted1,465 192.19192.19
Vested (648) 23.17
Vested(1,263)154.06154.06
Forfeited (212) 27.03
Forfeited(108)181.61181.61
Unvested at May 31, 2015 1,848
 28.97
Unvested at December 31, 2021Unvested at December 31, 20211,640 184.90
Granted 461
 57.04
Granted1,496 137.51137.51
Vested (633) 27.55
Vested(756)170.79170.79
Forfeited (70) 34.69
Forfeited(235)164.06164.06
Unvested at May 31, 2016 1,606
 37.25
Unvested at December 31, 2022Unvested at December 31, 20222,145 159.04
Replacement AwardsReplacement Awards202 98.44
Granted 348
 74.26
Granted1,322 112.81112.81
Vested (639) 31.38
Vested(1,041)157.33157.33
Forfeited (52) 45.27
Forfeited(147)128.18128.18
Unvested at December 31, 2016 1,263
 49.55
Granted 899
 79.79
Vested (858) 39.26
Forfeited (78) 59.56
Unvested at December 31, 2017 1,226
 $78.29
Unvested at December 31, 2023Unvested at December 31, 20232,481 $131.41


The total fair value of restricted stock and performance awardsunits vested was $33.7$163.8 million, for the year ended December 31, 2017, $20.0 million for the 2016 fiscal transition period and $17.4$129.2 million and $15.0$194.6 million respectively, for the years ended MayDecember 31, 20162023, 2022 and 2015.2021, respectively.


For restricted stock and performance awards,units, we recognized compensation expense of $35.2$186.9 million, for the year ended December 31, 2017, $17.2 million for the 2016 fiscal transition period and $28.8$151.5 million and $19.8$167.3 million respectively, for the years ended MayDecember 31, 20162023, 2022 and 2015.2021, respectively. As of December 31, 2017,2023, there was $46.1$156.0 million of unrecognized compensation expense related to unvested restricted stock awards and performance awardsunits that we expect to recognize over a weighted-average period of 1.81.7 years. Our restricted stock and performance award plans provide for accelerated vesting under certain conditions.


Stock Options


Stock options are granted with an exercise price equal to 100% of fair market value of our common stock on the date of grant and have a term of ten years. Stock options granted before the year ended May 31, 2015 vest in equal installments, generally on each of the first three or four anniversaries of the grant date. Stock options granted duringdate, subject to the year ended May 31, 2015 and thereafter vest in

equal installmentsholder's continued service on each of the first three anniversaries of the grantapplicable vesting date. Our stock option plansagreements provide for accelerated vesting under certain conditions.


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The following table summarizes changes in stock option activity for the yearyears ended December 31, 2017, the 2016 fiscal transition period2023, 2022 and the years ended May 31, 2016 and 2015:2021: 

OptionsOptionsWeighted-Average Exercise PriceWeighted-Average Remaining Contractual TermAggregate Intrinsic Value
(in thousands)
(in thousands)
(in thousands)(years)(in millions)
Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value
(in thousands)   (years) (in millions)
Outstanding at May 31, 20141,532
 $20.36
 3.8 $21.3
Outstanding at December 31, 2020
Outstanding at December 31, 2020
Outstanding at December 31, 20201,253 $93.666.3$152.6
Granted306
 35.78
  
Forfeited(48) 27.42
  
Forfeited
Forfeited
Exercised(896) 20.15
 16.6
Outstanding at May 31, 2015894
 25.47
 5.2 23.9
Exercised
Exercised(192)68.4224.1
Outstanding at December 31, 2021Outstanding at December 31, 20211,172 107.445.847.4
Granted145
 55.92
  
Forfeited(8) 16.10
  
Forfeited
Forfeited
Exercised(220) 22.46
 9.4
Outstanding at May 31, 2016811
 31.81
 5.8 36.8
Exercised
Exercised(98)65.695.5
Outstanding at December 31, 2022Outstanding at December 31, 20221,139 111.755.417.3
Replacement Awards
Granted
Granted
Granted73
 74.66
  
Forfeited(1) 22.93
  
Exercised(124) 22.26
 6.5
Outstanding at December 31, 2016759
 37.51
 6.0 24.5
Granted124
 79.45
  
Forfeited
Forfeited—
 —
  
Exercised(160) 23.50
 10.1
Outstanding at December 31, 2017723
 $47.79
 6.4 $37.9
Exercised
Exercised(296)89.089.4
Outstanding at December 31, 2023Outstanding at December 31, 2023921 $99.545.0$32.1
     
Options vested and exercisable at December 31, 2017502
 $36.60
 5.4 $31.9
Options vested and exercisable at December 31, 2023
Options vested and exercisable at December 31, 2023
Options vested and exercisable at December 31, 2023647 $96.413.6$25.3


We recognized compensation expense for stock options of $2.6$17.0 million, $6.4 million and $7.9 million during the yearyears ended December 31, 20172023, 2022 and $1.1 million, $1.4 million and $0.7 million during the 2016 fiscal transition period and the fiscal years ended May 31, 2016 and 2015,2021, respectively. As of December 31, 2017,2023, we had $3.4$5.7 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 1.8 years.


The weighted-average grant-date fair value of stock options granted, duringincluding replacement awards granted in connection with the year ended December 31, 2017, the 2016 fiscal transition period andEVO acquisition, during the years ended MayDecember 31, 20162023, 2022 and 20152021 was $23.68, $21.87, $15.60$46.17, $48.88 and $8.45,$65.99, respectively. Fair value was estimated on the date of grant using the Black-Scholes valuation model with the following weighted-average assumptions:

Years Ended December 31,Years Ended December 31,
2023202320222021
Year Ended
December 31,		 Seven Months Ended December 31, Year Ended May 31,
2017 2016 2016 2015
Risk-free interest rate
Risk-free interest rate
Risk-free interest rate1.99% 1.05% 1.62% 1.57%3.84%1.87%0.59%
Expected volatility30.00% 31.58% 28.65% 23.65%Expected volatility45%40%
Dividend yield0.06% 0.06% 0.10% 0.13%Dividend yield0.81%0.56%0.44%
Expected term (years)5
 5
 5
 5
Expected term (years)55



The risk-free interest rate iswas based on the yield of a zero coupon U.S. Treasury security with a maturity equal to the expected life of the option from the date of the grant. Our assumption on expected volatility iswas based on our historical volatility. The dividend yield assumption is calculatedwas determined using our average stock price over the preceding year and the annualized amount of our most current quarterly dividend per share. We based our assumptions on the expected term of the options on our analysis of the historical exercise patterns of the options and our assumption on the future exercise pattern of options.


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NOTE 12—15—SUPPLEMENTAL CASH FLOW INFORMATION


Supplemental cash flow disclosures for the periods presentedyears ended December 31, 2023, 2022 and 2021 are as follows:

Years Ended December 31,
Years Ended December 31,
Years Ended December 31,
202320222021
Year Ended
December 31,		 Seven Months Ended December 31, Year Ended May 31,
2017 2016 2016  2015
       (in thousands)
(in thousands)
Income taxes paid (refunded), net$97,002
 $(3,680) $89,684
 $66,726
Income taxes paid, net of refunds
Income taxes paid, net of refunds
Income taxes paid, net of refunds
Interest paid$154,200
 $93,624
 $58,730
 $36,537


NOTE 13—16—NONCONTROLLING INTERESTS


The following table ispresents the reconciliation of net income attributable to noncontrolling interests to comprehensive income attributable to noncontrolling interests for the periods presented:years ended December 31, 2023, 2022 and 2021:

Years Ended December 31,
202320222021
(in thousands)
Net income attributable to noncontrolling interests$42,590 $31,820 $22,404 
Foreign currency translation attributable to noncontrolling interests50,397 (13,301)(10,281)
Comprehensive income attributable to noncontrolling interests$92,987 $18,519 $12,123 

During the year ended December 31, 2023, we received $26.2 million from a noncontrolling shareholder in exchange for a 20% ownership interest in one of our majority-owned subsidiaries in Spain, which resulted in a reallocation between equity attributable to Global Payments and equity attributable to noncontrolling interests.

During the year ended December 31, 2021, Global Payments and noncontrolling shareholders made contributions of $209.6 million and $70.0 million, respectively, to certain of our majority-owned subsidiaries based on each shareholder's proportionate ownership, primarily to fund acquisitions that closed in the fourth quarter of 2021. The contributions from the noncontrolling shareholders were reflected as an increase to noncontrolling interests in the consolidated balance sheet. In addition, we increased our controlling financial interest in one of our majority-owned subsidiaries from 51% to 55%, which resulted in a reallocation between equity attributable to noncontrolling interests and total equity attributable to Global Payments.

Redeemable Noncontrolling Interests

Through the acquisition of EVO, the portions of equity in our consolidated subsidiaries in Poland, Greece and Chile that are not attributable, directly or indirectly, to us, are redeemable upon the occurrence of an event that is not solely within our control.

We own 66% of our subsidiary in Poland, 51% of our subsidiary in Greece and 50.1% of our subsidiary in Chile. Under the shareholder agreements, the minority shareholders have the option to compel us to purchase their shares at a price per share based on the fair value of the shares, or under certain circumstances for our subsidiary in Greece, at a price determined by calculations stipulated in the shareholder agreement. The option held by the minority shareholder in Poland expired on January 1, 2024 and the redeemable noncontrolling interest in Poland will be reclassified to noncontrolling interest in the consolidated balance sheet as of January 1, 2024. The other options have no expiration date.
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 Year Ended
December 31,		 Seven Months Ended December 31, Year Ended May 31,
 2017 2016 2016 2015
        
 (in thousands)
Net income attributable to noncontrolling interests$25,645
 $12,752
 $18,551
 $31,075
Foreign currency translation attributable to noncontrolling interests13,807
 (8,417) 471
 (28,597)
Comprehensive income attributable to noncontrolling interests$39,452
 $4,335
 $19,022
 $2,478


Because the exercise of each of these redemption options is not solely within our control, the redeemable noncontrolling interests are presented in the mezzanine section between total liabilities and shareholders’ equity, as temporary equity, in our consolidated balance sheet as of December 31, 2023. The redeemable noncontrolling interest for each subsidiary is reflected at the higher of: (i) the initial carrying amount, increased or decreased for the noncontrolling interest's share of comprehensive income (loss), capital contributions and distributions or (ii) the redemption price. Estimates of redemption price are based on projected operating performance of each subsidiary, including key assumptions - revenue growth rates, current and expected market conditions and weighted-average cost of capital. Each of the redeemable noncontrolling interests was presented at the respective carrying amount as of December 31, 2023, and no adjustments to estimated redemption price were recognized during the year ended December 31, 2023.


NOTE 14—17—ACCUMULATED OTHER COMPREHENSIVE LOSS


The changes in the accumulated balances for each component of other comprehensive income (loss), net of tax, were as follows for the periods presented:years ended December 31, 2023, 2022 and 2021:

 Foreign Currency Translation Unrealized Losses on Hedging Activities Other Accumulated Other Comprehensive Loss
        
 (in thousands)
Balance at May 31, 2014$1,583
 $—
 $(3,359) $(1,776)
Other comprehensive loss, net of tax(179,892) (3,874) (450) (184,216)
Balance at May 31, 2015(178,309) (3,874) (3,809) (185,992)
Other comprehensive loss, net of tax(56,329) (2,881) (848) (60,058)
Balance at May 31, 2016(234,638) (6,755) (4,657) (246,050)
Other comprehensive income (loss), net of tax(83,812) 6,115
 1,030
 (76,667)
Balances at December 31, 2016(318,450) (640) (3,627) (322,717)
Other comprehensive income (loss), net of tax132,594
 7,639
 (660) 139,573
Balances at December 31, 2017$(185,856) $6,999
 $(4,287) $(183,144)
Foreign Currency TranslationNet Unrealized Gains (Losses) on Hedging ActivitiesOtherAccumulated Other Comprehensive Loss
(in thousands)
Balance at December 31, 2020$(114,227)$(81,543)$(6,503)$(202,273)
Other comprehensive income (loss)(68,814)33,053 3,760 (32,001)
Effect of change in ownership to a noncontrolling interest92 — — 92 
Balance at December 31, 2021(182,949)(48,490)(2,743)(234,182)
Other comprehensive income (loss)(197,635)26,070 (222)(171,787)
Balance at December 31, 2022(380,584)(22,420)(2,965)(405,969)
Other comprehensive income (loss)165,044 (18,439)439 147,044 
Balance at December 31, 2023$(215,540)$(40,859)$(2,526)$(258,925)


Other comprehensive income (loss) attributable to noncontrolling interests, which relates only to foreign currency translation, was $50.4 million, $(13.3) million and $(10.3) million for the years ended December 31, 2023, 2022 and 2021, respectively.


NOTE 15—18—SEGMENT INFORMATION


Information About Profit and Assets


We operate in two reportable segments: Merchant Solutions and Issuer Solutions. As described in "Note 3—Business Dispositions," during the second quarter of 2023, we completed the sale of the consumer portion of our Netspend business, which comprised our former Consumer Solutions segment. Our former Consumer Solutions segment is presented below for periods prior to disposition.

Our Merchant Solutions payment technology is similar around the world in that we enable our customers to accept card and other digital-based payments. Through this segment, our offerings include, but are not limited to, authorization, settlement and funding services, customer support, chargeback resolution, terminal rental, sales and deployment, payment security services, consolidated billing and on-line reporting. In addition, we offer a wide array of enterprise software solutions that streamline business operations to customers in numerous vertical markets. We also provide a variety of value-added solutions and services, including specialty point-of-sale software, analytics and customer engagement, human capital management and payroll and reporting that assist our customers with driving demand and operating their businesses more efficiently.

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Through our Issuer Solutions segment, we provide financial institutions and retailers technologies to manage their card portfolios, reduce technical complexity and overhead and offer a seamless experience for cardholders on a single platform. In addition, we provide flexible commercial payments, accounts payable and electronic payment alternative solutions that support B2B payment processes for businesses and governments. We also offer complementary services including account management and servicing, fraud solution services, analytics and business intelligence, cards, statements and correspondence, customer contact services and risk management solutions. Additionally, our Issuer Solutions segment provides B2B payment services and other financial service solutions marketed to businesses, including SaaS offerings that automate key procurement processes, provide invoice capture, coding and approval, and enable virtual cards and integrated payments options across a variety of key vertical markets.

Through our former Consumer Solutions segment, we provided general purpose reloadable prepaid debit and payroll cards, demand deposit accounts and other financial service solutions to the underbanked and other consumers and businesses in the United States.

We evaluate performance and allocate resources based on the operating income of each operating segment. The operating income of each operating segment includes the revenues of the segment less expenses that are directly related to those revenues. Operating overhead, shared costs and certainshare-based compensation costs are included in CorporateCorporate. Impairment of goodwill and gains or losses on business dispositions are not included in the following table.determining segment operating income. Interest and other income, interest and other expense, income tax expense and provision forequity in income taxesof equity method investments are not allocated to the individual segments. We do not evaluate the performance of or allocate resources to our operating segments using asset data. The accounting policies of the reportable operating segments are the same as those described in the Summary of Significant Accounting Policies in "Note 1 - 1—Basis of Presentation and Summary of Significant Accounting Policies."



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Information on segments and reconciliations to consolidated revenues, and consolidated operating income areand consolidated depreciation and amortization was as follows for the periods presented:follows:

 Year Ended
December 31,		 Seven Months Ended December 31, Year Ended May 31,
 2017 2016 2016 2015
        
 (in thousands)
Revenues (1):
       
North America$2,929,522
 $1,650,616
 $2,052,623
 $1,968,890
Europe767,524
 403,823
 631,900
 615,966
Asia-Pacific278,117
 148,457
 213,627
 188,862
Consolidated revenues$3,975,163
 $2,202,896
 $2,898,150
 $2,773,718
        
Operating income (loss) (1):
       
North America$457,009
 $233,850
 $307,626
 $293,139
Europe272,769
 145,767
 244,837
 240,014
Asia-Pacific81,273
 37,530
 50,743
 39,697
Corporate(2)
(252,183) (179,196) (178,262) (116,253)
Consolidated operating income$558,868
 $237,951
 $424,944
 $456,597
        
Depreciation and amortization (1):
       
North America$379,953
 $208,198
 $128,618
 $81,051
Europe46,928
 26,178
 40,194
 39,910
Asia-Pacific16,466
 10,385
 13,935
 9,973
Corporate7,804
 2,810
 5,134
 6,571
Consolidated depreciation and amortization$451,151
 $247,571
 $187,881
 $137,505
Years Ended December 31,
202320222021
(in thousands)
Revenues(1):
Merchant Solutions$7,151,793 $6,204,917 $5,665,557 
Issuer Solutions2,398,870 2,245,623 2,165,747 
Consumer Solutions182,740 620,482 783,625 
Intersegment eliminations(78,984)(95,507)(91,167)
Consolidated revenues$9,654,419 $8,975,515 $8,523,762 
Operating income (loss)(1):
Merchant Solutions$2,345,255 $2,040,255 $1,725,990 
Issuer Solutions409,807 356,215 333,355 
Consumer Solutions(3,908)53,594 135,541 
Corporate(898,024)(777,744)(836,010)
Impairment of goodwill— (833,075)— 
Net loss on business dispositions(136,744)(199,094)— 
Consolidated operating income$1,716,386 $640,151 $1,358,876 
Depreciation and amortization(1):
Merchant Solutions$1,109,186 $981,297 $993,228 
Issuer Solutions646,118 623,755 589,394 
Consumer Solutions— 35,773 76,018 
Corporate21,388 21,630 32,744 
Consolidated depreciation and amortization$1,776,692 $1,662,455 $1,691,384 


(1) Revenues, operating income and depreciation and amortization reflect the effecteffects of acquired businesses from the respective acquisition dates and the effects of acquisition. Fordivested businesses through the respective disposal dates. See “Note 2—Acquisition” and “Note 3—Business Dispositions” for further discussion, see "Note 2—Acquisitions."discussion.


(2)During the yearyears ended December 31, 2017, the seven months ended December 31, 20162023, 2022 and the year ended May 31, 2016,2021, operating loss for Corporateincome included acquisition and integration expenses of $94.6$341.9 million, $91.6$259.2 million, and $51.3$340.4 million, respectively.respectively, which were primarily included within Corporate expenses. During the years ended December 31, 2023, 2022 and 2021, operating loss for Corporate also included $18.5 million, $47.1 million, and $56.8 million, respectively, of other charges related to facilities exit activities.


Enterprise-WideEntity-Wide Information


As a percentage of our total consolidated revenues, revenues from external customers in the United States and the United Kingdom were 66% and 11%, respectively,76% for the year ended December 31, 2017. Revenues from external customers in the United States and the United Kingdom were 67% and 10%, respectively, for the 2016 transition period. Revenues from external customers in the United States, the United Kingdom, and Canada were 61%, 10% and 10%, respectively,2023, 80% for the year ended MayDecember 31, 2016;2022, and 60%, 13% and 11%, respectively,79% for the year ended MayDecember 31, 2015.2021. Revenues from external customers are attributed to individual countries based on the location of the customer arrangements. Our results of operations and our financial condition are not significantly reliant upon any single customer.

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Long-lived assets, excluding goodwill and other intangible assets, by location as of December 31, 20172023 and 20162022 were as follows:

20232022
2017 2016
   
(in thousands)
(in thousands)
(in thousands)
(in thousands)
United States$451,436
 $413,499
United States
United States
Foreign countries136,912
 112,871
$588,348
 $526,370
$


NOTE 16—19—COMMITMENTS AND CONTINGENCIES


Leases and Purchase Obligations
 
We conduct a major part of our operations using leased facilities and equipment. Many of these operating leases have renewal and purchase options and provide that we pay the cost of property taxes, insurance and maintenance. Rent expense on all operating leases for the year ended December 31, 2017, the 2016 fiscal transition period and the years ended May 31, 2016 and 2015 was $44.7 million, $19.2 million, $19.7 million and $17.5 million, respectively. We also have contractual obligations related to service arrangements with suppliers for fixed or minimum amounts.

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

Future minimum payments at December 31, 20172023 for noncancelable operating leases and purchase obligations were as follows:follows (in thousands):

 Operating Leases Purchase Obligations
    
 (in thousands)
Years ending December 31:   
2018$41,542
 $70,663
201935,916
 58,494
202028,149
 51,850
202125,436
 42,699
202223,946
 13,734
Thereafter179,295
 31,511
   Total future minimum payments$334,284
 $268,951
Year ending December 31:
2024$425,892 
2025361,578 
2026288,002 
2027247,581 
2028223,190 
2029 and thereafter384,340 
   Total future minimum payments$1,930,583 


During the year ended December 31, 2023, we entered into agreements to acquire hardware, software and related services, of which $182.2 million was financed utilizing under two to five-year vendor financing arrangements. Certain of the agreements included the purchase of assets previously leased.

During the year ended December 31, 2022, we entered into new agreements to acquire hardware, software and related services, of which $112.0 million was financed utilizing two-year supplier financing arrangements. One of the agreements included the purchase of certain assets previously leased. The reduction in operating and finance lease liabilities arising from the termination of the related right-of-use assets was $44.2 million and $9.7 million, respectively.

Legal Matters


We are party to a number of claims and lawsuits incidental to our business. In our opinion, the liabilities, if any, which may ultimately result from the outcome of such matters, individually or in the aggregate, are not expected to have a material adverse effect on our financial position, liquidity, results of operations or cash flows.
 
Heartland, Heartland’s board of directors, Global Payments, Data Merger Sub One, Inc. (a wholly owned subsidiary of Global Payments) and Data Merger Sub Two, LLC (a wholly owned subsidiary of Global Payments) were named as defendants in a putative class action lawsuit challenging the merger with Heartland. The suit was filed on January 8, 2016 in the New Jersey Superior Court, Mercer County, Civil Division, and is captioned Kevin Merchant v. Heartland Payment Systems, et al, L-45-16. The complaint alleged, among other things, that the directors of Heartland breached their fiduciary duties to Heartland stockholders by agreeing to sell Heartland for inadequate consideration, agreeing to improper deal protection terms in the merger agreement,

failing to properly value Heartland, and filing a materially incomplete registration statement with the Securities and Exchange Commission. In addition, the complaint alleged that Heartland, Global Payments, Data Merger Sub One, and Data Merger Sub Two aided and abetted these purported breaches of fiduciary duty. On April 12, 2016, solely to avoid the costs, disruption and distraction of further litigation, and without admitting the validity of any allegations made by the plaintiff, Heartland and Global Payments reached an agreement to settle the suit and entered into a Memorandum of Understanding to document the terms and conditions for settlement of the suit.  On April 7, 2017, the court approved the parties' settlement agreement under which Heartland agreed to pay Plaintiffs’ counsel an immaterial amount of attorney’s fees. The settlement releases all claims that were or could have been brought challenging any aspect of the merger with Heartland or the merger agreement related thereto.

We have reached preliminary agreement to resolve an SEC investigation against Heartland, which commenced prior to the acquisition of Heartland by us and concerns certain non-financial disclosures made by prior Heartland management between 2013 and 2015. We expect the final resolution of the investigation to be immaterial to our business, financial condition and results of operations.

Operating Taxes


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


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BIN/ICA Agreements


We have enteredIn certain markets, we enter into sponsorship or depository and processing agreements with certain banks. These agreements allow us to use the banks' identification numbers, referred to as Bank Identification Number ("BIN") for Visa transactions and an Interbank Card Association ("ICA") number for MasterCardMastercard transactions, to clear credit card transactions through Visa and MasterCard.Mastercard. Certain of these agreements contain financial covenants, and we were in compliance with all such covenants as of December 31, 2017.2023.


NOTE 17—COMPARATIVE DATA FOR THE YEAR ENDED DECEMBER 31, 2016 AND THE SEVEN MONTHS ENDED DECEMBER 31, 2015 (UNAUDITED)

The condensed consolidated statement of income for the year ended December 31, 2016 and the seven months ended December 31, 2015 is as follows (in thousands, except per share data):
110
 Year Ended December 31, Seven Months Ended December 31,
 2016 2015
    
Revenues$3,370,976
 $1,730,070
Operating expenses:   
Cost of service1,603,532
 638,700
Selling, general and administrative1,411,096
 784,823
 3,014,628
 1,423,523
    
Operating income356,348
 306,547
    
Interest and other income46,780
 2,886
Interest and other expense(146,156) (32,149)
 (99,376) (29,263)
    
Income before income taxes256,972
 277,284
Provision for income taxes(36,267) (70,089)
Net income220,705
 207,195
Less: Net income attributable to noncontrolling interests(18,952) (12,351)
Net income attributable to Global Payments$201,753
 $194,844
    
Earnings per share attributable to Global Payments:   
Basic earnings per share$1.38
 $1.50
Diluted earnings per share$1.37
 $1.49


NOTE 18—QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)

Summarized quarterly results for the years ended December 31, 2017 and 2016 are as follows (in thousands, except per share data):
 Quarter Ended
 March 31, 2017 June 30, 2017  September 30, 2017 December 31, 2017
        
Year Ended December 31, 2017       
Revenues$919,762
 $962,240
 $1,038,907
 $1,054,253
Operating income104,970
 131,852
 172,471
 149,575
Net income52,959
 72,443
 118,362
 250,305
Net income attributable to Global Payments48,813
 66,909
 110,740
 241,962
Basic earnings per share attributable to Global Payments0.32
 0.44
 0.72
 1.52
Diluted earnings per share attributable to Global Payments0.32
 0.44
 0.71
 1.51
        
 Quarter Ended
 March 31, 2016 June 30, 2016  September 30, 2016 December 31, 2016
        
Year Ended December 31, 2016       
Revenues$626,259
 $842,644
 $951,885
 $950,187
Operating income94,573
 61,161
 120,389
 80,226
Net income63,447
 67,133
 62,224
 27,902
Net income attributable to Global Payments59,911
 62,233
 55,510
 24,101
Basic earnings per share attributable to Global Payments0.46
 0.42
 0.36
 0.16
Diluted earnings per share attributable to Global Payments0.46
 0.42
 0.36
 0.16

The quarterly financial data in the table above reflect the effectsTable of acquisitions and borrowings to fund certain of those acquisitions. Notably, we acquired Heartland during the quarter ended June 30, 2016 and ACTIVE Network during the quarter ended September 30, 2017. Additionally, our consolidated results reflected incremental expenses associated with the acquisition and integration of Heartland and ACTIVE Network. See "Note 2—Acquisitions" for further discussion of our acquisitions.Contents

Acquisition and integration expenses were $26.1 million, $21.9 million, $21.5 million and $25.1 million for the quarters ended March 31, 2017, June 30, 2017, September 30, 2017 and December 31, 2017, respectively. Acquisition and integration expenses were $8.5 million, $50.5 million, $34.0 million, and $49.1 million for the quarters ended March 31, 2016, June 30, 2016, September 30, 2016 and December 31, 2016, respectively.

Results for the quarter ended June 30, 2016 reflect a gain of $41.2 million recorded in connection with the sale of our membership interests in Visa Europe. See "Note 6—Other Assets" for further discussion of this transaction.

Results for the quarter ended December 31, 2017 reflect the effects of a net income tax benefit of $158.7 million in connection with the 2017 U.S. Tax Act, which was enacted on December 22, 2017. See "Note 9—Income Tax" for further discussion of the new tax legislation.

GLOBAL PAYMENTS INC.
SCHEDULE II
 
Valuation & Qualifying Accounts
(in thousands)
(a)(b)(c)(d)(e)
Description
Balance at Beginning of Period
  
Additions: Charged to Costs and Expenses(2)
  Deductions: Uncollectible Accounts Write-Offs (Recoveries)  
Balance at End of Period
Allowance for credit losses - accounts receivable
December 31, 2021$20,608 $12,835 $16,054 $17,389 
December 31, 2022$17,389 $14,951 $11,320 $21,020 
December 31, 2023 (3)
$21,020 $23,267 $25,282 $19,005 
Allowance for credit losses - settlement assets (1)
December 31, 2021$6,171 $3,553 $6,750 $2,974 
December 31, 2022$2,974 $12,984 $13,671 $2,287 
December 31, 2023$2,287 $19,242 $11,799 $9,730 
Reserve for sales allowances
December 31, 2021$10,871 $16,881 $19,236 $8,516 
December 31, 2022$8,516 $24,517 $25,073 $7,960 
December 31, 2023$7,960 $29,498 $28,425 $9,033 
Allowance for credit and operating losses - check guarantee
December 31, 2021$2,102 $10,160 $9,725 $2,536 
December 31, 2022$2,536 $12,291 $11,383 $3,444 
December 31, 2023 (3)
$3,444 $3,074 $6,518 $— 
Reserve for contract contingencies and processing errors
December 31, 2021$3,589 $734 $2,986 $1,337 
December 31, 2022$1,337 $1,212 $972 $1,577 
December 31, 2023$1,577 $3,194 $3,158 $1,613 
Reserve for cardholder losses
December 31, 2021$10,075 $62,751 $62,769 $10,058 
December 31, 2022$10,058 $58,673 $58,541 $10,190 
December 31, 2023 (3)
$10,190 $15,861 $26,051 $— 
Deferred income tax asset valuation allowance
December 31, 2021$132,531 $(20,272)$— $112,259 
December 31, 2022$112,259 $(2,216)$— $110,043 
December 31, 2023$110,043 $104,280 $3,274 $211,049 
Allowance for credit losses - notes receivable
December 31, 2023$— $15,245 $— $15,245 

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(a) (b) (c) (d) (e)
Description 
Balance at Beginning of Period 
  
Additions: Charged to Costs and Expenses
  
Deductions: Uncollectible Accounts Write-Offs (Recoveries)
  
Balance at End of Period 
         
Allowance for doubtful accounts        
May 31, 2015 $401
 $324
 $257
 $468
May 31, 2016 468
 515
 630
 353
December 31, 2016(2)
 353
 4,283
 3,544
 1,092
December 31, 2017 $1,092
 $6,113
 $5,378
 $1,827
         
Reserve for operating losses-merchant card processing (1)
        
May 31, 2015 $1,724
 $4,928
 $5,366
 $1,286
May 31, 2016 1,286
 3,729
 2,555
 2,460
December 31, 2016(2)
 2,460
 4,629
 4,810
 2,279
December 31, 2017 $2,279
 $14,893
 $13,712
 $3,460
         
Reserve for sales allowances-merchant card processing (1)
        
May 31, 2015 $601
 $7,974
 $3,646
 $4,929
May 31, 2016 4,929
 3,571
 7,450
 1,050
December 31, 2016(2)
 1,050
 2,637
 3,027
 660
December 31, 2017 $660
 $3,874
 $3,954
 $580
         
Reserve for operating losses-check guarantee processing        
May 31, 2015 $2,998
 $9,578
 $9,892
 $2,684
May 31, 2016 2,684
 22,827
 20,643
 4,868
December 31, 2016(2)
 4,868
 15,204
 14,286
 5,786
December 31, 2017 $5,786
 $28,064
 $28,112
 $5,738
         
Deferred income tax asset valuation allowance        
May 31, 2015 $7,199
 $(3,376) $—
 $3,823
May 31, 2016 3,823
 11,296
 —
 15,119
December 31, 2016(2)
 15,119
 1,492
 —
 16,611
December 31, 2017 $16,611
 $7,079
 $7,140
 $16,550

(1)Included in settlement processing obligations.

(2)Additions In addition to amounts charged to costs and deductionsexpenses, amounts in columns (c)this column include additions, as applicable, resulting from business combinations.

(3) Includes certain amounts related to our consumer and (d), respectively,gaming business disposal groups that were presented as held for sale in the consolidated balance sheet as of December 31, 2022. During the second quarter of 2023, we completed the sale of our gaming business and the consumer portion of our Netspend business. The results relating to our consumer and gaming business are included for the seven months ended December 31, 2016.periods prior to disposition, and the amounts divested are included in the deductions column above.






ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
None.


ITEM 9A - CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


As of December 31, 2017,2023, 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, 2017,2023, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and are designed to ensure that information required to be disclosed in those reports is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. 

Management's Report on Internal Control over Financial Reporting


Our management team is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017.2023. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in the Internal Control -— Integrated Framework (2013).

We completed our acquisition of ACTIVE Network on September 1, 2017. As permitted by the SEC rules and regulations management's assessment did not include the internal control of the acquired operations of ACTIVE Network which are included in our consolidated financial statements as of December 31, 2017 and for the period from the acquisition date through December 31, 2017. In accordance with our integration efforts, we plan to incorporate ACTIVE Network's operations into our internal control over financial reporting program within the time period provided by applicable SEC rules and regulations. The assets, excluding goodwill of ACTIVE Network, constituted approximately 4.3% of our total consolidated assets as of December 31, 2017. ACTIVE Network's revenues were less than 1.5% of our total consolidated revenues, and ACTIVE Network did not contribute to our consolidated operating income for the year ended December 31, 2017.


Based on the results of its evaluation, which excluded an assessment of the internal control of the acquired operations of ACTIVE Network, management believes that as of December 31, 2017,2023, our internal control over financial reporting is effective based on those criteria. Our independent registered public accounting firm has issued an audit report on our internal control over financial reporting, which is included in this Annual Report.

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

Deloitte & Touche LLP has issued an attestation report on our internal control over financial reporting, which is included herein as the Report of Independent Registered Public Accounting Firm under "Item 8 - Financial Statements and Supplementary Data" for the year ended December 31, 2023.

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Changes in Internal Control over Financial Reporting

On April 22, 2016, we completed our merger with Heartland, which we have since been integrating into our North America segment. As part of our integration activities, we have completed the incorporation of Heartland's operations into our internal control over financial reporting program.


On September 1, 2017, we completed our acquisition of ACTIVE Network, which is being integrated into our North America segment. 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.

We also added internal controls over the disclosures related to the expected accounting and reporting effects of the new revenue accounting standard, which is effective for us as of January 1, 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.


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)ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2023 includes the acquired operations of EVO.



ITEM 9B - OTHER INFORMATION
(c) Director and Officer Trading Plans and Arrangements

During the quarter ended December 31, 2023, none of our directors or officers notified us that they adopted, modified or terminated any Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement as defined in Item 408(a) of Regulation S-K.

ITEM 9C - DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not Applicable.
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PART III


ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
We incorporate by reference in this Item 10 information about our directors, executive officers and our corporate governance contained under the headings "Proposal 1: Election of Directors" andDirectors," "Biographical Information About Our Executive Officers" and information about compliance with"Delinquent 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"Reports" from our proxy statement to be delivered in connection with our 20182024 Annual Meeting of Shareholders to be held on April 27, 2018 (the "201825, 2024 ("2024 Proxy Statement").
 
We have adopted codes of ethics that apply to our senior financial officers. The senior financial officers include our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Controller or persons performing similar functions. The code of ethics is available in the investor relations section of our website at www.globalpaymentsinc.com, and as indicated in the section entitled "Where To Find Additional Information" in Part I to this Annual Report. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision of our code of ethics by posting such information on our website at the address and location set forth above.


ITEM 11 - EXECUTIVE COMPENSATION
 
We incorporate by reference in this Item 11 the information relating to executive and director compensation and the report of the Compensation Committee contained under the headings "Compensation Discussion and Analysis,"Analysis" and "Corporate"Board and Corporate Governance-Director Compensation" from our 20182024 Proxy Statement.


ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
We incorporate by reference in this Item 12 the information relating to ownership of our common stock by certain persons contained under the headings "Common Stock Ownership-Common Stock Ownership ofby Management" and "Common Stock Ownership-Common Stock Ownership by Certain Other Persons"Non-Management Shareholders" from our 20182024 Proxy Statement.
 
The following table provides certain information as of December 31, 20172023 concerning the shares of our common stock that may be issued under existing equity compensation plans. For more information on these plans, see "Note 10—Shareholders' Equity"14—Share-Based Awards and Options" in the notes to the accompanying consolidated financial statements.

Plan category
Number of securities to be issued upon exercise of outstanding options, warrants and rights 
(a) 
 
Weighted-average exercise
price of outstanding options, warrants and rights 
(b) 
 
Number of securities
remaining available for
future issuance under equity compensation plans (excluding securities reflected in column (a)) 
(c) 
Plan category
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
Weighted-average exercise price of outstanding options, warrants and rights
(b)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
Equity compensation plans approved by security holders722,431
 $47.79
 11,810,191
Equity compensation plans not approved by security holders—
 —
 —
Total722,431
 $47.79
 11,810,191
 

Includes 11,046,846The number of securities remaining available for future issuance under equity compensation plans reflected in column (c) above includes 6,273,259 shares authorized for issuance under theour 2011 Amended and Restated Incentive Plan (the "2011 Incentive Plan"), all of which are available for issuance pursuant to grants of full-value stock awards. Also includes 50,462awards, 906,381 shares authorized under theour 2000 Employee Stock Purchase Plan (the "2000 ESPP"), 13,554,740 shares authorized under our Total System Services 2017 Omnibus Plan, 7,331,435 shares authorized under our Total System Services 2012 Omnibus Plan, 1,541,327 shares authorized under our Total System Services 2007 Omnibus Plan and 602,611 shares authorized under our Amended and Restated 2005NetSpend Holdings, Inc. 2004 Equity Incentive Plan for Options and Restricted Shares Assumed by Total System Services. We intend to issue future shares under the 2011 Incentive Plan and 106,836 shares authorized under the 2000 Director Option Plan. We do not intend to issue shares under either the Amended and Restated 2005 Incentive Plan or the 2000 Director Option Plan.ESPP only.


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Table of Contents
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
We incorporate by reference in this Item 13 the information regarding certain relationships and related transactions between us and our affiliates and the independence of our directors contained under the headings "Additional Information--RelationshipsInformation-Relationships and Related Party Transactions" and "Corporate Governance--Board"Board and Corporate Governance-Board Independence" from our 20182024 Proxy Statement.


ITEM 14 - PRINCIPAL ACCOUNTINGACCOUNTANT FEES AND SERVICES


We incorporate by reference in this Item 14 the information regarding principal accounting fees and services contained under the heading "Proposal Three: Ratification of Reappointment of Auditors" from our 20182024 Proxy Statement.





PART IV

ITEM 15 - EXHIBITS AND FINANCIAL STATEMENT SCHEDULES:SCHEDULES
 
The following documents are filed as part of this Annual Report on Form 10-K:


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

PageNumber
Reports of Independent Registered Public Accounting Firm (PCAOB ID 34)
4955
Consolidated Statements of Income for the yearyears ended December 31, 2017, the seven months ended December 31, 20162023, 2022 and the years ended May 31, 2016 and 20152021
5258
Consolidated Statements of Comprehensive Income for the yearyears ended December 31, 2017, the seven months ended December 31, 20162023, 2022 and the years ended May 31, 2016 and 20152021
5359
Consolidated Balance Sheets as of December 31, 20172023 and 20162022
5460
Consolidated Statements of Cash Flows for the yearyears ended December 31, 2017, the seven months ended December 31, 20162023, 2022 and the years ended May 31, 2016 and 20152021
5561
Consolidated Statements of Changes in Equity for the yearyears ended December 31, 2017, the seven months ended December 31, 20162023, 2022 and the years ended May 31, 2016 and 20152021
5662
Notes to Consolidated Financial Statements
5864
 
(2) Financial Statement Schedules
Page Number
Page Number
Schedule II, Valuation and Qualifying Accounts
95111
 
All other schedules to our consolidated financial statements have been omitted because they are not required under the related instruction or are inapplicable, or because we have included the required information in our consolidated financial statements or related notes.
 
(3) Exhibits
 
The following exhibits either (i) are filed with this Annual Report on Form 10-K or (ii) have previously been filed with the SEC and are incorporated in this Item 15 by reference to those prior filings.

Exhibit No.Description
Exhibit No.Description
2.1++2.1†
Agreement and Plan of Merger, dated as of December 15, 2015, by andAugust 1, 2022, among EVO Payments, Inc., Global Payments Inc., Data and Falcon Merger Sub One, Inc., Data Merger Sub Two, LLC and Heartland Payment Systems, Inc., incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed December 17, 2015.
2.2++
Agreement and Plan of Merger, dated as of January 23, 2014, by and among the Company, Payment Processing, Inc. and, solely for the limited purposes set forth therein, certain additional parties thereto, incorporated by reference to Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q filed April 3, 2014.
2.3++
Stock Purchase and Merger Agreement, dated as 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, 2017.2, 2022.
2.4++3.1
Amendment No. 1 to the Stock Purchase and Merger Agreement, dated as of August 31, 2017, by and among Global Payments Inc., Athlaction Topco, LLC, Vista Equity Partners Management, LLC, as Sellers’ Representative, and VEP Global Aggregator, LLC, incorporated by reference to Exhibit 2.2. to the Company’s Current Report on Form 8-K filed on September 6, 2017.
3.1
SecondThird Amended and Restated Articles of Incorporation of the Company,Global Payments Inc., incorporated by reference to Exhibit 3.14.1 to the Company’s Annual ReportCompany's Post-Effective Amendment No. 1 on Form 10-KS-8 to the Registration Statement on Form S-4 filed July 25, 2013.on September 18, 2019.
3.2
EighthArticles of Amendment to the Third Amended and Restated BylawsArticles of the Company,Incorporation of Global Payments Inc., incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 4, 2017.1, 2020.

115

4.13.3
Stockholders Agreement, dated August 31, 2017, by an among the CompanyTwelfth Amended and the stockholders party thereto,Restated Bylaws of Global Payments Inc., incorporated by reference to Exhibit 10.13.1 to Global Payment Inc.’s Current Report on Form 8-K filed on February 21, 2023.
4.1
Indenture, dated as of August 14, 2019, between Global Payments Inc. and U.S. Bank National Association, as trustee, incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on August 14, 2019.
4.2
Supplemental Indenture No. 1, dated as of August 14, 2019, between Global Payments Inc. and U.S. Bank National Association, as trustee, incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on August 14, 2019.
4.3Form of Notes (included in Exhibit 4.2).
4.4
Senior Indenture, dated March 17, 2016, between TSYS and Regions Bank, as trustee, incorporated by reference to Exhibit 4.1 of TSYS’ Current Report on Form 8-K filed on March 17, 2016.
4.5
Supplemental Indenture No. 1, dated as of September 17, 2019, among TSYS, Global Payments Inc. and Regions Bank, incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on September 6, 2017.20, 2019.
10.14.6
Amended and Restated Debt Commitment Letter, dated asForm of January 8, 2016, by and among Global Payments Inc., Bank of America, N.A., Merrill, Lynch, Pierce, Fenner and Smith Incorporated and certain other lenders named therein,4.800% Senior Note due 2026, incorporated by reference to Exhibit 10.14.3 to TSYS' Current Report on Form 8-K filed on March 17, 2016.
4.7*
Description of Registrant’s Securities Registered pursuant to Section 12 of the Securities Exchange Act.
4.8
Supplemental Indenture No. 2, dated as of May 15, 2020, between Global Payments Inc. and U.S. Bank National Association, as trustee, incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed January 14, 2016.on May 15, 2020.
10.24.9Form of Global Note (included in Exhibit 4.8).
4.10
First Amendment to the Second Amended and Restated 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,Supplemental Indenture No. 3, dated as of February 26, 2016, by and among the Company and2021, between Global Payments Direct, Inc., and U.S. Bank National Association, as borrowers, Bank of America, N.A., as Administrative Agent, and certain other lenders party thereto,trustee, incorporated by reference to Exhibit 10.14.2 to the Company’s Current Report on Form 8-K filed March 1, 2016.on February 26, 2021.
10.34.11Form of Global Note representing the 1.200% Senior Notes due 2026 (included in Exhibit 4.10).
4.12
Second Amendment to Second Amended and Restated Credit Agreement,Supplemental Indenture No. 4, dated as of October 31, 2016, byNovember 22, 2021, between Global Payments Inc. and among the Company, the other borrowers party thereto, the guarantors party thereto, the lenders party thereto andU.S. Bank of America, N.A.,National Association, as Administrative Agent,trustee, incorporated by reference to Exhibit 10.44.2 to the Company’s QuarterlyCurrent Report on Form 10-Q8-K filed on January 9, 2017.November 22, 2021.
10.44.13Form of Global Note representing the Notes (included in Exhibit 4.12)
4.14
Third Amendment dated March 30, 2017, to Second Amended and Restated Credit Agreement,Indenture, dated as of July 31, 2015 among theAugust 8, 2022, between Global Payments Inc. and U.S. Bank Trust Company, the other borrowers party thereto, the Guarantors party thereto, the Lenders party thereto, and Bank of America, N.A.,National Association, as Administrative Agent,trustee, related to 1.00% Convertible Senior Notes due 2029, incorporated by reference to Exhibit 10.44.1 to the Company’s QuarterlyCompany's Current Report on Form 10-Q8-K filed on May 4, 2017.August 9, 2022.
10.54.15Form of 1.00% Convertible Senior Notes due 2029 (included in Exhibit 4.14)
4.16
Fourth Amendment, dated May 2, 2017, to Second Amended and Restated Credit Agreement,Indenture, dated as of July 31, 2015 among theAugust 14, 2019, between Global Payments Inc. and U.S. Bank Trust Company, the other borrowers party thereto, the Guarantors party thereto, the Lenders party thereto, andNational Association (as successor to U.S. Bank of America, N.A.National Association), as Administrative Agent, incorporated by referenced to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 3, 2017.
10.6
First Amended and Restated Marketing Alliance Agreement with HSBC Bank plc, dated June 12, 2009,trustee, incorporated by reference to Exhibit 10.394.1 to the Company’sCompany's Current Report on Form 8-K filed on August 14, 2019.
4.17
Supplemental Indenture No. 5, dated as of August 22, 2022, between Global Payments Inc. and U.S. Bank Trust Company, National Association, as trustee, incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on August 22, 2022.
4.18Form of Global Note representing the Notes (included in Exhibit 4.17)
4.19
First Supplemental Indenture, dated as of December 14, 2022 between Global Payments Inc., and U.S. Bank Trust Company, National Association, as trustee, incorporated by reference to Exhibit 4.23 to the Company's Annual Report on Form 10-K filed July 28, 2009, File No. 001-16111.on February 17, 2023.
10.7+4.20
Supplemental Indenture No. 6, dated as of March 17, 2023, between Global Payments Inc., U.S. Bank National Association, as trustee, Elavon Financial Services DAC, UK Branch, as initial paying agent, and U.S. Bank Trust Company, National Association, as initial securities registrar and transfer agent, incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on March 17, 2023.
4.21Form of Global Note representing the Notes (included in Exhibit 4.20)
10.1+
Total System Services, Inc. 2017 Omnibus Plan incorporated by reference to Exhibit 10.1 to TSYS’s Current Report on Form 8-K filed on April 28, 2017.
10.2+
Total System Services, Inc. 2012 Omnibus Plan, incorporated by reference to Exhibit 10.1 to TSYS’ Current Report on Form 8-K filed on May 4, 2012.
10.3+
Total System Services, Inc. 2007 Omnibus Plan, incorporated by reference to Exhibit 10.1 to TSYS’ Current Report on Form 8-K filed on April 25, 2007.
10.4+
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 on July 28, 2010.
116

10.8+
10.5+
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 on July 30, 2007, File No. 001-16111.2007.
10.9+

10.6+
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 on July 30, 2007, File No. 001-16111.2007.
10.10+10.7+
Third Amended and Restated 2005 Incentive Plan, dated December 31, 2008, incorporated by reference to Exhibit 10.2 to the Company's Form Quarterly Report on 10-Q filed April 6, 2009, File No. 001-16111.2009.
10.11+10.8+
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.
10.12+
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.
10.13+
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.
10.14+
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.
10.15+
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.
10.16+
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.
10.17+
Form of Restricted Stock Award pursuant to the 2011 Incentive Plan (2015 and 2016 fiscal year), incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed April 8, 2015.
10.18+
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.
10.19+
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.
10.20+
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.

10.21+
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.
10.22+
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 on July 25, 2013.
10.23+10.9+
Employment AgreementNon-Qualified Deferred Compensation Plan, incorporated by reference to Exhibit 99.1 to the Company's Registration Statement on Form S-8 filed on September 16, 2010.
10.10+
Amended and betweenRestated 2011 Incentive Plan, incorporated by reference to Exhibit 10.11 to the CompanyCompany’s Annual Report on Form 10-KT filed on February 28, 2017.
10.11+
EVO Payments, Inc. Second Amended and Jeffrey S. Sloan, dated as of March 30, 2010,Restated 2018 Omnibus Incentive Stock Plan, incorporated by reference to Exhibit 10.1 to the Company’s CurrentEVO Payments, Inc.'s Quarterly Report on Form 8-K10-Q filed April 1, 2010.on November 3, 2021.
10.24+10.12+
AmendmentForm of Non-Statutory Stock Option Award pursuant to Employment Agreement bythe Amended and between the Company and Jeffrey S. Sloan, dated as of October 1, 2013,Restated 2005 Incentive Plan, incorporated by reference to Exhibit 10.310.5 to the Company’s CurrentCompany's Quarterly Report on Form 8-K10-Q filed October 7, 2013.on January 8, 2007.
10.25+10.13+
Second AmendmentForm of Restricted Stock Award pursuant to Employment Agreement bythe 2011 Amended and between the Company and Jeffrey S. Sloan, dated as of August 29, 2014,Restated Incentive Plan for Executive Officers (calendar 2019), incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed Octoberon May 2, 2014.2019.
10.26+10.14+
EmploymentForm of Performance Unit Award Agreement by and between the Company and David E. Mangum, dated as of March 1, 2010, incorporated by reference to Exhibit 10.1pursuant to the Company’s Current Report on Form 8-K filed March 3, 2010.
10.27+
Amendment to Employment Agreement by2011 Amended and between the Company and David E. Mangum, dated as of August 29, 2014,Restated Incentive Plan for Executive Officers (calendar 2019), incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed Octoberon May 2, 2014.2019.
10.28+10.15+
Employment Agreement by and between the Company and Cameron M. Bready, dated asForm of May 21, 2014, incorporated by reference to Exhibit 10.1Stock Option Award pursuant to the Company’s Current Report on Form 8-K filed May 23, 2014.
10.29+
Employment Agreement by2011 Amended and between the Company and Guido F. Sacchi, dated as of December 1, 2013,Restated Incentive Plan for Executive Officers (calendar 2019) incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed January 8, 2014.on May 2, 2019.
10.30+10.16+
Amended and Restated Employment Agreement, dated as of September 20, 2019, between Global Payments Inc. and Jeffrey S. Sloan, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on October 31, 2019.
10.17+
Letter Agreement, dated May 1, 2023, between Global Payments Inc. and Jeffrey S. Sloan, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 1, 2023.
10.18+
Amended and Restated Employment Agreement, dated as of May 1, 2023, by and between Global Payments Inc. and Cameron M. Bready, incorporated by reference to Exhibit 10.1 to the CompanyCompany’s Quarterly Report on Form 10-Q filed on August 1, 2023.
10.19+
Amended and Restated Employment Agreement, dated as of September 20, 2019, between Global Payments Inc. and Guido F. Sacchi, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on October 31, 2019.
10.20+
Amended and Restated Employment Agreement, dated as of September 20, 2019, between Global Payments Inc. 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.on October 31, 2019.
21.1*10.21+*
Employment Agreement, dated as of July 29, 2020, between Global Payments Inc. and Andréa Carter
10.22+
Form of Restricted Stock Award pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2020), incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 6, 2020.
10.23+
Form of Performance Unit Award Agreement pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2020), incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 6, 2020.
10.24+
Form of Stock Option Award pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2020), incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 6, 2020.
10.25+
Form of Restricted Stock Award pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2021), incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 4, 2021.
10.26+
Form of Performance Unit Award Agreement pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2021), incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 4, 2021.
117

10.27+
Form of Stock Option Award pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2021), incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 4, 2021.
10.28+
Form of Supplemental Performance Unit Award Agreement pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2021), incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on May 4, 2021.
10.29+
Form of Restricted Stock Award pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2022), incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 2, 2022.
10.30+
Form of Performance Unit Award Agreement pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2022), incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 2, 2022.
10.31+
Form of Stock Option Award pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2022), incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 2, 2022.
10.32+
Form of Restricted Stock Award pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2023), incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 3, 2023.
10.33+
Form of Performance Unit Award Agreement pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2023), incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 3, 2023.
10.34+
Form of Stock Option Award pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2023), incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 3, 2023.
10.35+
Employment Agreement, dated as of September 20, 2019, between Global Payments Inc. and Joshua J. Whipple incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on October 31, 2022.
10.36+
Amendment to Employment Agreement, dated as of August 2, 2022, between Global Payments Inc. and Joshua J. Whipple incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on October 31, 2022.
10.37+
Investment Agreement, dated as of August 1, 2022, among Global Payments Inc., Silver Lake Partners VI DE (AIV), L.P. and Silver Lake Alpine II, L.P., incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed on August 2, 2022
10.38+
Form of Capped Call Confirmation, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on August 9, 2022
10.39+
Credit Agreement, dated as of August 19, 2022, among Global Payments Inc., as borrower, the other borrowers party thereto, Bank of America, N.A., as administrative agent and an L/C Issuer and the other lenders and L/C Issuers party thereto, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on August 22, 2022
21.1*
List of Subsidiaries.
23.1*
Consent of Independent Registered Public Accounting Firm.
24.1*
Power of Attorney.
31.1*
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
31.2*
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.
32.1*
Certification pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002.
97*
Global Payments Executive Compensation Clawback Policy
101.1*The following financial information from the Annual Report on Form 10-K for the year ended December 31, 2017,2023, formatted in Inline XBRL (eXtensible Business Reporting Language) and filed electronically herewith: (i) the Consolidated Statements of Income; (ii) the Consolidated Statements of Comprehensive Income; (iii) the Consolidated Balance Sheets; (iv) the Consolidated Statements of Cash Flows; (v) the Consolidated Statements of Changes in Equity; and (vi) the Notes to Consolidated Financial Statements.
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

118

* Filed herewith.
+ Management contract or compensatory plan or arrangement.
++ Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K and Global Payments Inc. agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule and/or exhibit upon request.

(b) Exhibits

*Filed herewith.
+Management contract or compensatory plan or arrangement.
†Pursuant to Item 601(b)(2) of Regulation S-K, certain schedules have been omitted. The registrant hereby agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request.

(b) Exhibits
PageNumber
Index to Exhibits
99115


(c)    Financial Statement Schedules


See Item 15(a)(2)15(2) above.









119

SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Global Payments Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 22, 2018.14, 2024.

GLOBAL PAYMENTS INC.
By:/s/ Jeffrey S. Sloan
Jeffrey S. Sloan
Chief Executive Officer
(Principal Executive Officer)
By:/s/ Cameron M. Bready
Cameron M. Bready
Chief Executive Officer
(Principal Executive Officer)
By:/s/ Joshua J. Whipple
Joshua J. Whipple
Senior Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
By:/s/ David M. Sheffield
David M. Sheffield
SeniorExecutive Vice President and Chief Accounting Officer
(Principal Accounting Officer)


120

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

SignatureTitleDate
SignatureTitleDate
/s/  William I Jacobs *M. Troy Woods*Chairman of the BoardFebruary 22, 201814, 2024
William I JacobsM. Troy Woods
/s/ Connie D. McDaniel*Lead Independent DirectorFebruary 14, 2024
Connie D. McDaniel
/s/  F. Thaddeus Arroyo*DirectorFebruary 14, 2024
F. Thaddeus Arroyo
/s/ Robert H.B. Baldwin, Jr.*DirectorFebruary 22, 201814, 2024
Robert H.B. Baldwin, Jr.
/s/ John G. Bruno*DirectorDirectorFebruary 22, 201814, 2024
John G. Bruno
/s/  Joia M. Johnson*DirectorFebruary 14, 2024
Joia M. Johnson
/s/ Mitchell L. Hollin*DirectorFebruary 22, 2018
Mitchell L. Hollin
/s/  Ruth Ann Marshall *Marshall*DirectorFebruary 22, 201814, 2024
Ruth Ann Marshall
/s/  Kirsten Kliphouse*DirectorFebruary 14, 2024
/s/  John M. Partridge *DirectorFebruary 22, 2018Kirsten Kliphouse
/s/ Joseph Osnoss*John M. PartridgeDirectorFebruary 14, 2024
Joseph Osnoss
/s/ William B. Plummer *Plummer*DirectorDirectorFebruary 22, 201814, 2024
William B. Plummer
/s/ John T. Turner*DirectorFebruary 14, 2024
/s/  Alan M. Silberstein *DirectorFebruary 22, 2018John T. Turner
/s/ Cameron M. BreadyAlan M. SilbersteinDirectorFebruary 14, 2024
Cameron M. Bready
*By:/s/  Jeffrey S. SloanCameron M. BreadyDirectorAttorney-in-factFebruary 22, 201814, 2024
Jeffrey S. Sloan
*By:/s/  Jeffrey S. SloanAttorney-in-factFebruary 22, 2018
Jeffrey S. SloanCameron M. Bready


102
121