UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~November 30, 2016~~March 31, 2017



☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-16111

GLOBAL PAYMENTS INC.

(Exact name of registrant as specified in charter)



Georgia		58-2567903
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



~~10 Glenlake Parkway, North Tower,~~3550 Lenox Road, Atlanta, Georgia		~~30328~~30321
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (770) 829-8000

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the ~~registrant~~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~~“large accelerated ~~filer," "accelerated filer"~~filer”, “accelerated filer”, “smaller reporting company” and ~~"smaller reporting company"~~“emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer ☒		Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)		Smaller reporting company ☐
		Emerging growth company ☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



	Yes ☐ No ☒

The number of shares of the issuer’s common stock, no par value, outstanding as of ~~January 4,~~May 2, 2017 was ~~152,263,156.~~152,484,189.

GLOBAL PAYMENTS INC.

FORM 10-Q

For the quarterly period ended ~~November 30, 2016~~March 31, 2017

TABLE OF CONTENTS



		Page
PART I - FINANCIAL INFORMATION
ITEM 1.	Unaudited Consolidated Statements of Income for the three months ended March 31, 2017 and ~~six months ended November 30,~~ 2016 ~~and 2015~~	3
	Unaudited Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the three months ended March 31, 2017 and ~~six months ended November 30,~~ 2016 ~~and 2015~~	54
	Consolidated Balance Sheets at ~~November 30, 2016~~March 31, 2017 (unaudited) and ~~May~~December 31, 2016	65
	Unaudited Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~November 30,~~March 31, 2017 and 2016 ~~and 2015~~	76
	Unaudited Consolidated Statements of Changes in Equity for the ~~six~~three months ended ~~November 30,~~March 31, 2017 and 2016 ~~and 2015~~	87
	Notes to Unaudited Consolidated Financial Statements	108
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2320
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3227
ITEM 4.	Controls and Procedures	3228
PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	3329
ITEM 1A.	Risk Factors	3329
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3329
ITEM 6.	Exhibits	3431
	Signatures	3532

PART 1 - FINANCIAL INFORMATION

ITEM 1—FINANCIAL STATEMENTS

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)


	Three Months Ended						Three Months Ended
	November 30, 2016			November 30, 2015			March 31, 2017			March 31, 2016

Revenues	$	941,821		$	722,350		$	919,762		$	626,259
Operating expenses:
Cost of service	468,383			270,565			455,936			248,187
Selling, general and administrative	368,171			328,620			358,856			283,499
	836,554			599,185			814,792			531,686
Operating income	105,267			123,165			104,970			94,573

Interest and other income	1,353			1,292			1,607			1,282
Interest and other expense	(52,448		)	(14,126		)	(41,297		)	(13,075		)
	(51,095		)	(12,834		)	(39,690		)	(11,793		)
Income before income taxes	54,172			110,331			65,280			82,780
Provision for income taxes	(1,557		)	(27,253		)	(12,321		)	(19,333		)
Net income	52,615			83,078			52,959			63,447
Less: Net income attributable to noncontrolling interests, net of income tax	(3,163		)	(4,307		)	(4,146		)	(3,536		)
Net income attributable to Global Payments	$	49,452		$	78,771		$	48,813		$	59,911

Earnings per share attributable to Global Payments:
Basic earnings per share	$	0.32		$	0.61		$	0.32		$	0.46
Diluted earnings per share	$	0.32		$	0.60		$	0.32		$	0.46

See Notes to Unaudited Consolidated Financial Statements.

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF ~~INCOME~~

~~(in thousands, except per share data)~~

Six Months Ended
November 30, 2016 November 30, 2015

Revenues $ 1,881,313
$ 1,471,146
Operating expenses:
Cost of service 931,009
543,231
Selling, general and administrative 723,931
666,978
1,654,940
1,210,209
Operating income 226,373
260,937

Interest and other income 43,826
2,434
Interest and other expense (95,524 ) (27,369 )
(51,698 ) (24,935 )
Income before income taxes 174,675
236,002
Provision for income taxes (29,601 ) (59,876 )
Net income 145,074
176,126
Less: Net income attributable to noncontrolling interests, net of income tax (10,529 ) (10,708 )
Net income attributable to Global Payments $ 134,545
$ 165,418

Earnings per share attributable to Global Payments:
Basic earnings per share $ 0.88
$ 1.27
Diluted earnings per share $ 0.87
$ 1.27

~~See Notes to Unaudited Consolidated Financial Statements.~~

~~GLOBAL PAYMENTS INC.~~

~~UNAUDITED CONSOLIDATED STATEMENTS OF~~ COMPREHENSIVE INCOME ~~(LOSS)~~

(in thousands)

Three Months Ended
November 30, 2016 November 30, 2015

Net income $ 52,615
$ 83,078
Other comprehensive income (loss):
Foreign currency translation adjustments (58,008 ) (35,582 )
Income tax provision related to foreign currency translation adjustments —
(2,256 )
Unrealized gains (losses) on hedging activities 7,089
(3,968 )
Reclassification of losses on hedging activities to interest expense 1,768
2,467
Income tax (expense) benefit related to hedging activities (3,328 ) 562
Other (246 ) —
Other comprehensive loss, net of tax (52,725 ) (38,777 )

Comprehensive income (110 ) 44,301
Comprehensive loss attributable to noncontrolling interests 5,356
1,965
Comprehensive income attributable to Global Payments $ 5,246
$ 46,266



	Six Months Ended						Three Months Ended
	November 30, 2016			November 30, 2015			March 31, 2017			March 31, 2016

Net income	$	145,074		$	176,126		$	52,959		$	63,447
Other comprehensive income (loss):
Other comprehensive income:
Foreign currency translation adjustments	(76,789		)	(72,599		)	34,336			44,220
Income tax benefit related to foreign currency translation adjustments	—			8,844
Income tax provision related to foreign currency translation adjustments							—			(3,250		)
Unrealized gains (losses) on hedging activities	3,884			(4,000		)	827			(10,818		)
Reclassification of losses on hedging activities to interest expense	3,665			4,201
Income tax expense related to hedging activities	(2,810		)	(60		)
Reclassification of unrealized losses on hedging activities to net income							1,596			1,955
Income tax (provision) benefit related to hedging activities							(910		)	3,306
Other	(139		)	—			(217		)	—
Other comprehensive loss, net of tax	(72,189		)	(63,614		)
Other comprehensive income, net of tax							35,632			35,413

Comprehensive income	72,885			112,512			88,591			98,860
Comprehensive income attributable to noncontrolling interests	(2,007		)	(6,336		)
Less: comprehensive income attributable to noncontrolling interests							(4,867		)	(10,463		)
Comprehensive income attributable to Global Payments	$	70,878		$	106,176		$	83,724		$	88,397

See Notes to Unaudited Consolidated Financial Statements.

GLOBAL PAYMENTS INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	November 30, 2016			May 31, 2016			March 31, 2017			December 31, 2016
	(Unaudited)						(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	995,816		$	1,044,728		$	1,261,845		$	1,162,779
Accounts receivable, net of allowances for doubtful accounts of $294 and $353, respectively	266,245			281,612
Claims receivable, net of allowances for doubtful accounts of $4,771 and $4,868, respectively	8,772			6,799
Accounts receivable, net of allowances for doubtful accounts of $1,280 and $1,092 respectively							264,042			275,032
Claims receivable, net of allowances for doubtful accounts of $5,740 and $5,786, respectively							7,961			8,202
Settlement processing assets	1,117,666			1,336,326			751,509			1,546,854
Prepaid expenses and other current assets	186,464			181,848			113,823			123,139
Total current assets	2,574,963			2,851,313			2,399,180			3,116,006
Goodwill	4,823,756			4,829,405			4,859,387			4,807,594
Other intangible assets, net	2,115,842			2,264,708			1,997,420			2,085,292
Property and equipment, net	520,714			493,678			551,951			526,370
Deferred income taxes	20,419			22,719			15,838			15,789
Other	57,420			48,129			135,940			113,299
Total assets	$	10,113,114		$	10,509,952		$	9,959,716		$	10,664,350
LIABILITIES AND EQUITY
Current liabilities:
Settlement lines of credit	$	467,293		$	378,436		$	276,403		$	392,072
Current portion of long-term debt	177,759			135,542			179,004			177,785
Accounts payable and accrued liabilities	681,356			696,414			824,319			804,887
Settlement processing obligations	883,447			1,220,315			813,136			1,477,212
Total current liabilities	2,209,855			2,430,707			2,092,862			2,851,956
Long-term debt	4,316,391			4,379,744			4,221,258			4,260,827
Deferred income taxes	695,258			744,862			636,908			676,472
Other noncurrent liabilities	89,773			77,235			132,397			95,753
Total liabilities	7,311,277			7,632,548			7,083,425			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; 152,267,428 issued and outstanding at November 30, 2016 and 154,421,585 issued and outstanding at May 31, 2016	—			—
Common stock, no par value; 200,000,000 shares authorized; 152,502,543 issued and outstanding at March 31, 2017 and 152,185,616 issued and outstanding at December 31, 2016							—			—
Paid-in capital	1,818,487			1,976,715			1,826,166			1,816,278
Retained earnings	1,146,844			1,015,811			1,192,519			1,137,230
Accumulated other comprehensive loss	(309,717		)	(246,050		)	(287,806		)	(322,717		)
Total Global Payments shareholders’ equity	2,655,614			2,746,476			2,730,879			2,630,791
Noncontrolling interests	146,223			130,928			145,412			148,551
Total equity	2,801,837			2,877,404			2,876,291			2,779,342
Total liabilities and equity	$	10,113,114		$	10,509,952		$	9,959,716		$	10,664,350

See Notes to Unaudited Consolidated Financial Statements.

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Six Months Ended						Three Months Ended
	November 30, 2016			November 30, 2015			March 31, 2017			March 31, 2016
Cash flows from operating activities:
Net income	$	145,074		$	176,126		$	52,959		$	63,447
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment	45,681			35,697			24,984			18,767
Amortization of acquired intangibles	166,188			41,809			84,049			20,545
Share-based compensation expense	16,366			13,472			8,816			7,047
Provision for operating losses and bad debts	19,024			11,257			13,482			6,553
Amortization of capitalized customer acquisition costs	12,291			—			8,948			—
Deferred income taxes	(52,710		)	2,900			(19,391		)	(2,328		)
Gain on sale of investments	(41,150		)	—
Other, net	18,784			2,198			4,692			2,598
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable	9,693			(4,271		)	11,929			52,461
Claims receivable	(14,067		)	(18,723		)	(6,557		)	(4,970		)
Settlement processing assets and obligations, net	(113,359		)	208,446			122,948			66,233
Prepaid expenses and other assets	(5,846		)	(14,097		)	4,644			(12,587		)
Capitalized customer acquisition costs							(4,559		)	—
Accounts payable and other liabilities	(12,426		)	(744		)	(12,979		)	(9,553		)
Net cash provided by operating activities	193,543			454,070			293,965			208,213
Cash flows from investing activities:
Business acquisitions, net of cash acquired	(35,260		)	(241,934		)
Capital expenditures	(83,268		)	(36,246		)	(46,219		)	(24,367		)
Proceeds from sale of investments	37,717			—
Other, net							(422		)	(74		)
Net cash used in investing activities	(80,811		)	(278,180		)	(46,641		)	(24,441		)
Cash flows from financing activities:
Net borrowings on settlement lines of credit	94,757			101,464
Proceeds from issuance of long-term debt	1,289,000			3,030,175
Principal payments of long-term debt	(1,314,799		)	(2,852,175		)
Net payments on settlement lines of credit							(117,789		)	(135,071		)
Proceeds from long-term debt							149,000			142,000
Repayments of long-term debt							(189,732		)	(157,000		)
Payment of debt issuance costs	(9,279		)	(4,934		)	(896		)	(2,099		)
Repurchase of common stock	(172,405		)	(71,748		)	—			(2,901		)
Proceeds from stock issued under share-based compensation plans	4,882			6,317			1,149			179
Common stock repurchased - share-based compensation plans	(20,390		)	(11,579		)	(167		)	(527		)
Tax benefit from share-based compensation plans	13,017			6,521
Purchase of subsidiary shares from noncontrolling interest	—			(7,550		)
Distributions to noncontrolling interests	(12,365		)	(8,158		)	(8		)	(4,740		)
Dividends paid	(3,069		)	(2,602		)	(1,522		)	(1,293		)
Net cash (used in) provided by financing activities	(130,651		)	185,731
Net cash used in financing activities							(159,965		)	(161,452		)
Effect of exchange rate changes on cash	(30,993		)	(23,903		)	11,707			17,849
(Decrease) increase in cash and cash equivalents	(48,912		)	337,718
Increase in cash and cash equivalents							99,066			40,169
Cash and cash equivalents, beginning of the period	1,044,728			650,739			1,162,779			587,751
Cash and cash equivalents, end of the period	$	995,816		$	988,457		$	1,261,845		$	627,920

See Notes to Unaudited Consolidated Financial Statements.

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in thousands)

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, 2016 154,422
$ 1,976,715
$ 1,015,811
$ (246,050 ) $ 2,746,476
$ 130,928
$ 2,877,404
Net income 134,545
134,545
10,529
145,074
Other comprehensive loss, net of tax (63,667 ) (63,667 ) (8,522 ) (72,189 )
Stock issued under share-based compensation plans 671
4,882
4,882
4,882
Common stock repurchased - share-based compensation plans (267 ) (20,531 )

(20,531 ) (20,531 )
Tax benefit from employee share-based compensation 13,017
13,017
13,017
Share-based compensation expense 16,366
16,366
16,366
Contribution of subsidiary shares to noncontrolling interest related to a business combination —
25,653
25,653
Distributions to noncontrolling interest

—
(12,365 ) (12,365 )
Repurchase of common stock (2,559 ) (171,962 ) (443 ) (172,405 ) (172,405 )
Dividends paid ($0.02 per share) (3,069 ) (3,069 ) (3,069 )
Balance at November 30, 2016 152,267
$ 1,818,487
$ 1,146,844
$ (309,717 ) $ 2,655,614
$ 146,223
$ 2,801,837

~~See Notes to Unaudited Consolidated Financial Statements.~~

~~GLOBAL PAYMENTS INC.~~

~~UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY~~

~~(in thousands)~~



	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, 2016	152,186		$	1,816,278		$	1,137,230		$	(322,717	)	$	2,630,791		$	148,551		$	2,779,342
Net income						48,813						48,813			4,146			52,959
Other comprehensive income, net of tax									34,911			34,911			721			35,632
Stock issued under share-based compensation plans	318		1,149									1,149						1,149
Common stock repurchased - share-based compensation plans	(1	)	(77		)							(77		)				(77		)
Share-based compensation expense			8,816									8,816						8,816
Dissolution of a subsidiary						7,998						7,998			(7,998		)	—
Distributions to noncontrolling interest												—			(8		)	(8		)
Dividends paid ($0.01 per share)						(1,522		)				(1,522		)				(1,522		)
Balance at March 31, 2017	152,503		$	1,826,166		$	1,192,519		$	(287,806	)	$	2,730,879		$	145,412		$	2,876,291


	Number of Shares		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Global Payments Shareholders’ Equity			Noncontrolling Interests			Total Equity			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, 2015	130,558		$	148,742		$	795,226		$	(185,992	)	$	757,976		$	105,577		$	863,553
Balance at December 31, 2015																					129,274		$	133,345		$	943,879		$	(247,190	)	$	830,034		$	112,176		$	942,210
Net income						165,418						165,418			10,708			176,126								59,911						59,911			3,536			63,447
Other comprehensive loss, net of tax									(59,242		)	(59,242		)	(4,372		)	(63,614		)
Other comprehensive income, net of tax																													28,486			28,486			6,927			35,413
Stock issued under employee stock plans	644		6,317									6,317						6,317			22		179									179						179
Common stock repurchased - share-based compensation plans	(195	)	(11,997		)							(11,997		)				(11,997		)	(1	)	(84		)							(84		)				(84		)
Tax benefit from employee share-based compensation			6,521									6,521						6,521
Tax benefit from employee share-based compensation plans																							135									135						135
Share-based compensation expense			13,472									13,472						13,472					7,047									7,047						7,047
Purchase of subsidiary shares from noncontrolling interest			(11		)							(11		)	(7,539		)	(7,550		)
Contribution of subsidiary shares to noncontrolling interest related to a business combination			4,673									4,673			24,727			29,400					(820		)							(820		)	(3,925		)	(4,745		)
Distributions to noncontrolling interest												—			(8,158		)	(8,158		)												—			(4,740		)	(4,740		)
Repurchase of common stock	(1,645	)	(35,316		)	(40,053		)				(75,369		)				(75,369		)	(49	)	(1,307		)	(1,594		)				(2,901		)				(2,901		)
Dividends paid ($0.02 per share)						(2,602		)				(2,602		)				(2,602		)
Balance at November 30, 2015	129,362		$	132,401		$	917,989		$	(245,234	)	$	805,156		$	120,943		$	926,099
Dividends paid ($0.01 per share)																										(1,293		)				(1,293		)				(1,293		)
Balance at March 31, 2016																					129,246		$	138,495		$	1,000,903		$	(218,704	)	$	920,694		$	113,974		$	1,034,668

See Notes to Unaudited Consolidated Financial Statements.

NOTES TO UNAUDITED 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 payment technology services delivering innovative solutions to our customers globally. Our technologies, partnerships and employee expertise enable us to provide a broad range of services that allow our customers to accept various payment types. We distribute our services across a variety of channels to merchants and partners in 30 countries throughout North America, Europe, the Asia-Pacific region and in 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. Global Payments Inc. and its consolidated subsidiaries are referred to collectively as "Global Payments," the "Company," "we," "our" or "us," unless the context requires otherwise.

These unaudited consolidated financial statements include our accounts and those of our majority-owned subsidiaries, and all intercompany balances and transactions have been eliminated in consolidation. These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). The consolidated balance sheet as of ~~May~~December 31, 2016 was derived from the audited financial statements ~~for the year ended May 31, 2016~~ included in our ~~Annual~~Transition Report on Form 10-K for the ~~year~~seven months ended ~~May~~December 31, 2016 but does not include all disclosures required by GAAP for annual financial statements. As a result of the change in our fiscal year end from May 31 to December 31, we presented our interim financial information for the quarter ended March 31, 2016 on the basis of the new fiscal year for comparative purposes.

In the opinion of our management, all known adjustments necessary for a fair presentation of the results of the interim periods have been made. These adjustments consist of normal recurring accruals and estimates that affect the carrying amount of assets and liabilities. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our ~~Annual Report on Form 10-K for the year ended May 31, 2016.~~

~~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 of the change, we will file a~~ Transition Report on Form 10-K for the ~~seven-month transition period~~seven months ended December 31, 2016.

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.

Recently Adopted Accounting Pronouncements

In ~~April 2015,~~March 2016, the Financial Accounting Standards Board ("FASB") issued ~~Accounting Standards Update ("ASU") 2015-05, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40)~~ASU 2016-09, "Compensation - Stock Compensation (Topic 718): ~~Customer's Accounting for Fees Paid in a Cloud Computing Arrangement~~Improvements to Employee Share-Based Payment Accounting.." The amendments in this update ~~provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should~~changed how companies account for certain aspects of share-based payments to employees. We adopted the ~~software license element~~various amendments in ASU 2016-09 in our unaudited consolidated financial statements effective January 1, 2017 with no material effect. On a prospective basis, as required, we recognize the income tax effects of the ~~arrangement consistent with~~excess benefits or deduction deficiencies of share-based awards in the ~~acquisition~~statement of ~~other software licenses. If~~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 ~~cloud computing arrangement does not include~~financing activity in our consolidated statement of cash flows, are now presented as an operating activity using a ~~software license, the customer should~~retrospective transition method for all periods presented. Finally, we have elected to account for forfeitures of share-based awards with service conditions as they occur.

In August 2016, the ~~arrangement as a service contract. The guidance does not change GAAP for a customer’s accounting for service contracts.~~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 unaudited 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 ~~standard as~~ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of ~~June 1, 2016~~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 ~~and it was not material to~~effective January 1, 2017. The adoption of this standard had no effect on our ~~balance sheet and/or our results of operations or cash flows.~~unaudited consolidated financial statements.

Recently Issued ~~Accounting~~ Pronouncements Not Yet Adopted

Accounting Standard Codification ("ASC") 606 - New Revenue 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 for years beginning after December 15, 2017, including interim periods, with early adoption permitted for years beginning after December 15, 2016. Since the issuance of ASU 2014-09, the FASB has issued additional interpretive guidance, including new accounting standards updates, that ~~clarify~~clarifies certain points of the standard and modifies certain requirements.

We have performed a review of the requirements of the new revenue standard and are monitoring the activity of the FASB and the transition resource group as it relates to specific interpretive guidance. We have 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 are ~~reviewing~~analyzing customer contracts, ~~and are in the process of~~ applying the five-step model of the new standard to each ~~contact~~contract category we have identified and ~~will compare~~comparing the results to our current accounting practices. The new standard could change the amount and timing of revenue and expenses to be recognized under certain arrangement types. In addition, it could also increase the administrative burden on our operations to properly account for customer contracts and provide the more expansive required disclosures. More judgment and estimates may be required within the process of 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 customer lives. We have not completed our assessment or quantified the effect, if any, the new guidance will have on our consolidated financial statements, related disclosures and/or our internal control over financial reporting. This will occur during the design and implementation phases over the remainder of the calendar year. However, our preliminary view is that we expect the amount and timing of revenue to be recognized under ASU 2014-09 for our most significant contract category, core payment services, will be similar to the amount and timing of revenue recognized under our current accounting practices. We also expect to be required to capitalize additional costs to obtain contracts with customers, 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 time period. Finally, we expect disclosures about our revenues and related customer acquisition costs will be more extensive.

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, on January 1, 2018. We will likely apply the modified retrospective transition method, which would result in an adjustment to retained earnings for the cumulative effect, if any, of applying the standard to contracts in process as of the adoption date. Under this method, we would not restate 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.

Other Accounting Standards Updates

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 ~~could change~~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 ~~amount and timing~~expectation that fewer will qualify as acquisitions (or disposals) of ~~revenue and costs under~~businesses. The ASU will become effective for us on January 1, 2018. Early adoption is permitted for certain ~~arrangement types and could increase~~transactions that occur before the ~~administrative burden on our operations to properly account for customer contracts and provide~~effective date. We are evaluating the ~~more expansive required disclosures. We have not yet determined what~~ effect ~~if any, the new guidance will have~~of ASU 2017-01 on our consolidated financial ~~statements and/or related disclosures.~~

~~Other Accounting Standards Updates~~statements.

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. The amendments in this update will bebecome effective for ~~annual reporting periods beginning after December 15, 2017, including interim reporting periods within those periods.~~us on January 1, 2018. Early adoption is permitted as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued. The amendments in this update should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. We are evaluating the effect of ASU 2016-16 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. ASU 2016-15 will be effective for years beginning after December 15, 2017, including interim periods, and will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. Early adoption is permitted. We are evaluating the effect of ASU 2016-15 on our consolidated financial statements and disclosures.

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 bebecome effective for ~~years beginning after December 15, 2019 and interim periods within those years.~~us on January 1, 2020. Early adoption is permitted for ~~annual and interim~~ periods ~~in years~~ beginning on or after ~~December 15, 2018.~~January 1, 2019. We are evaluating the effect of ASU 2016-13 on our consolidated financial statements.

~~In March 2016, the FASB issued ASU 2016-09, "Compensation - Stock Compensation (Topic 718):~~ ~~Improvements to Employee Share-Based Payment Accounting.~~" The amendments in this update will change how companies account for certain aspects of share-based payments to employees. Entities will be required to recognize the income tax effects the excess deficiencies or shortfalls of awards in the statement of income when the awards vest or are settled. This update also changes the guidance on employers’ accounting

for an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation and permits entities to elect to recognize forfeitures based on actuals or estimates. Finally, the update eliminates the hypothetical additional paid-in capital pool, permits stock option deductions even if not realized in the current year on a return, requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity and potentially has a dilutive effect on earnings per share ("EPS") to the extent that excess tax benefits have historically been included in the calculation of diluted EPS. We will adopt the various amendments in ASU 2016-09 in our consolidated financial statements for the quarterly period ending March 31, 2017 with an effective date of January 1, 2017. As required, we will use the modified retrospective transition method for amendments related to the timing of when excess tax benefits are recognized by means of a cumulative-effect adjustment to shareholders' equity as of January 1, 2017. In addition, the excess tax benefits from our share-based compensation plans are currently presented as a financing activity in our consolidated statement of cash flows and will be presented as an operating activity using a retrospective transition method. We do not expect the adoption of these amendments will have a material effect on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, "~~Leases~~."Leases." The amendments in this update require lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases. ~~Accounting by lessors will remain largely unchanged. The guidance~~In addition, several new disclosures will be required. Although early adoption is permitted, we expect to adopt ASU 2016-02 when it becomes effective for ~~years, including interim periods, beginning after December 15, 2018, with early adoption permitted.~~us on January 1, 2019. Adoption will require a modified retrospective transition where the lessees ~~and lessors~~ are required to recognize and measure leases at the beginning of the earliest period presented. We ~~are evaluating~~have not completed our evaluation of the effect of ASU 2016-02 on our consolidated financial ~~statements.~~statements; however, we expect to recognize right of use assets and liabilities for our operating leases in the balance sheet upon adoption.

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 supersede 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 either upon the occurrence of an observable price change or upon identification of an impairment. The amendments also require enhanced disclosures about those investments. The guidance will bebecome effective for ~~years beginning after December 15, 2017, including interim periods within those years.~~us on January 1, 2018. Except for specific aspects of this pronouncement, early adoption of the amendments in this update is not permitted. We are evaluating the effect of ASU 2016-01 on our consolidated financial statements.

NOTE 2—ACQUISITIONS

Heartland

~~On December 15, 2015, we entered into a merger agreement with Heartland, pursuant to which we~~We merged with Heartland Payment Systems, Inc. ("Heartland") in a cash-and-stock transaction ~~that we completed~~ on April 22, 2016 for total purchase consideration of $3.9 billion.

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. The initial accounting for these acquisitions was not complete as of November 30, 2016. 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. See Note 4 - ~~Goodwill and Other Intangible Assets~~ for measurement-period adjustments by segment during the six months ended November 30, 2016. 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. Also, we are still in the process of assigning goodwill to our reporting units.

The provisional 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 and cash equivalents $ 304,747
Accounts receivable 68,585
Prepaid expenses and other assets 106,442
Identified intangible assets 1,639,040
Property and equipment 106,525
Debt (437,933 )
Accounts payable and accrued liabilities (454,225 )
Settlement processing obligations (20,978 )
Deferred income taxes (553,454 )
Other liabilities (58,542 )
Total identifiable net assets 700,207
Goodwill 3,222,613
Total purchase consideration $ 3,922,820

~~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 agreement, we acquired substantially all of the assets of its gaming business related to licensed gaming operators (the "FIS Gaming Business"), including approximately 260 gaming client locations, for $237.5 million, funded from borrowings on our revolving credit facility and cash on hand. We acquired the FIS Gaming Business to expand our direct distribution and service offerings in the gaming industry. 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. Transaction costs associated with this business combination were not material. The revenue and earnings of the FIS Gaming Business for the year ended May 31, 2016 were not material nor were the historical revenue and earnings of the acquired business material for the purpose of presenting pro forma information.

The estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed previously determined as of December 31, 2016 and as subsequently revised during the three months ended March 31, 2017 for measurement-period adjustments, including a reconciliation to the total purchase consideration, are as ~~follows (in thousands):~~follows:


Customer-related intangible assets	$	143,400
Liabilities	(150		)
				December 31, 2016			Measurement-Period Adjustments			March 31, 2017
				(in thousands)

Cash and cash equivalents				$	304,747		$	—		$	304,747
Accounts receivable				70,385			—			70,385
Prepaid expenses and other assets				103,090			(5,131		)	97,959
Identified intangible assets				1,639,040			—			1,639,040
Property and equipment				106,583			—			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 assets	143,250			707,839			(23,511		)	684,328
Goodwill	94,250			3,214,981			23,511			3,238,492
Total purchase consideration	$	237,500		$	3,922,820		$	—		$	3,922,820

~~Goodwill arising from~~The measurement-period adjustments are the ~~acquisition, included in the North America segment, was attributable to expected growth opportunities, including cross-selling opportunities at existing~~result of continued refinement of certain estimates, particularly regarding certain tax positions and ~~acquired gaming client locations, operating synergies in the gaming business and assembled workforce. Goodwill associated with this acquisition is deductible for~~deferred income ~~tax purposes. The customer-related intangible assets have an estimated amortization period of 15 years.~~taxes.

NOTE 3—SETTLEMENT PROCESSING ASSETS AND OBLIGATIONS

As of ~~November 30, 2016~~March 31, 2017 and ~~May~~December 31, 2016, settlement processing assets and obligations consisted of the following:


	November 30, 2016			May 31, 2016			March 31, 2017			December 31, 2016

	(in thousands)						(in thousands)
Settlement processing assets:
Interchange reimbursement	$	260,227		$	150,644		$	143,782		$	150,612
Liability to Members	(120,422		)	(14,997		)
(Liability to) receivable from members							(14,266		)	71,590
Receivable from networks	1,003,108			1,203,308			623,691			1,325,029
Exception items	5,420			3,003			5,885			6,450
Merchant Reserves	(30,667		)	(5,632		)
Merchant reserves							(7,583		)	(6,827		)
	$	1,117,666		$	1,336,326		$	751,509		$	1,546,854

Settlement processing obligations:
Interchange reimbursement	$	66,519		$	193,989		$	198,220		$	199,202
Liability to Members	(33,566		)	(261,945		)
Liability to members							(154,331		)	(177,979		)
Liability to merchants	(771,239		)	(1,005,009		)	(708,914		)	(1,358,271		)
Exception items	8,742			5,827			8,643			21,194
Merchant Reserves	(150,260		)	(149,667		)
Reserves for operating losses and sales allowances	(3,643		)	(3,510		)
Merchant reserves							(152,510		)	(158,419		)
Reserve for operating losses and sales allowances							(4,244		)	(2,939		)
	$	(883,447	)	$	(1,220,315	)	$	(813,136	)	$	(1,477,212	)

NOTE 4—GOODWILL AND OTHER INTANGIBLE ASSETS

As of ~~November 30, 2016~~March 31, 2017 and ~~May~~December 31, 2016, goodwill and other intangible assets consisted of the following:


	November 30, 2016		May 31, 2016		March 31, 2017		December 31, 2016

	(in thousands)				(in thousands)

Goodwill	$	4,823,756	$	4,829,405	$	4,859,387	$	4,807,594
Other intangible assets:
Customer-related intangible assets	$	1,867,753	$	1,864,709	$	1,854,876	$	1,864,731
Acquired technologies	548,007		549,293		556,400		547,151
Trademarks and trade names	188,360		188,763		189,212		188,311
Contract-based intangible assets	158,103		159,890		158,403		157,882
	2,762,223		2,762,655		2,758,891		2,758,075
Less accumulated amortization:
Customer-related intangible assets	476,322		414,979		531,614		487,729
Acquired technologies	79,263		26,403		118,554		89,633
Trademarks and trade names	21,835		7,830		31,011		24,142
Contract-based intangible assets	68,961		48,735		80,292		71,279
	646,381		497,947		761,471		672,783
	$	2,115,842	$	2,264,708	$	1,997,420	$	2,085,292

The following table sets forth the changes in the carrying amount of goodwill for the ~~six~~three months ended ~~November 30, 2016:~~March 31, 2017:

North America Europe Asia-Pacific Total

(in thousands)

Balance at May 31, 2016 $ 4,086,430
$ 471,773
$ 271,202
$ 4,829,405
Goodwill acquired —
28,820
—
28,820
Effect of foreign currency translation (1,925 ) (41,863 ) 2,924
(40,864 )
Measurement-period adjustments 6,395
—
—
6,395
Balance at November 30, 2016 $ 4,090,900
$ 458,730
$ 274,126
$ 4,823,756



	North America		Europe		Asia-Pacific		Total

	(in thousands)

Balance at December 31, 2016	$	4,083,252	$	455,300	$	269,042	$	4,807,594
Effect of foreign currency translation	676		8,279		12,297		21,252
Measurement-period adjustments	23,511		—		7,030		30,541
Balance at March 31, 2017	$	4,107,439	$	463,579	$	288,369	$	4,859,387

There was no accumulated impairment loss as of ~~November 30, 2016~~March 31, 2017 or ~~May~~December 31, 2016.

NOTE 5—~~OTHER ASSETS~~

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 which we recorded a gain of $41.2 million included in interest and other income in our consolidated statement of income for the six months ended November 30, 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, which we account for using the cost method, have been assigned a value of zero as of June 21, 2016, based on transfer restrictions, Visa's ability to adjust the conversion rate, and the estimation uncertainty associated with those factors. The fair value 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 ultimately received 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 will also 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).

~~NOTE 6—~~LONG-TERM DEBT AND LINES OF CREDIT ~~FACILITIES~~

As of ~~November 30, 2016~~March 31, 2017 and ~~May~~December 31, 2016, long-term debt consisted of the following:


	November 30, 2016		May 31, 2016		March 31, 2017		December 31, 2016

	(in thousands)				(in thousands)
Term loans (face amounts of $3,730,213 and $3,530,000 at November 30, 2016 and May 31, 2016, respectively, less unamortized debt issuance costs of $47,102 and $51,770 at November 30, 2016 and May 31, 2016, respectively)	$	3,683,111	$	3,478,230
Corporate credit facility:
Term loans (face amounts of $3,683,132 and $3,728,857 at March 31, 2017 and December 31, 2016, respectively, less unamortized debt issuance costs of $43,900 and $46,282 at March 31, 2017 and December 31, 2016, respectively)					$	3,639,232	$	3,682,575
Revolving credit facility	811,000		1,037,000		761,000		756,000
Capital lease obligations	39		56		30		37
Total long-term debt	4,494,150		4,515,286		4,400,262		4,438,612
Less current portion of long-term debt (face amounts of $187,274 and $145,938 at November 30, 2016 and May 31, 2016, respectively, less unamortized debt issuance costs of $9,551 and $10,442 at November 30, 2016 and May 31, 2016, respectively) and current portion of capital lease obligations of $36 and $46 at November 30, 2016 and May 31, 2016, respectively	177,759		135,542
Less current portion of corporate credit facility (face amounts of $188,368 and $187,274 at March 31, 2017 and December 31, 2016, respectively, less unamortized debt issuance costs of $9,394 and $9,526 at March 31, 2017 and December 31, 2016, respectively) and current portion of capital lease obligations of $30 and $37 at March 31, 2017 and December 31, 2016, respectively					179,004		177,785
Long-term debt, excluding current portion	$	4,316,391	$	4,379,744	$	4,221,258	$	4,260,827

Maturity requirements on long-term debt as of ~~November 30, 2016~~March 31, 2017 by year are as follows (in thousands):


Fiscal years ending May 31,
Years ending December 31,
2017	$	93,637	$	141,579
2018	187,274		200,974
2019	214,674		214,674
2020	214,674		214,674
2021	214,674		3,158,349
2022	3,103,724		5,424
2023 and thereafter	512,556		508,488
Total	$	4,541,213	$	4,444,162

~~July 2015 Refinancing~~

~~On July~~We are party to a credit facility agreement (as amended from time to time, the "Credit Facility Agreement"), which, as of March 31, ~~2015, we entered into~~2017, provided for secured financing of up to $5.0 billion, comprised of (i) a second amended and restated term loan agreement (the "2015 Term Loan Agreement") and a second amended and restated credit agreement (the "2015 Revolving Credit Facility Agreement" and collectively, the "2015 Credit Facility Agreements") to provide for a $1.75$1.8 billion term loan (the "Term A Loan"), (ii) a $1.5 billion term loan (the "Term A-2 Loan"), (iii) a $542 million term loan (the "Term B Loan") and (iv) a ~~$1.25~~$1.3 billion revolving credit facility (the "Revolving Credit Facility"), each with a syndicate of financial institutions. We used the proceeds of approximately $2.0 billion to repay the then-outstanding balances on our previously existing term loan and revolving credit facility.

~~February 2016 Refinancing~~

On February 26, 2016, we entered into an amendment to the 2015 Credit Facility Agreements (as amended, the "2016 Credit Facility Agreement") to, among other things, (i) accelerate our repayment schedule for the Term A Loan, effective as of February 26, 2016, and (ii) provide security for the Term A Loan and the Revolving Credit Facility and modify the applicable financial covenants and interest rate margins. In addition, the 2016 Credit Facility Agreement provided for a $735 million delayed draw term loan facility (the "Delayed Draw Facility").

~~We also entered into a~~ $1.045 billion term B loan ("Term B Loan"). The Delayed Draw Facility and Term B Loan were issued on April 22, 2016 in connection with our merger with Heartland, resulting in total financing of approximately $4.78 billion. The incremental proceeds from the new loans were used, among other things, to repay certain portions of Heartland's existing indebtedness and to finance, in part, the cash consideration and the merger-related costs. Substantially all of the assets of our domestic subsidiaries are pledged as collateral under the ~~2016~~ Credit Facility Agreement.

~~October 2016 Refinancing~~ On May 2, 2017, we entered into an amendment to the Credit Facility Agreement, which, among

On October 31, 2016, we entered into the Second Amendment to the 2016 Credit Facility Agreement (the "October 2016 Refinancing"), which (i) increased our borrowing capacity under the Delayed Draw Facility (which we now refer to as "Term A-2 Loan") by $750 million to $1.48 billion, (ii) decreased our outstanding borrowings under the Term B Loan by $500 million to $542 million, (iii) extended the ~~maturity dates for the Term A Loan, the Term A-2 Loan and the Revolving Credit Facility and (iv) decreased the interest rate margin on our term loans and Revolving Credit Facility. The October 2016 Refinancing~~other things, increased the total financing capacity available under the ~~2016~~ Credit Facility Agreement ~~from~~to $5.2 billion, as described in more detail in "Note 12 $4.78 billion to $5.03 billion; although, the aggregate outstanding debt did not change as we repaid $250 million outstanding under the Revolving Credit Facility in connection with the October 2016 Refinancing.—Subsequent Event."

The ~~2016~~ Credit Facility Agreement 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 ~~November 30, 2016,~~March 31, 2017, the interest rates on the Term A Loan, the Term A-2 Loan and the Term B Loan were ~~2.86%~~3.23%, ~~2.71%~~3.20% and ~~3.11%~~3.48%, respectively.

The Term A Loan must be repaid in equal quarterly installments of $43.8 million through August 2021, with the remaining principal balance due upon maturity in October 2021. The Term A-2 Loan must be repaid in quarterly installments of $1.7 million, the first installment of which was made in August 2016, increasing to quarterly installments of $8.6 million in August 2018 and

ending in August 2021, with the remaining balance due upon maturity in October 2021. The Term B Loan must be repaid in quarterly installments of $1.4 million, the first installment commencing in December 2016, ending in March 2023, with the remaining principal balance due upon maturity in April 2023.

~~As of November 30, 2016, the outstanding balance on the Revolving Credit Facility was $811.0 million. The 2016~~ Credit Facility Agreement 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." ~~At November 30, 2016 and May 31, 2016, we had outstanding standby letters of credit of $20.5 million and $8.5 million, respectively.~~ The total available commitments under the Revolving Credit Facility at ~~November 30, 2016~~March 31, 2017 and ~~May~~December 31, 2016 were ~~$418.5~~$228.8 million and ~~$204.5~~$446.3 million, respectively. As of ~~November 30, 2016,~~March 31, 2017, the interest rate on the Revolving Credit Facility was ~~2.71%~~3.20%. In addition, wewe are required to pay a quarterly commitment fee on the unused portion of the Revolving Credit Facility. ~~The Revolving Credit Facility expires in October 2021.~~

~~We incurred fees and expenses associated with the July 2015 refinancing, the February 2016 refinancing and October 2016 refinancing of $74.5 million, in the aggregate.~~ The portion of ~~the~~ debt issuance costs related to the Revolving Credit Facility isare included in other noncurrent assets, and the portion of ~~the~~ debt issuance costs related to the ~~Term A Loan, the Term B Loan and the Delayed Draw Facility~~term loans is reported as a reduction to the carrying amount of the ~~debt.~~term loans. Debt issuance costs are amortized as an adjustment to interest expense over the terms of the respective facilities.

Settlement Lines of Credit

We have lines of credit with banks in various markets where we do business. The lines of credit, which are restricted for use in funding settlement, generally have variable interest rates and are subject to annual review. The settlement lines of credit ~~facilities~~ are generally 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 ~~November 30, 2016~~March 31, 2017 and ~~May~~December 31, 2016, a total of $~~49.6~~41.0 million and ~~$42.9~~$51.0 million, respectively, of cash on deposit was used to determine the available credit.

As of ~~November 30, 2016~~March 31, 2017 and ~~May~~December 31, 2016, respectively, we had ~~$467.3~~$276.4 million and ~~$378.4~~$392.1 million outstanding under these lines of credit with additional capacity of ~~$776.6~~$856.5 million as of ~~November 30, 2016~~March 31, 2017 to fund settlement. The weighted-average interest rate on these borrowings was ~~2.05%~~2.40% and ~~1.80%~~1.90% at ~~November 30, 2016~~March 31, 2017 and ~~May~~December 31, 2016, respectively.

During the three months ended ~~November 30, 2016,~~March 31, 2017, the maximum and average outstanding balances under these lines of credit were ~~$691.7~~$577.9 million and ~~$402.4~~$310.4 million, respectively.

Compliance with Covenants

The ~~2016~~ Credit Facility Agreement contains customary affirmative and restrictive covenants, including, among others, financial covenants based on our leverage and fixed charge coverage ~~ratios. Financial~~ratios, as defined in the agreement. As of March 31, 2017, financial covenants ~~require~~under the Credit Facility Agreement required a leverage ratio no greater than (i) ~~4.75 to 1.00 as of the end of any fiscal quarter ending during the period from September 1, 2016 through February 28, 2017, (ii)~~ 4.50 to 1.00 as of the end of any fiscal quarter ending during the period from March 1, 2017 through August 31, ~~2017, (iii)~~2017; (ii) 4.25 to 1.00 as of the end of any fiscal quarter ending during the period from September 1, 2017 tothrough February 28, 2018 and ~~(iv)~~(iii) 4.00 to 1.00 as of the end of any fiscal quarter ending thereafter. ~~The~~As of March 31, 2017, the fixed charge coverage ratio iswas required to be no less than 2.25 to 1.00. The ~~2016~~ Credit Facility Agreement and settlement lines of credit also include various other covenants that are customary in such borrowings. The ~~2016~~ Credit Facility Agreement 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. In connection with the May 2, 2017 amendment to the Credit Facility Agreement, the required leverage ratios were updated, as described in more detail in "Note 12—Subsequent Event."

The ~~2016~~ Credit Facility Agreement 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 ~~six~~three months ended ~~November 30, 2016.~~March 31, 2017.

Interest Rate Swap Agreements

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. A $500 million notional interest rate swap agreement, which became effective on October 31, 2014, effectively converted $500 million of our variable-rate debt to a fixed rate of 1.52% plus a leverage-based margin and will mature on February 28, 2019. A $250 million notional interest rate swap, which became effective on August 28, 2015, effectively converted $250 million of our variable-rate debt to a fixed rate of 1.34% plus a leverage-based margin and will mature on July 31, 2020.

Net amounts to be received or paid under the swap agreements are reflected as adjustments to interest expense. Since we have designated the interest rate swap agreements as portfolio cash flow hedges, unrealized gains or losses resulting from adjusting the swaps to fair value are recorded 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 three ~~and six~~ months ended ~~November 30, 2016,~~March 31, 2017, there was no ineffectiveness. The fair values of the 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.

The table below presents the fair values of our derivative financial instruments designated as cash flow hedges included ~~within~~in the consolidated balance sheets:

November 30, 2016 May 31, 2016

(in thousands)

Interest rate swaps ($250 million notional) Other assets $ 827
$ —
Interest rate swaps ($500 million notional) Accounts payable and accrued liabilities $ 4,054
$ 10,775



Derivative Financial Instruments	Balance Sheet Location	Weighted-Average Fixed Rate of Interest at March 31, 2017	Range of Maturity Dates	March 31, 2017		December 31, 2016
				(in thousands)
Interest rate swaps (Notional of $500 million at March 31, 2017, $250 million at December 31, 2016)	Other assets	1.46%	December 31, 2019 - July 31, 2020	$	3,305	$	2,147
Interest rate swaps (Notional of $800 million at March 31, 2017, $750 million at December 31, 2016)	Accounts payable and accrued liabilities	1.67%	February 28, 2019 - March 31, 2021	$	1,906	$	3,175

The table below presents the effects of our interest rate swaps on the consolidated statements of income and ~~other~~ comprehensive ~~loss~~income for the three ~~and six~~ months ended ~~November 30, 2016~~March 31, 2017 and ~~2015:~~2016:

Three Months Ended Six Months Ended
November 30, 2016 November 30, 2015 November 30, 2016 November 30, 2015

(in thousands)

Amount of gain (loss) recognized in other comprehensive loss $ 7,089
$ (3,968 ) $ 3,884
$ (4,000 )
Amount of loss recognized in interest expense $ 1,768
$ 2,467
$ 3,665
$ 4,201



	Three Months Ended
	March 31, 2017		March 31, 2016

	(in thousands)

Amount of gain (loss) recognized in other comprehensive income	$	827	$	(10,818	)
Amount reclassified out of other comprehensive income to interest expense	$	1,596	$	1,955

~~At November 30, 2016,~~As of March 31, 2017, the amount 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 ~~$4.4~~$4.6 million.

Interest Expense

Interest expense was ~~$50.8~~$41.1 million and ~~$13.4~~$13.5 million for the three months ended ~~November 30,~~March 31, 2017 and 2016, ~~and 2015, respectively, and $95.3 million and $26.8 million for the six months ended November 30, 2016 and 2015,~~ respectively.

NOTE 7—6—INCOME TAX

Our effective income tax rates were ~~2.9%~~18.9% and ~~24.7%~~23.4% for the three months ended ~~November 30,~~March 31, 2017 and March 31, 2016, ~~and November 30, 2015, respectively. Our effective income tax rates were 16.9% and 25.4% for the six months ended November 30, 2016 and November 30, 2015,~~ respectively. Our effective income tax rates differ from the U.S. statutory rate primarily due to income generated in international jurisdictions with lower tax rates. We also changed our estimate of the mix of earnings by jurisdiction in determining our annual estimated effective tax rate and our estimate of certain U.S. inclusion items during the three months ended November 30, 2016.

We conduct business globally and file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities around the world, including,

without limitation, the United States and the United Kingdom. We are no longer subject to state income tax examinations for years ended on or before May 31, 2008, U.S. federal income tax examinations for fiscal years prior to 2013 and U.K. federal income tax examinations for years ended on or before May 31, 2013.

NOTE 8—7—SHAREHOLDERS’ EQUITY

~~From time-to-time, we~~We make repurchases of our common stock mainly through the use of open market purchases and, at times, through accelerated share repurchase ~~programs ("ASR's").~~programs. As of ~~November 30, 2016,~~March 31, 2017, we were authorized to repurchase up to ~~$94.5~~$299.7 million of our common stock.

During the ~~six~~three months ended ~~November 30,~~March 31, 2016, ~~127,435 shares were delivered to us in connection with the completion of an ASR initiated on April 25, 2016. In addition,~~ through open market repurchase plans, we repurchased and retired ~~1,470,643 and 2,431,359~~48,816 shares of our common stock at a cost of ~~$104.8 million and $172.4~~$2.9 million, or an average cost of ~~$71.24 and $70.91~~$59.37 per share, including ~~commissions, during the three and six months ended November 30, 2016, respectively.~~

During the six months ended November 30, 2015, 324,742 shares were delivered to us in connection with the completion of an ASR initiated on April 10, 2015. In addition, through open market repurchase plans, we repurchased and retired 625,573 and 1,320,563 shares of our common stock at a cost of $37.5 million and $75.4 million, or an average cost of $59.87 and $57.07 per share, including commissions, during the three and six months ended November 30, 2015, respectively.commissions.

NOTE 9—8—SHARE-BASED AWARDS AND OPTIONS

The following table summarizes share-based compensation expense and the related income tax benefit recognized for our share-based awards and stock options:


	Three Months Ended				Six Months Ended				Three Months Ended
	November 30, 2016		November 30, 2015		November 30, 2016		November 30, 2015		March 31, 2017		March 31, 2016

	(in thousands)								(in thousands)

Share-based compensation expense	$	8,747	$	7,005	$	16,366	$	13,472	$	8,816	$	7,047
Income tax benefit	$	2,206	$	2,279	$	5,778	$	4,637	$	3,065	$	2,344

Share-Based Awards

The following table summarizes the changes in unvested share-based awards for the ~~six~~three months ended ~~November 30, 2016:~~March 31, 2017:


	Shares		Weighted-Average Grant-Date Fair Value		Shares		Weighted-Average Grant-Date Fair Value
	(in thousands)				(in thousands)

Unvested at May 31, 2016	1,606		$	37.25
Unvested at December 31, 2016					1,263			$49.55
Granted	436		74.29		441		79.47
Vested	(730	)	31.38		(3	)	42.90
Forfeited	(39	)	44.87		(24	)	56.74
Unvested at November 30, 2016	1,273		$	49.46
Unvested at March 31, 2017					1,677			$57.30

The total fair value of share-based awards vested during the ~~six~~three months ended ~~November 30,~~March 31, 2017 and March 31, 2016 ~~and November 30, 2015~~ was $~~22.9~~0.1 million and $~~17.6~~0.2 million, respectively.

For these share-based awards, we recognized compensation expense of $~~8.1~~8.0 million and $~~6.4~~6.5 million during the three months ended ~~November 30,~~March 31, 2017 and March 31, 2016, ~~and November 30, 2015, respectively, and $15.0 million and $12.6 million during the six months ended November 30, 2016 and November 30, 2015,~~ respectively. As of ~~November 30, 2016,~~March 31, 2017, there was ~~$49.1~~$72.2 million of unrecognized compensation expense related to unvested share-based awards that we expect to recognize over a weighted-average period of ~~2.08~~2.38 years. Our share-based 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 ~~fiscal~~the year ended May 31, 2015 vest in equal installments on each of the first four anniversaries of the grant date. Stock options granted during ~~fiscal~~the year ended May 31, 2015 and thereafter vest in equal installments on each of the first three anniversaries of the grant date. During ~~each of~~ the ~~six~~three months ended ~~November 30, 2016 and November 30, 2015,~~March 31, 2017, we granted

stock options to purchase 0.1 million shares of our common stock. There were no stock ~~options.~~options granted during the three months ended March 31, 2016. Our stock option plans provide for accelerated vesting under certain conditions.

The following summarizes changes in unvested stock option activity for the ~~six~~three months ended ~~November 30, 2016:~~March 31, 2017:


	Options		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value		Options		Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in thousands)				(years)	(in millions)		(in thousands)			(years)	(in millions)
Outstanding at May 31, 2016	811		$	31.81	5.8	$	36.8
Outstanding at December 31, 2016								759		$37.51	6.0	$24.5
Granted	73		74.66					124		79.45
Forfeited	(1	)	22.93					—		—
Exercised	(124	)	22.26					(52	)	23.68
Outstanding at November 30, 2016	759		$	37.51	6.1	$	25.0
Outstanding at March 31, 2017								831		$44.65	6.6	$29.9

Options vested and exercisable at November 30, 2016	502		$	28.88	4.8	$	20.6
Options vested and exercisable at March 31, 2017								449		$29.49	4.7	$23.0

We recognized compensation expense for stock options of ~~$0.5~~$0.6 million and $0.4 million during the three months ended ~~November 30,~~March 31, 2017 and March 31, 2016, ~~and November 30, 2015, respectively, and $0.9 million and $0.6 million during the six months ended November 30, 2016 and November 30, 2015,~~ respectively. The aggregate intrinsic value of stock options exercised during the ~~six~~three months ended ~~November 30,~~March 31, 2017 and March 31, 2016 ~~and November 30, 2015~~ was ~~$6.5~~$2.8 million and ~~$4.8~~$0.3 million, respectively. As of ~~November 30,~~

~~2016,~~March 31, 2017, we had ~~$1.8~~$2.5 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of ~~1.9~~2.37 years.

The weighted-average grant-date fair value of each stock option granted during the ~~six~~three months ended ~~November 30, 2016 and November 30, 2015~~March 31, 2017 was ~~$21.87 and $15.60, respectively.~~$10.28. Fair value was estimated on the date of grant using the Black-Scholes valuation model with the following weighted-average assumptions:

Six Months Ended
November 30, 2016 November 30, 2015
Risk-free interest rate 1.05% 1.62%
Expected volatility 31.58% 28.65%
Dividend yield 0.06% 0.10%
Expected term (years) 5 5



	Three Months Ended
	March 31, 2017
Risk-free interest rate	1.99%
Expected volatility	30%
Dividend yield	0.06%
Expected term (years)	5

The risk-free interest rate is based on the yield of a zero coupon U.S. Treasury security with a maturity equal to the expected life of the option from the date of the grant. Our assumption on expected volatility is based on our historical volatility. The dividend yield assumption is calculated using our average stock price over the preceding year and the annualized amount of our 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.

NOTE ~~10—~~9—EARNINGS PER SHARE

Basic earnings per share 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 earnings per share 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 that would have a dilutive effect on earnings per share. 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 earnings per share. There were less than 0.1 million stock options that would

have an antidilutive effect on the computation of diluted earnings per share for the three ~~and six~~ months ended ~~November 30, 2016 and for the six months ended November 30, 2015.~~March 31, 2017. There were no such antidilutive stock options for the three months ended ~~November 30, 2015.~~March 31, 2016.

The following table sets forth the computation of diluted weighted-average number of shares outstanding for the three ~~and six~~ months ended ~~November 30, 2016~~March 31, 2017 and ~~November 30, 2015:~~March 31, 2016:


	Three Months Ended		Six Months Ended		Three Months Ended
	November 30, 2016	November 30, 2015	November 30, 2016	November 30, 2015	March 31, 2017	March 31, 2016

	(in thousands)				(in thousands)

Basic weighted-average number of shares outstanding	153,173	129,505	153,539	129,919	152,304	129,268
Plus: Dilutive effect of stock options and other share-based awards	818	848	896	833	951	869
Diluted weighted-average number of shares outstanding	153,991	130,353	154,435	130,752	153,255	130,137

NOTE ~~11—~~10—ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in the accumulated balances for each component of other comprehensive loss, net of tax, were as follows for the three ~~and six~~ months ended ~~November 30, 2016~~March 31, 2017 and ~~November 30, 2015:~~March 31, 2016:

Foreign Currency Translation Unrealized Gains (Losses) on Hedging Activities Other Accumulated Other Comprehensive Loss

(in thousands)

Balance at August 31, 2015 $ (206,124 ) $ (2,794 ) $ (3,809 ) $ (212,727 )
Other comprehensive loss (31,568 ) (939 ) —
(32,507 )
Balance at November 30, 2015 $ (237,692 ) $ (3,733 ) $ (3,809 ) $ (245,234 )

Balance at August 31, 2016 $ (253,417 ) $ (7,545 ) $ (4,549 ) $ (265,511 )
Other comprehensive income (loss) (49,488 ) 5,529
(247 ) (44,206 )
Balance at November 30, 2016 $ (302,905 ) $ (2,016 ) $ (4,796 ) $ (309,717 )

Other comprehensive loss attributable to noncontrolling interest, which relates only to foreign currency translation, was approximately $8.5 million and $6.3 million for the three months ended November 30, 2016 and November 30, 2015, respectively.

Foreign Currency Translation Unrealized Gains (Losses) on Hedging Activities Other Accumulated Other Comprehensive Loss

(in thousands)

Balance at May 31, 2015 $ (178,309 ) $ (3,874 ) $ (3,809 ) $ (185,992 )
Other comprehensive income (loss) (59,383 ) 141
—
(59,242 )
Balance at November 30, 2015 $ (237,692 ) $ (3,733 ) $ (3,809 ) $ (245,234 )

Balance at May 31, 2016 $ (234,638 ) $ (6,755 ) $ (4,657 ) $ (246,050 )
Other comprehensive income (loss) (68,267 ) 4,739
(139 ) (63,667 )
Balance at November 30, 2016 $ (302,905 ) $ (2,016 ) $ (4,796 ) $ (309,717 )

Other comprehensive loss attributable to noncontrolling interest, which relates only to foreign currency translation, was approximately $8.5 million and $4.4 million for the six months ended November 30, 2016 and November 30, 2015, respectively.



	Foreign Currency Translation			Unrealized Gains (Losses) on Hedging Activities			Other			Accumulated Other Comprehensive Loss

	(in thousands)

Balance at December 31, 2016	$	(318,450	)	$	(640	)	$	(3,627	)	$	(322,717	)
Other comprehensive income (loss), net of tax	33,615			1,513			(217		)	34,911
Balance at March 31, 2017	$	(284,835	)	$	873		$	(3,844	)	$	(287,806	)

Balance at December 31, 2015	$	(239,650	)	$	(3,732	)	$	(3,808	)	$	(247,190	)
Other comprehensive income (loss), net of tax	34,043			(5,557		)	—			28,486
Balance at March 31, 2016	$	(205,607	)	$	(9,289	)	$	(3,808	)	$	(218,704	)

NOTE ~~12—~~11—SEGMENT INFORMATION

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 certain compensation costs are included in Corporate in the following table. Interest and other income, interest and other expense and provision for income taxes are not allocated to the individual ~~operating~~ 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 our ~~Annual~~Transition Report on Form 10-K for the ~~year~~seven months ended ~~May~~December 31, 2016 and our summary of significant accounting policies in "Note ~~1-Basis~~1—Basis of Presentation and Summary of Significant Accounting Policies."

Information on segments and reconciliations to consolidated revenues and consolidated operating income are as follows for the three ~~and six~~ months ended ~~November 30, 2016~~March 31, 2017 and ~~November 30, 2015:~~March 31, 2016:


	Three Months Ended						Six Months Ended						Three Months Ended
	November 30, 2016			November 30, 2015			November 30, 2016			November 30, 2015			March 31, 2017			March 31, 2016

	(in thousands)												(in thousands)
Revenues⁽¹⁾:
North America	$	701,300		$	511,335		$	1,413,064		$	1,042,192		$	687,044		$	427,860
Europe	174,904			158,016			344,469			326,373			165,549			144,119
Asia-Pacific	65,617			52,999			123,780			102,581			67,169			54,280
Consolidated revenues	$	941,821		$	722,350		$	1,881,313		$	1,471,146		$	919,762		$	626,259

Operating income (loss)⁽¹⁾:
North America	$	105,746		$	79,121		$	211,446		$	162,635		$	94,083		$	65,190
Europe	60,875			62,012			126,414			134,745			54,507			55,778
Asia-Pacific	16,658			11,857			30,680			24,089			19,754			14,559
Corporate⁽²⁾	(78,012		)	(29,825		)	(142,167		)	(60,532		)	(63,374		)	(40,954		)
Consolidated operating income	$	105,267		$	123,165		$	226,373		$	260,937		$	104,970		$	94,573

Depreciation and amortization⁽¹⁾:
North America	$	90,964		$	24,222		$	177,880		$	47,965		$	92,708		$	24,927
Europe	12,188			9,921			22,601			20,265			11,576			9,621
Asia-Pacific	4,476			3,358			8,902			6,415			3,275			3,666
Corporate	1,054			1,248			2,486			2,861			1,474			1,098
Consolidated depreciation and amortization	$	108,682		$	38,749		$	211,869		$	77,506		$	109,033		$	39,312

⁽¹⁾Revenues, operating income and depreciation and amortization 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."

⁽²⁾ During the three ~~and six~~ months ended ~~November 30, 2016,~~March 31, 2017, operating loss for Corporate included Heartland integration expenses of ~~$36.6~~$26.1 million, ~~and $67.2 million incurred in connection with the integration of Heartland. These expenses~~which are included in selling, general and administrative expenses in the consolidated statements of income.

NOTE 12—SUBSEQUENT EVENT

On May 2, 2017, we entered into the Fourth Amendment to the Credit Facility Agreement (the "Fourth Amendment"). The Fourth Amendment increased the total financing capacity available under the Credit Facility Agreement to $5.2 billion, consisting of (i) the $1.2 billion Revolving Credit Facility; (ii) the $1.5 billion Term A Loan; (iii) the $1.3 billion Term A-2 Loan; and (iv) a $1.2 billion term loan facility, which replaced the Term B Loan (the "Term B-2 Loan"). The aggregate outstanding debt under the Credit Facility Agreement did not change because we repaid certain outstanding amounts under the Term A Loan, the Term A-2 Loan and the Revolving Credit Facility in connection with the Fourth Amendment.

As amended by the Fourth Amendment, the Credit Facility Agreement provides for an interest rate with respect to borrowings under the Term A Loan, the Term A-2 Loan and the Revolving Credit Facility of (a) in the case of Base Rate Loans (as defined in the Credit Facility Agreement), a base rate plus a margin ranging from 0.25% to 1.00%, in each case depending on our leverage ratio and (b) in the case of Eurocurrency Loans (as defined in the Credit Facility Agreement), a base rate plus a margin ranging from 1.25% to 2.00%, in each case depending on our leverage ratio. As amended by the Fourth Amendment, the Credit Facility Agreement provides for an interest rate with respect to the borrowings under the Term B-2 Loan of a base rate plus a margin of 1.00% in the case of Base Rate Loans and a base rate plus a margin of 2.00% in the case of Eurocurrency Loans. With respect to the Base Rate Loans, the base rate is the highest of (a) the Federal Funds Effective Rate (as defined in the Credit Facility Agreement)

plus 0.50%, (b) the Bank of America prime rate and (c) the applicable Eurocurrency Base Rate (as defined in the Credit Facility Agreement) plus 1.00%. The Credit Facility Agreement also provides for a commitment fee with respect to borrowings under the Revolving Credit Facility at an applicable rate per annum ranging from 0.20% to 0.30% depending on our leverage ratio.

Pursuant to the Fourth Amendment, the Term A Loan and the Term A-2 Loan mature, and the Revolving Credit Facility Agreement 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 Agreement contains customary affirmative and restrictive covenants, including, among others, financial covenants based on our leverage and fixed charge coverage ratios. The Credit Facility Agreement 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.

Pursuant to the Fourth Amendment, financial covenants require a leverage ratio for the period beginning May 2, 2017 no greater than: (i) 4.75 to 1.00 as of the end of any fiscal quarter ending during the period from May 2, 2017 through June 30, 2017; (ii) 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; (iii) 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 (iv) 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.

ITEM 2—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 our unaudited consolidated financial statements and related notes included in Item 1 of Part 1 of this Quarterly Report and the Management’s Discussion and Analysis of Financial Condition and Results of Operations and consolidated financial statements contained in our ~~Annual~~Transition Report on Form 10-K for the ~~year~~seven months ended ~~May~~December 31, 2016. 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. See "Forward-Looking Statements" below for additional information.

Executive Overview

We are a leading worldwide provider of payment technology services delivering innovative solutions to our customers globally. Our technologies, partnerships and employee expertise enable us to provide a broad range of services that allow our customers to

accept various payment types. We distribute our services across a variety of channels to merchants and partners in 30 countries throughout North America, Europe, the Asia-Pacific region and Brazil and operate in three reportable segments: North America, Europe and Asia-Pacific.

~~On December 15, 2015, we entered into a merger agreement with Heartland, pursuant to which we~~We merged with Heartland Payments Systems, Inc. ("Heartland") in a cash-and-stock transaction ~~that we completed~~ on April 22, 2016 for total purchase consideration of $3.9 billion. See "Note 2—Acquisitions" in the notes to the accompanying unaudited consolidated financial statements for further discussion of our merger with Heartland.

Highlights related to our financial condition and results of operations for the three ~~and six~~ months ended ~~November 30, 2016~~March 31, 2017 are provided below:

Consolidated revenues increased by ~~30.4% and 27.9%~~46.9% to ~~$941.8~~$919.8 million ~~and $1.9 billion, respectively,~~ in the three ~~and six~~ months ended ~~November 30, 2016~~March 31, 2017, compared to ~~$722.4~~$626.3 million ~~and $1.5 billion~~ for the prior-year ~~periods~~period, primarily due to the inclusion of Heartland, partially offset by the unfavorable effect of currency fluctuations in foreign markets of ~~$16.0 million and $30.4 million, respectively.~~$8.2 million.

Consolidated operating income was ~~$105.3~~$105.0 million ~~and $226.4 million, respectively,~~ for the three ~~and six~~ months ended ~~November 30, 2016~~March 31, 2017 compared to ~~$123.2~~$94.6 million, ~~and $260.9 million, respectively,~~ for the prior-year ~~periods.~~period. Our operating margin for the three ~~and six~~ months ended ~~November 30, 2016~~March 31, 2017 was ~~11.2% and 12.0%~~11.4%, ~~respectively,~~ compared to ~~17.1% and 17.7%~~15.1%, ~~respectively,~~ for the prior-year ~~periods.~~period. The contribution of the revenue growth in local currency was ~~more than~~partially offset by an increase in depreciation and amortization expense of ~~$69.9~~$69.7 million ~~and $134.4 million, respectively,~~ and Heartland integration expenses of ~~$36.6~~$26.1 million ~~and $67.2 million, respectively,~~ for the three ~~and six~~ months ended ~~November 30, 2016.~~

~~On October~~March 31, ~~2016, we amended our 2016 Credit Facility Agreement, which among other things~~ reduced the interest rate spread on our term loans and revolving credit facility. We expect this refinancing to yield $10 million to $12 million of annual interest expense savings, net of additional anticipated expense associated with future interest rate hedging activities.

On June 21, 2016, Visa Inc. ("Visa") acquired all of the membership interests in Visa Europe Limited ("Visa Europe"), including ours, and we recorded a gain on the sale of those investments of $41.2 million.

2017.

Net income attributable to Global Payments was ~~$49.5~~$48.8 million ~~and $134.5 million, respectively,~~ for the three ~~and six~~ months ended ~~November 30, 2016~~March 31, 2017 compared to ~~$78.8~~$59.9 million ~~and $165.4 million, respectively, in~~for the prior-year ~~periods.~~period. Diluted earnings per share was $0.32 ~~and $0.87, respectively,~~ for the three ~~and six~~ months ended ~~November 30, 2016~~March 31, 2017 compared to ~~$0.60 and $1.27, respectively,~~$0.46 in the prior-year ~~periods.~~period.

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 tointo new markets internationally or increase our scale and improve our competitiveness in existing markets by pursuing further acquisitions and joint ~~ventures in the future.~~ventures.

We believe that 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 payment types such 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.

Results of Operations

The following table sets forth key selected financial data for the three months ended ~~November 30,~~March 31, 2017 and March 31, 2016, ~~and November 30, 2015,~~ this data as a percentage of total revenues, and the changes between the periods in dollars and as a percentage of the prior year amount. The income statement data for the three months ended March 31, 2016 are derived from our unaudited consolidated financial statements for that period.


	Three Months Ended November 30, 2016			% of Revenue⁽¹⁾		Three Months Ended November 30, 2015			% of Revenue⁽¹⁾		Change			% Change		Three Months Ended March 31, 2017			% of Revenue⁽¹⁾		Three Months Ended March 31, 2016			% of Revenue⁽¹⁾		Change			% Change

	(dollar amounts in thousands)															(dollar amounts in thousands)
Revenues⁽²⁾:
North America	$	701,300		74.5	%	$	511,335		70.8	%	$	189,965		37.2	%	$	687,044		74.7	%	$	427,860		68.3	%	$	259,184		60.6	%
Europe	174,904			18.6	%	158,016			21.9	%	16,888			10.7	%	165,549			18.0	%	144,119			23.0	%	21,430			14.9	%
Asia-Pacific	65,617			7.0	%	52,999			7.3	%	12,618			23.8	%	67,169			7.3	%	54,280			8.7	%	12,889			23.7	%
Total revenues	$	941,821		100.0	%	$	722,350		100.0	%	$	219,471		30.4	%	$	919,762		100.0	%	$	626,259		100.0	%	$	293,503		46.9	%

Consolidated operating expenses⁽²⁾:
Cost of service	$	468,383		49.7	%	$	270,565		37.5	%	$	197,818		73.1	%	$	455,936		49.6	%	$	248,187		39.6	%	$	207,749		83.7	%
Selling, general and administrative	368,171			39.1	%	328,620			45.5	%	39,551			12.0	%	358,856			39.0	%	283,499			45.3	%	75,357			26.6	%
Operating expenses	$	836,554		88.8	%	$	599,185		82.9	%	$	237,369		39.6	%	$	814,792		88.6	%	$	531,686		84.9	%	$	283,106		53.2	%

Operating income (loss)⁽²⁾:
North America	$	105,746				$	79,121				$	26,625		33.7	%	$	94,083				$	65,190				$	28,893		44.3	%
Europe	60,875					62,012					(1,137		)	(1.8	)%	54,507					55,778					(1,271		)	(2.3	)%
Asia-Pacific	16,658					11,857					4,801			40.5	%	19,754					14,559					5,195			35.7	%
Corporate(3)	(78,012		)			(29,825		)			(48,187		)	161.6	%	(63,374		)			(40,954		)			(22,420		)	54.7	%
Operating income	$	105,267		11.2	%	$	123,165		17.1	%	$	(17,898	)	(14.5	)%	$	104,970		11.4	%	$	94,573		15.1	%	$	10,397		11.0	%

Operating margin⁽²⁾:
North America	15.1		%			15.5		%			(0.4		)%			13.7		%			15.2		%			(1.5		)%
Europe	34.8		%			39.2		%			(4.4		)%			32.9		%			38.7		%			(5.8		)%
Asia-Pacific	25.4		%			22.4		%			3.0		%			29.4		%			26.8		%			2.6		%

⁽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 unaudited consolidated financial statements.

~~The following table sets forth key selected financial data for~~⁽³⁾During the ~~six~~three months ended ~~November 30, 2016~~March 31, 2017, operating loss for Corporate included Heartland integration costs of $26.1 million, which are included in selling, general and ~~November 30, 2015, this data as a percentage of total revenues, and the changes between the periods in dollars and as a percentage of the prior year amount.~~

Six Months Ended November 30, 2016
% of Revenue⁽¹⁾
Six Months Ended November 30, 2015
% of Revenue⁽¹⁾
Change % Change

(dollar amounts in thousands)
Revenues⁽²⁾:

North America $ 1,413,064
75.1 % $ 1,042,192
70.8 % $ 370,872
35.6 %
Europe 344,469
18.3 % 326,373
22.2 % 18,096
5.5 %
Asia-Pacific 123,780
6.6 % 102,581
7.0 % 21,199
20.7 %
Total revenues $ 1,881,313
100.0 % $ 1,471,146
100.0 % $ 410,167
27.9 %

Consolidated operating expenses⁽²⁾:

Cost of service $ 931,009
49.5 % $ 543,231
36.9 % $ 387,778
71.4 %
Selling, general and administrative 723,931
38.5 % 666,978
45.3 % 56,953
8.5 %
Operating expenses $ 1,654,940
88.0 % $ 1,210,209
82.3 % $ 444,731
36.7 %

Operating income (loss)⁽²⁾:

North America $ 211,446
$ 162,635
$ 48,811
30.0 %
Europe 126,414
134,745
(8,331 ) (6.2 )%
Asia-Pacific 30,680
24,089
6,591
27.4 %
Corporate (142,167 ) (60,532 ) (81,635 ) 134.9 %
Operating income $ 226,373
12.0 % $ 260,937
17.7 % $ (34,564 ) (13.2 )%

Operating margin⁽²⁾:

North America 15.0 % 15.6 % (0.6 )%
Europe 36.7 % 41.3 % (4.6 )%
Asia-Pacific 24.8 % 23.5 % 1.3 %

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

⁽²⁾~~Revenues, operating~~administrative 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~~ unaudited consolidated ~~financial statements.~~statements of income.

Revenues

For the three months ended ~~November 30, 2016,~~March 31, 2017, revenues increased by ~~30.4%~~$293.5 million, or 46.9%, compared to the prior year, to ~~$941.8~~$919.8 million, reflecting growth in each of our operating segments, despite the unfavorable effect of currency fluctuations of ~~$16.0 million. For the six months ended November 30, 2016, revenues increased by 27.9% compared to the prior year to $1.9 billion, despite the unfavorable effect of currency fluctuations of $30.4~~$8.2 million.

North America Segment. For the three ~~and six~~ months ended ~~November 30, 2016,~~March 31, 2017, revenues from our North America segment increased by ~~$190.0 million and $370.9~~$259.2 million, or ~~37.2% and 35.6%~~60.6%, ~~respectively,~~ compared to the prior year, to ~~$701.3~~$687.0 million, ~~and $1.4 billion, respectively,~~ primarily due to ~~the~~our merger with Heartland.

Europe Segment. For the three ~~and six~~ months ended ~~November 30, 2016,~~March 31, 2017, revenues from our Europe ~~revenues~~segment increased ~~$16.9 million and $18.1~~by $21.4 million, or ~~10.7% and 5.5%~~14.9%, ~~respectively,~~ compared to the prior year, to ~~$174.9~~$165.5 million, ~~and $344.5 million, respectively,~~ primarily due to ~~a joint venture with Erste Group Bank AG ("Erste Group")~~growth in ~~Central and Eastern Europe that commenced in June 2016,~~

~~despite~~local currencies partially offset by the unfavorable effect of currency fluctuations of ~~$16.4 million and $29.0 million, respectively.~~$10.6 million.

Asia-Pacific Segment. For the three ~~and six~~ months ended ~~November 30, 2016,~~March 31, 2017, revenues from our Asia-Pacific ~~revenues~~segment increased by ~~$12.6 million and $21.2~~$12.9 million, or ~~23.8% and 20.7%~~23.7%, ~~respectively,~~ compared to the prior year, to ~~$65.6~~$67.2 million, ~~and $123.8 million, respectively,~~ primarily due to organic growth.

Operating Expenses

Cost of Service. ~~Cost~~For the three months ended March 31, 2017, cost of service increased by ~~73.1% and 71.4% to $468.4~~$207.7 million, ~~and $931.0 million, respectively, for the three and six months ended November 30, 2016~~or 83.7%, compared to the prior ~~year.~~year, to $455.9 million. As a percentage of ~~revenue,~~revenues, cost of service increased to ~~49.7%~~49.6% for the three months ended ~~November 30, 2016~~March 31, 2017 from ~~37.5% for the prior year and to 49.5% for the six months ended November 30, 2016 from 36.9%~~39.6% for 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 ~~$64.7 million and $124.4~~$63.5 million for the three ~~and six~~ months ended ~~November 30, 2016, respectively.~~March 31, 2017.

Selling, General and Administrative Expenses. ~~Selling,~~For the three months ended March 31, 2017, selling, general and administrative expenses increased by ~~12.0% and 8.5% to $368.2~~$75.4 million, ~~and $723.9 million, respectively, for the three and six months ended November 30, 2016~~or 26.6%, compared to the prior ~~year.~~year, to $358.9 million. As a percentage of revenues, selling, general and administrative expenses decreased to ~~39.1%~~39.0% for the three months ended ~~November 30, 2016 from 45.5% for the prior year and to 38.5% for the six months ended November 30, 2016~~March 31, 2017 from 45.3% for the prior year. The increase in selling, general and administrative expenses was primarily due to additional costs to support the growth of our business, including incremental expenses associated with the integration of Heartland. The decrease in selling, general and administrative expenses as a percentage of ~~revenue~~revenues is primarily due to synergies achieved in general and administrative expenses from the merger with Heartland.

Operating Income and Operating Margin ~~for Segments~~

North America Segment. Operating income in our North America segment increased by ~~33.7% and 30.0%~~44.3% to ~~$105.7~~$94.1 million ~~and $211.4 million, respectively,~~ for the three ~~and six~~ months ended ~~November 30, 2016~~March 31, 2017 compared to the prior year. The increase in operating income was primarily due to revenue growth in our U.S. business offset by expenses associated with the integration of Heartland and additional intangible asset amortization associated with the merger. Operating margin decreased ~~0.4~~1.5 percentage points for the three months ended ~~November 30, 2016 and 0.6 percentage points for the six months ended November 30, 2016 compared to the prior year periods.~~March 31, 2017.

Europe Segment. Operating income in our Europe segment decreased by ~~1.8% and 6.2%~~2.3% to ~~$60.9~~$54.5 million ~~and $126.4 million, respectively,~~ for the three ~~and six~~ months ended ~~November 30, 2016~~March 31, 2017 compared to the prior year, including the effect of unfavorable currency fluctuations of ~~$9.5 million and $16.6 million, respectively.~~$6.5 million. Operating margin decreased ~~4.4~~5.8 percentage points for the three months ended ~~November 30, 2016 and 4.6 percentage points for the six months ended November 30, 2016 compared to the prior year periods.~~March 31, 2017. The decreases in operating income and operating margin ~~was~~were primarily driven by the effect of unfavorable currency fluctuations.

Asia-Pacific Segment. Operating income in our Asia-Pacific segment increased by ~~40.5% and 27.4%~~35.7% to ~~$16.7~~$19.8 million ~~and $30.7 million, respectively,~~ for the three ~~and six~~ months ended ~~November 30, 2016~~March 31, 2017 compared to the prior year. Operating margin increased ~~3.0~~2.6 percentage points for the three months ended ~~November 30, 2016 and 1.3 percentage points for the six months ended November 30, 2016 compared to the prior year periods.~~March 31, 2017. The increase in operating income and operating margin was due to organic revenue growth.

Corporate. Corporate expenses increased by ~~161.6% and 134.9%~~54.7% to ~~$78.0~~$63.4 million ~~and $142.2 million, respectively,~~ for the three ~~and six~~ months ended ~~November 30, 2016~~March 31, 2017 compared to the prior year, primarily due to the merger with Heartland and expenses of ~~$36.6~~$26.1 million ~~and $67.2 million, respectively,~~ associated with its integration.

Other Income/Expense, Net

~~Interest and other income for the six months ended November 30, 2016 increased primarily due to a gain of $41.2 million recorded~~ ~~in connection with the sale of our membership interests in Visa Europe. See "Note 5—Other Assets" in the notes to the accompanying unaudited consolidated financial statements for further discussion of this transaction.~~

Interest and other expense increased ~~$38.3~~$28.2 million ~~and $68.2 million, respectively,~~ for the three ~~and six~~ months ended ~~November 30, 2016~~March 31, 2017 compared to the prior year, primarily due to an increase in interest expense incurred resulting from an increase in the outstanding borrowings ~~under our recently expanded credit facilities~~ to fund the merger with Heartland.

Provision for Income Taxes

Our effective income tax rates were ~~2.9%~~18.9% and ~~24.7%~~23.4% for the three months ended ~~November 30,~~March 31, 2017 and March 31, 2016, ~~and November 30, 2015, respectively, and 16.9% and 25.4% for the six months ended November 30, 2016.~~respectively. The decrease in our effective income tax ~~rates is~~rate was primarily due to a higher percentage of income generated in international

jurisdictions with lower tax ~~rates. We also changed our estimate~~rates (primarily as a result of the ~~mix of earnings by jurisdiction~~merger-related expenses incurred in ~~determining our annual estimated effective tax rate and our estimate of certain U.S. inclusion items during~~ the ~~three months ended November 30, 2016.~~United States).

Liquidity and Capital Resources

In the ordinary course of our business, a significant portion of our liquidity comes from operating cash flows. Cash flow from operations is used to make planned capital investments in our business, to pursue acquisitions that meet our corporate objectives, to pay dividends, ~~and~~ to pay ~~down~~principal and interest on our outstanding debt and to repurchase shares of our common stock. Accumulated cash balances are invested in high-quality, marketable short-term instruments.

Our capital plan objectives are to support our operational needs and strategic plan for long-term growth while maintaining a low cost of capital. We use ~~debt~~our financing, such as our revolving credit facility and our term loans, for general corporate purposes and to fund acquisitions. In addition, ~~specialized~~ lines of credit are also used in certain of our markets to ~~pre-fund settlement.~~fund merchant settlement prior to receipt of funds from the card network. We regularly evaluate our liquidity and capital position relative to cash requirements, and we may elect to raise additional funds in the future, either through the issuance of debt, equity or otherwise.

At ~~November 30, 2016,~~March 31, 2017, we had cash and cash equivalents totaling ~~$995.8~~$1,261.8 million. Of this amount, we consider ~~$387.4~~$423.3 million to be available ~~cash. Available cash excludes~~for general purposes, which does not include the following: (1) settlement-related cash ~~reserve~~ balances, (2) funds held ~~for~~as collateral for merchant losses ("Merchant Reserves") and (3) funds held for customers. Settlement-related cash ~~reserve~~ balances represent funds that we hold when the incoming amount from the card networks precedes the funding obligation to the merchant. Settlement-related cash ~~reserve~~ balances are not restricted; however, these funds are generally paid out in satisfaction of settlement processing obligations the following day. At ~~November 30, 2016,~~March 31, 2017, our cash and cash equivalents included ~~$415.7~~$322.7 million for settlement-related cash ~~reserve~~ balances. ~~Certain of our funds collected from our merchants~~Merchant Reserves serve as collateral to minimize contingent liabilities associated with any losses that may occur under the merchant agreement. At ~~November 30, 2016,~~March 31, 2017, our cash and cash equivalents included ~~$180.9~~$160.1 million related to Merchant Reserves. While this cash is not restricted in its use, we believe that designating this cash to collateralize Merchant Reserves strengthens our fiduciary standing with our member sponsors and is in accordance with the guidelines set by the card networks. Funds held for customers and the corresponding liability that we record in customer deposits include amounts collected prior to remittance on our customers' behalf. At ~~November 30, 2016,~~March 31, 2017, cash and cash equivalents included funds held for customers of ~~$181.4~~$315.9 million.

Our available cash balance ~~includes $263.4~~at March 31, 2017 included $342.9 million of cash held by foreign subsidiaries whose earnings are considered indefinitely reinvested outside the United States. These cash balances reflect 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. We believe that we are able to maintain a sufficient level of liquidity for our domestic operations and commitments without repatriation of the earnings of these foreign subsidiaries. If we were to repatriate some or all of the cash held by such foreign subsidiaries, we do not believe that the associated income tax liabilities would have a significant effect on our liquidity.

Operating activities provided net cash of ~~$193.5~~$294.0 million and ~~$454.1~~$208.2 million for the ~~six~~three months ended ~~November 30,~~March 31, 2017 and March 31, 2016, ~~and November 30, 2015,~~ respectively. The ~~decrease~~increase in cash flows from operating activities of ~~$260.5~~$85.8 million was primarily due to ~~a decrease~~an increase in the change in net settlement processing assets of ~~$321.8 million and payment of Heartland integration costs.~~$56.7 million. Fluctuations in settlement processing assets and obligations are largely due to timing of month-end and settlement transaction volume.

Net cash used in investing activities was ~~$80.8~~$46.6 million and $24.4 million during the ~~six~~three months ended ~~November 30,~~March 31, 2017 and March 31, 2016, ~~and $278.2 million in the prior year. During the six months ended November 30, 2016 and November 30, 2015,~~ respectively, ~~we invested net cash of $35.3 million and $241.9 million in the aggregate to complete business acquisitions. We made~~reflecting capital expenditures of ~~$83.3~~$46.2 million and ~~$36.2~~$24.4 million, ~~during the six months ended November 30, 2016 and November 30, 2015,~~ respectively. During the ~~calendar~~ year ending December 31, 2017, we expect capital expenditures for property and equipment, including internal-use capitalized software development costs, to approximate $160 million.

~~In addition, during the six months ended November 30, 2016, we received cash of €33.5 million ($37.7 million equivalent at June 21, 2016)~~ ~~in connection with the sale of our membership interests in Visa Europe to Visa.~~

Net cash used in financing activities was ~~$130.7~~$160.0 million and $161.5 million during the ~~six~~three months ended ~~November 30, 2016. During the six months ended November 30, 2015, financing activities provided net cash of $185.7 million.~~

~~During the six months ended November 30,~~March 31, 2017 and March 31, 2016, respectively, primarily due to net repayments of principal under long-term borrowing arrangements were $25.8 million compared to net borrowings of $178.0 million in the prior year, reflecting incremental proceeds from the July 2015 refinancing described below.

~~On October 31, 2016, we amended~~ our ~~2016 Credit Facility Agreement as further discussed below.~~ ~~Under the terms of the amendment, we increased our aggregate~~ ~~Delayed Draw Facility (which we now refer to as "Term A-2 Loan")~~ by $750 million with the proceeds being used to reduce a portion of the Term B Loan and outstanding Revolving Credit Facility borrowings. Our total borrowings remained unchanged as a result of the amendment. The amendment also reduced the interest rate spread on the Term A Loan, Term A-2 Loan and the Revolving Credit Facility by 25 basis points (subject to adjustment based on an amended leveraged-based pricing grid) and on the Term B Loan by 100 basis points. We expect this refinancing to yield $10 million to $12 million of annual interest expense savings, net of additional anticipated expense associated with future interest rate hedging activities.

~~Net borrowings on~~ settlement lines of ~~credit were $94.8 million and $101.5 million during the six months ended November 30, 2016 and November 30, 2015, respectively.~~credit. Fluctuations in our settlement lines of credit balances are largely due to timing of month-end and settlement transaction volume.

We generally pay dividends to our shareholders on a quarterly basis. In ~~addition, we used cash~~connection with the change in our fiscal year end from May 31 to December 31, our board of ~~$172.4 million and $71.7 million during~~directors approved a quarterly dividend of $0.0133 per share, payable June 23, 2017 to shareholders of record as of June 9, 2017. This dividend includes the ~~six months ended November 30,~~period from December 1, 2016 ~~and November 30, 2015, respectively, to repurchase shares of our common stock.~~through March 31, 2017.

We believe that our current level of cash and borrowing capacity under our long-term debt ~~facilities~~and lines of credit described below, together with future cash flows from operations will be sufficient to meet the needs of our existing operations and planned requirements for the foreseeable future.

Long-Term Debt and Lines of Credit ~~Facilities~~

~~July 2015 Refinancing~~We are party to a 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 Agreement"). ~~On July 31, 2015, we entered into a second~~The Credit Facility Agreement was most recently amended ~~and restated term loan agreement~~on May 2, 2017 (the ~~"2015 Term Loan Agreement"~~"Fourth Amendment") and, as amended, provides for (i) a second amended and restated credit agreement (the "2015 Revolving Credit Facility Agreement" and collectively, the "2015 Credit Facility Agreements") to provide for a $1.75 billion term loan (the "Term A Loan") and a $1.25$1.2 billion revolving credit facility (the "Revolving Credit Facility")~~, each with~~; (ii) a ~~syndicate of financial institutions. We used the proceeds of approximately $2.0~~$1.5 billion ~~to repay the then-outstanding balances on our previously existing~~ term loan (the "Term A Loan"); (iii) a $1.3 billion term loan (the "Term A-2 Loan"); and ~~revolving credit facility.~~

~~February 2016 Refinancing~~. On February 26, 2016, we entered into an amendment to the 2015 Credit Facility Agreement (as amended, the "2016 Credit Facility Agreement") to, among other things, (i) accelerate our repayment schedule for the Term A Loan, effective as of February 26, 2016, and (ii) provide security for the Term A Loan and the Revolving Credit Facility and modify the applicable financial covenants and interest rate margins. In addition, the 2016 Credit Facility Agreement provided for(iv) a ~~new $735 million delayed draw~~$1.2 billion term loan facility, ~~(the "Delayed Draw Facility").~~

~~October 2016 Refinancing.~~ ~~On October 31, 2016, we entered into the Second Amendment to the 2016 Credit Facility Agreement (the "October 2016 Refinancing"),~~ which ~~(i) increased our borrowing capacity under the Delayed Draw Facility (which we now refer to as "Term A-2 Loan") by $750 million to $1.48 billion, (ii) decreased our outstanding borrowings under~~replaced the Term B Loan ~~by $500 million~~(the "Term B-2 Loan"). The Fourth Amendment increased the total financing capacity under the Credit Facility Agreement on May 2, 2017 from $4.9 billion to ~~$542 million, (iii) extended~~$5.2 billion, although the ~~maturity dates for~~ outstanding debt under the Credit Facility Agreement did not change because we repaid certain outstanding amounts under the Term A Loan, the Term A-2 Loan and the Revolving Credit Facility in connection with the Fourth Amendment. Substantially all of the assets of our domestic subsidiaries are pledged as collateral under the Credit Facility Agreement.

The Credit Facility Agreement 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 March 31, 2017, the interest rates on the Term A Loan, the Term A-2 Loan and ~~(iv) decreased~~the Term B Loan (which was superseded by the Term B-2 Loan under the Fourth Amendment) were 3.23%, 3.20% and 3.48%, respectively, and the interest rate ~~margin~~ on ~~our~~the Revolving Credit Facility was 3.20%. As of March 31, 2017, the aggregate outstanding balance on the term loans was $3.7 billion, and the outstanding balance on the Revolving Credit Facility~~. The October 2016 Refinancing increased~~ was $761.0 million.

As amended by the ~~total financing capacity available under~~Fourth Amendment, the ~~2016~~ Credit Facility Agreement ~~from~~ ~~$4.78 billion~~provides for an interest rate with respect to ~~$5.03 billion, although~~borrowings under the ~~aggregate outstanding debt did not change as we repaid $250 million outstanding~~Term A Loan, the Term A-2 Loan and the Revolving Credit Facility of (a) in the case of Base Rate Loans (as defined in the Credit Facility Agreement), a base rate plus a margin ranging from 0.25% to 1.00%, in each case depending on our leverage ratio and (b) in the case of Eurocurrency Loans (as defined in the Credit Facility Agreement), a base rate plus a margin ranging from 1.25% to 2.00%, in each case depending on our leverage ratio. As amended by the Fourth Amendment, the Credit Facility Agreement provides for an interest rate with respect to the borrowings under the Term B-2 Loan of a base rate plus a margin of 1.00% in the case of Base Rate Loans and a base rate plus a margin of 2.00% in the case of Eurocurrency Loans. With respect to the Base Rate Loans, the base rate is the highest of (a) the Federal Funds Effective Rate (as defined in the Credit Facility Agreement) plus 0.50%, (b) the Bank of America prime rate and (c) the applicable Eurocurrency Base Rate (as defined in the Credit Facility Agreement) plus 1.00%. The Credit Facility Agreement also provides for a commitment fee with respect to borrowings under the Revolving Credit Facility ~~in connection with the October 2016 Refinancing.~~at an applicable rate per annum ranging from 0.20% to 0.30% depending on our leverage ratio.

Pursuant to the Fourth Amendment, the Term A Loan and the Term A-2 Loan mature, and the Revolving Credit Facility Agreement expires, on May 2, 2022. The Term B-2 Loan matures on April 22, 2023. The Term A Loan principal must be repaid in ~~equal~~ quarterly installments in the amount of ~~$43.8 million~~1.25% of principal through ~~August~~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 ~~October 2021.~~May 2022. The Term A-2 Loan principal must be repaid in quarterly installments of $1.7 million ~~the first installment of which was made in August 2016,~~through June 2018, increasing to quarterly installments of $8.6 million ~~in August 2018 and ending in August 2021,~~through March 2022, with the remaining balance due upon maturity in ~~October 2021.~~May 2022. The Term BB-2 Loan principal must be repaid in quarterly installments in the amount of ~~$1.4 million, the first installment commencing in December 2016, ending in~~0.25% of principal through March 2023, with the remaining principal balance due upon maturity in April 2023.

~~As of November 30, 2016, the outstanding balance on the Revolving Credit Facility was $811.0 million.~~ The ~~2016~~ Credit Facility Agreement 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." ~~At November 30, 2016 and May 31, 2016, we had outstanding issued standby letters of credit of $20.5 million and $8.5 million, respectively.~~ The total available commitments under the Revolving Credit Facility at ~~November 30, 2016 and May~~March 31, ~~2016~~2017 were ~~$418.5 million and $204.5 million, respectively. The Revolving Credit Facility expires in October 2021.~~$228.8 million.

Settlement Lines of Credit

We have lines of credit with banks in ~~various markets~~the United States and Canada as well as several countries in Europe and in the Asia-Pacific region where we do business. The lines of credit, which are restricted for use in funding settlement, generally have variable

interest rates and are subject to annual review. The lines of credit ~~facilities~~ are generally denominated in local currency but may, in some cases, facilitate borrowings in multiple currencies. For certain of our lines of credit, the 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 ~~November 30, 2016~~March 31, 2017 and ~~May~~December 31, 2016, a total of ~~$49.6~~$41.0 million and ~~$42.9~~$51.0 million, respectively, of cash on deposit was used to determine the available credit.

Compliance with Covenants

The Credit Facility Agreement and settlement lines of credit also include various other covenants that are customary in such borrowings. The ~~2016~~ Credit Facility Agreement includes covenants, subject in each case to exceptions and qualifications that may restrict certain payments, including, in certain circumstances, ~~the payment of~~repurchasing our common stock and paying cash dividends in excess of our current rate of $0.01 per share per quarter.

See "Note 6—5—Long-Term Debt and ~~Credit Facilities"~~Lines of Credit" and "Note 12—Subsequent Event" in the notes to the accompanying unaudited consolidated financial statements for further discussion of our borrowing arrangements.

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 in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies" in our ~~Annual~~Transition Report on Form 10-K for the year ended ~~May~~December 31, 2016.

Critical Accounting Policies

Our unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, which often require the judgment of management in the selection and application of certain accounting principles and methods. We discuss our critical accounting policies in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our ~~Annual~~Transition Report on Form 10-K for the ~~year~~seven-months ended ~~May~~December 31, 2016.

During the ~~three~~first quarter of 2017, we revised our reporting unit structure within our North America segment to reflect changes made in connection with the integration of Heartland. Under the revised reporting unit structure, we operate two reporting units in our North America segment: (i) Payments and ~~six months ended November 30, 2016,~~(ii) Integrated Solutions and Vertical Markets. We reassigned the goodwill previously allocated to North America merchant services and Heartland to the two new reporting units using a relative fair value approach. As

a result of the change in reporting units, we ~~did not adopt any new critical accounting policies, did not~~performed goodwill impairment tests immediately before and after this change ~~any critical accounting policies~~in reporting units and ~~did not change the application of any critical accounting policies from the year ended May 31, 2016.~~determined that there was no impairment.

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

From ~~time-to-time,~~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 unaudited consolidated financial statements for a discussion of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted.

Forward-Looking Statements

Investors are cautioned that some of the statements we use in this report contain forward-looking statements and are made pursuant to the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of risks and uncertainties and depend upon future events or conditions. Actual events or results might differ materially from those expressed or forecasted in these forward-looking statements. Accordingly, we cannot guarantee you that our plans and expectations will be achieved. Such statements may include, but are not limited to, statements about the benefits of our merger with Heartland, including future financial and operating results, the combined company’s plans, objectives, expectations and intentions and other statements that are not historical facts. 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. We undertake no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.

Important factors that may cause actual events or results to differ materially from those anticipated by our forward-looking statements include our ability to safeguard our data; increased competition from larger companies and non-traditional competitors; our ability to update our services in a timely manner; our ability to maintain Visa and MasterCard registration and financial institution sponsorship; our reliance on financial institutions to provide clearing services in connection with our settlement activities; our potential failure to comply with card network requirements; potential systems interruptions or failures; software defects or undetected errors; increased attrition of merchants, referral partners or independent sales organizations; our ability to increase our share of existing markets and expand into new markets; a decline in the use of cards for payment generally; unanticipated increases in chargeback liability; increases in credit card network fees; changes in laws, regulations or network rules or interpretations thereof; foreign currency exchange and interest rate risks; political, economic and regulatory changes in the foreign countries in which we operate; future performance, integration and conversion of acquired operations, including without limitation difficulties and delays in integrating the Heartland ~~Payment Systems, Inc.~~ business or fully realizing cost savings and other benefits of the acquisition at all or within the expected time period; fully realizing anticipated annual interest expense savings from refinancing

our corporate debt facilities; our loss of key personnel; and other risk factors presented in Item 1A -— Risk Factors of our ~~Annual~~Transition Report on Form 10‑K for the ~~year~~seven months ended ~~May~~December 31, 2016.

ITEM 3—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We are exposed to market risk related to changes in interest rates on our long-term debt 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 term loans and a ~~corporate~~revolving credit facility that we use for general corporate purposes, as well as various lines of credit that we use to fund settlement in certain of our markets. Interest rates on these debt instruments and settlement lines of credit are based on market rates and fluctuate accordingly. As of ~~November 30, 2016,~~March 31, 2017, there was ~~$5.0~~$4.7 billion outstanding under these variable-rate debt arrangements and settlement lines of credit.

The interest earned on our cash investments and the interest paid on 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 interest rate swaps that reduce a portion of our exposure to market interest rate risk on our LIBOR-based debt as discussed in "Note ~~6 -~~ 5—Long-Term Debt and ~~Credit Facilities"~~Lines of Credit" in the notes to ~~the~~our accompanying unaudited consolidated financial statements.

Based on balances outstanding under variable-rate debt agreements ~~existing interest rate swaps~~ and cash ~~investments~~investment balances at ~~November 30, 2016,~~March 31, 2017, a hypothetical increase of 50 basis points in applicable interest rates as of ~~November 30, 2016~~March 31, 2017 would increase our annual interest expense by approximately ~~$21.3~~$17.1 million and increase our annual interest income by approximately ~~$1.5~~$2.7 million.

Foreign Currency Exchange Rate Risk

A substantial amount 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 are also affected by fluctuations in exchange rates on assets and liabilities related to our foreign operations. We have not historically hedged our translation risk on foreign currency exposure, but we may do so in the future.

ITEM 4—CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of ~~November 30, 2016,~~March 31, 2017, 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 ~~November 30, 2016,~~March 31, 2017, 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.

Changes in Internal Control ~~Over~~over Financial Reporting

In April 2016, we completed ~~the~~our merger with Heartland, 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 Heartland business and to augment our company-wide controls to reflect the risks inherent in an acquisition of this magnitude. Otherwise, there were no changes in our internal control over financial reporting during the quarter ended ~~November 30, 2016~~March 31, 2017 that ~~have~~ materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1—LEGAL PROCEEDINGS

We are party to a number of claims and lawsuits incidental to our business. In our opinion, the liabilities, if any, which may ultimately result from the outcome of such matters, individually or in the aggregate, are not expected to have a material adverse 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, which we refer to as "Data Merger Sub One") and Data Merger Sub Two, LLC (a wholly owned subsidiary of Global Payments, which we refer to as "Data Merger Sub Two") were named as defendants in a putative class action lawsuit challenging the ~~proposed~~ 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 alleges, 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 alleges that Heartland, Global Payments, Merger Sub One, and 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. The ~~proposed~~court has approved the parties' settlement ~~is subject~~agreement under which Heartland amended its pre-acquisition disclosures and agreed to ~~court approval and a motion for such approval is now pending with the court. If the proposed~~pay Plaintiffs’ counsel $325,000 in attorney’s fees. The settlement ~~is approved by the court, it will release~~releases all claims that were or could have been brought challenging any aspect of the merger with Heartland or the merger agreement related thereto and any disclosure made in connection therewith, under terms that will be disclosed to stockholders before final approval of the proposed settlement. The settlement, if approved, is not expected to have a material adverse effect on our financial position, liquidity, results of operations or cash flows.thereto.

ITEM 1A - RISK FACTORS

There have been no material changes from the risk factors set forth in Part I, Item 1A, "Risk Factors" of our ~~Annual~~Transition Report on Form 10-K for ~~our fiscal year~~the seven months ended ~~May~~December 31, 2016.

ITEM 2—UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Information about the shares of our common stock that we repurchased during the quarter ended ~~November 30, 2016~~March 31, 2017 is set forth below:

Period
Total Number of
Shares Purchased ⁽¹⁾

Approximate Average Price Paid per Share ⁽²⁾
Total Number of
Shares Purchased as Part of
Publicly Announced
Plans or Programs
Maximum
Number (or
Approximate
Dollar Value) of
Shares that May Yet Be Purchased Under
the Plans or
Programs ⁽³⁾
September 2016 105,861
$ 74.02
105,861

October 2016 648,704
$ 73.51
648,704

November 2016 716,078
$ 68.78
716,078

Total 1,470,643
1,470,643
$ 94,505,014



Period	Total Number of Shares Purchased ⁽¹⁾	Approximate Average Price Paid per Share ⁽²⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs ⁽³⁾
					(in millions)
January 2017	—	$	—	—
February 2017	—	$	—	—
March 2017	—	$	—	—
Total	—			—	$	299.7


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


⁽²⁾	~~Through open market~~We did not repurchase ~~plans, we repurchased and retired 1,470,643~~any shares of our common stock ~~at a cost of $104.8 million, or an average cost of $71.24 per~~under our share ~~including commissions.~~repurchase program during the three months ended March 31, 2017.

⁽³⁾

The approximate dollar value of shares that may yet be purchased under our share repurchase program, as of ~~November 30, 2016,~~March 31, 2017, was comprised of ~~$94.5~~$299.7 million remaining available under the board’s authorization announced on ~~July 28, 2015.~~January 5, 2017. The authorizations by the board of directors do not expire, but could be revoked at any time. In addition, we are not required by any of the board’s authorizations or otherwise to complete any repurchases by any specific time or at all.

During the quarter ended March 31, 2017, pursuant to our employee incentive plans, we withheld 1,018 shares at an average price per share of $79.38 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—EXHIBITS

List of Exhibits



2.1		Agreement and Plan of Merger, dated as of December 15, 2015, by and among Global Payments Inc., Data 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.++
~~10.1~~3.1		~~Debt Commitment Letter, dated as~~ Second Amended and Restated Articles of ~~December 15, 2015, by and among Global Payments Inc., Bank~~Incorporation of ~~America, N.A. and Merrill, Lynch, Pierce, Fenner and Smith Incorporated,~~the Company, incorporated by reference to Exhibit ~~10.1~~3.1 to the Company’s ~~Current~~Annual Report on Form ~~8-K~~10-K filed ~~December 17, 2015.~~July 25, 2013.
~~10.2~~3.2		Seventh Amended and Restated ~~Debt Commitment Letter, dated as~~Bylaws 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,~~the Company, incorporated by reference to Exhibit ~~10.1~~3.1 to the Company’s ~~Current~~Annual Report on Form ~~8-K~~10-K filed ~~January 14, 2016.~~July 25, 2013.
~~10.3~~10.1*		~~First~~ Form of Restricted Stock Award pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2017)
10.2*		Form of Performance Unit Award Agreement pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2017)
10.3*		Form of Stock Option Award pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2017)
10.4*		Third Amendment, dated March 30, 2017, 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,~~ dated as of ~~February 26, 2016, by and~~July 31, 2015 among the Company, the other borrowers party thereto, the Guarantors party thereto, the Lenders party thereto, and ~~Global Payments Direct, Inc., as borrowers,~~ Bank of America, N.A., as ~~administrative agent, and certain other lenders party thereto, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 1, 2016.~~
10.4*		Second Amendment to the Second Amended and Restated Credit Agreement, Second Amendment to the Second Amended and Restated Term Loan Agreement, Second Amendment to the Company Guaranties and Second Amendment to the Subsidiary Guaranties, dated as of October 31, 2016, by and among the Company and Global Payments Direct, Inc., as borrowers, Bank of America, N.A., as administrative agent, and certain other lenders party thereto.
10.5*		~~Fourth Amended and Restated Non-Employee Director Compensation Plan.~~Administrative Agent.
31.1*		Certification of the Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*		The following financial information from the Quarterly Report on Form 10-Q for the quarter ended ~~November 30, 2016,~~March 31, 2017, formatted in XBRL (eXtensible Business Reporting Language) and filed electronically herewith: (i) the Unaudited Consolidated Statements of Income; (ii) the Unaudited Consolidated Statements of Comprehensive ~~Income (Loss);~~Income; (iii) the Consolidated Balance Sheets; (iv) the Unaudited Consolidated Statements of Cash Flows; (v) the Unaudited Consolidated Statements of Changes in Equity; and (vi) the Notes to Unaudited Consolidated Financial Statements.

______________________



*		Filed herewith.
++		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.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		Global Payments Inc.
		(Registrant)

Date: ~~January 9,~~May 4, 2017		/s/ Cameron M. Bready
		Cameron M. Bready
		Senior Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

3532



	Six Months Ended November 30, 2016			% of Revenue⁽¹⁾		Six Months Ended November 30, 2015			% of Revenue⁽¹⁾		Change			% Change

	(dollar amounts in thousands)
Revenues⁽²⁾:
North America	$	1,413,064		75.1	%	$	1,042,192		70.8	%	$	370,872		35.6	%
Europe	344,469			18.3	%	326,373			22.2	%	18,096			5.5	%
Asia-Pacific	123,780			6.6	%	102,581			7.0	%	21,199			20.7	%
Total revenues	$	1,881,313		100.0	%	$	1,471,146		100.0	%	$	410,167		27.9	%

Consolidated operating expenses⁽²⁾:
Cost of service	$	931,009		49.5	%	$	543,231		36.9	%	$	387,778		71.4	%
Selling, general and administrative	723,931			38.5	%	666,978			45.3	%	56,953			8.5	%
Operating expenses	$	1,654,940		88.0	%	$	1,210,209		82.3	%	$	444,731		36.7	%

Operating income (loss)⁽²⁾:
North America	$	211,446				$	162,635				$	48,811		30.0	%
Europe	126,414					134,745					(8,331		)	(6.2	)%
Asia-Pacific	30,680					24,089					6,591			27.4	%
Corporate	(142,167		)			(60,532		)			(81,635		)	134.9	%
Operating income	$	226,373		12.0	%	$	260,937		17.7	%	$	(34,564	)	(13.2	)%

Operating margin⁽²⁾:
North America	15.0		%			15.6		%			(0.6		)%
Europe	36.7		%			41.3		%			(4.6		)%
Asia-Pacific	24.8		%			23.5		%			1.3		%