UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________________

FORM 10-Q

__________________________________________________________



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

For the quarterly period ended ~~September~~June 30, ~~2016~~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: 001-35004

__________________________________________________________

FleetCor Technologies, Inc.

(Exact name of registrant as specified in its charter)

__________________________________________________________



Delaware		72-1074903
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5445 Triangle Parkway, Norcross, Georgia		30092
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (770) 449-0479

__________________________________________________________

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 ý 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 ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one:)



Large accelerated filer	ý	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 ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Class		Outstanding at ~~November 4, 2016~~July 25, 2017
Common Stock, $0.001 par value		~~92,791,739~~91,878,784

~~Table of Contents~~

FLEETCOR TECHNOLOGIES, INC. AND SUBSIDIARIES

FORM 10-Q

For the Three and ~~Nine~~Six Month Periods Ended ~~September~~June 30, ~~2016~~2017

INDEX



		Page
PART I—FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS

	Consolidated Balance Sheets at ~~September~~June 30, ~~2016~~2017 (unaudited) and December 31, ~~2015~~2016	1

	Unaudited Consolidated Statements of Income for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016	2

	Unaudited Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016	3

	Unaudited Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016	4

	Notes to Unaudited Consolidated Financial Statements	65

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1918

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3840

Item 4.	CONTROLS AND PROCEDURES	3840

PART II—OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS	3941

Item 1A.	RISK FACTORS	3941

Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	3942

Item 3.	DEFAULTS UPON SENIOR SECURITIES	3942

Item 4.	MINE SAFETY DISCLOSURES	3942

Item 5.	OTHER INFORMATION	3942

Item 6.	EXHIBITS	4043

SIGNATURES		4144

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

FleetCor Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share and Par Value Amounts)


	September 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	405,435		$	447,152		$	564,578		$	475,018
Restricted cash	199,319			167,492			201,039			168,752
Accounts receivable (less allowance for doubtful accounts of $30,072 and $21,903 at September 30, 2016 and December 31, 2015, respectively)	1,334,686			638,954
Accounts and other receivables (less allowance for doubtful accounts of $47,836 and $32,506 at June 30, 2017 and December 31, 2016, respectively)							1,429,563			1,202,009
Securitized accounts receivable—restricted for securitization investors	656,000			614,000			741,000			591,000
Prepaid expenses and other current assets	80,837			68,113			109,178			90,914
Deferred income taxes	8,879			8,913
Total current assets	2,685,156			1,944,624			3,045,358			2,527,693
Property and equipment	251,394			163,569
Less accumulated depreciation and amortization	(106,908		)	(82,809		)
Net property and equipment	144,486			80,760
Property and equipment, net							154,278			142,504
Goodwill	4,183,981			3,546,034			4,212,523			4,195,150
Other intangibles, net	2,758,877			2,183,595			2,562,326			2,653,233
Equity method investment	79,717			76,568
Investments							40,845			36,200
Other assets	63,837			58,225			86,381			71,952
Total assets	$	9,916,054		$	7,889,806		$	10,101,711		$	9,626,732
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,230,339		$	669,528		$	1,240,766		$	1,151,432
Accrued expenses	206,386			150,677			206,073			238,812
Customer deposits	595,405			507,233			688,574			530,787
Securitization facility	656,000			614,000			741,000			591,000
Current portion of notes payable and other obligations	727,763			261,100
Current portion of notes payable and lines of credit							702,444			745,506
Other current liabilities	39,080			44,936			40,169			38,781
Total current liabilities	3,454,973			2,247,474			3,619,026			3,296,318
Notes payable and other obligations, less current portion	2,552,357			2,059,900			2,394,621			2,521,727
Deferred income taxes	692,221			713,428			637,162			668,580
Other noncurrent liabilities	37,982			38,957			45,402			56,069
Total noncurrent liabilities	3,282,560			2,812,285			3,077,185			3,246,376
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock, $0.001 par value; 475,000,000 shares authorized; 121,188,761 shares issued and 92,765,739 shares outstanding at September 30, 2016; and 120,539,041 shares issued and 92,376,335 shares outstanding at December 31, 2015	121			121
Common stock, $0.001 par value; 475,000,000 shares authorized; 121,712,973 shares issued and 91,878,784 shares outstanding at June 30, 2017; and 121,259,960 shares issued and 91,836,938 shares outstanding at December 31, 2016							122			121
Additional paid-in capital	2,057,562			1,988,917			2,136,913			2,074,094
Retained earnings	2,123,297			1,766,336			2,473,401			2,218,721
Accumulated other comprehensive loss	(612,150		)	(570,811		)	(610,049		)	(666,403		)
Less treasury stock, 28,423,022 and 28,162,706 shares at September 30, 2016 and December 31, 2015, respectively	(390,309		)	(354,516		)
Less treasury stock 29,834,189 shares at June 30, 2017 and 29,423,022 shares at December 31, 2016							(594,887		)	(542,495		)
Total stockholders’ equity	3,178,521			2,830,047			3,405,500			3,084,038
Total liabilities and stockholders’ equity	$	9,916,054		$	7,889,806		$	10,101,711		$	9,626,732

See accompanying notes to unaudited consolidated financial statements.

FleetCor Technologies, Inc. and Subsidiaries

Unaudited Consolidated Statements of Income

(In Thousands, Except Per Share Amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015			2017			2016¹			2017		2016¹
Revenues, net	$	484,426		$	451,493		$	1,316,593		$	1,272,264		$	541,237		$	417,905		$	1,061,670	$	832,167
Expenses:
Merchant commissions	28,214			31,726			78,755			80,777			30,619			22,308			55,003		50,541
Processing	96,233			90,959			256,738			246,879			103,322			80,691			205,146		160,505
Selling	34,180			27,383			92,680			81,011			38,957			31,947			77,794		58,500
General and administrative	77,904			66,142			209,084			199,252			87,569			63,586			183,003		131,180
Depreciation and amortization	57,084			48,526			141,848			145,435			64,709			48,436			129,575		84,764
Other operating, net	(244		)	(1,703		)	(690		)	(2,475		)	18			(231		)	38		(446		)
Operating income	191,055			188,460			538,178			521,385			216,043			171,168			411,111		347,123
Equity method investment loss (income)	2,744			6,108			(2,247		)	13,926			2,354			(7,184		)	4,731		(4,991		)
Other expense (income), net	293			(168		)	1,056			2,345
Other (income) expense, net													(551		)	104			1,645		763
Interest expense, net	17,814			17,163			49,905			54,818			23,851			15,900			46,978		32,091
Total other expense	20,851			23,103			48,714			71,089			25,654			8,820			53,354		27,863
Income before income taxes	170,204			165,357			489,464			450,296			190,389			162,348			357,757		319,260
Provision for income taxes	40,586			48,587			132,503			140,695			59,402			46,095			103,077		91,917
Net income	$	129,618		$	116,770		$	356,961		$	309,601		$	130,987		$	116,253		$	254,680	$	227,343
Earnings per share:
Basic earnings per share	$	1.40		$	1.27		$	3.85		$	3.37		$	1.42		$	1.25		$	2.77	$	2.46
Diluted earnings per share	$	1.36		$	1.24		$	3.75		$	3.29		$	1.39		$	1.22		$	2.70	$	2.39
Weighted average shares outstanding:
Basic weighted average shares outstanding	92,631			92,110			92,604			91,923
Diluted weighted average shares outstanding	95,307			94,157			95,204			94,069
Basic shares													92,013			92,665			92,060		92,591
Diluted shares													94,223			95,279			94,392		95,137

¹ Reflects the impact of the Company's adoption of Accounting Standards Update 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, to simplify several aspects of the accounting for share-based compensation, including the income tax consequences.

See accompanying notes to unaudited consolidated financial statements.

FleetCor Technologies, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income ~~(Loss)~~

(In Thousands)

Three Months Ended
September 30, Nine Months Ended
September 30,
2016 2015 2016 2015
Net income $ 129,618
$ 116,770
$ 356,961
$ 309,601
Other comprehensive loss:
Foreign currency translation loss, net of tax (52,409 ) (163,030 ) (41,339 ) (263,968 )
Total other comprehensive loss (52,409 )
(163,030 )
(41,339 )
(263,968 )
Total comprehensive income (loss) $ 77,209

$ (46,260 )
$ 315,622

$ 45,633



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017		2016
Net income	$	130,987		$	116,253		$	254,680	$	227,343
Other comprehensive (loss) income:
Foreign currency translation (losses) gains, net of tax	(37,260		)	(20,132		)	56,354		11,070
Total other comprehensive (loss) income	(37,260		)	(20,132		)	56,354		11,070
Total comprehensive income	$	93,727		$	96,121		$	311,034	$	238,413

See accompanying notes to unaudited consolidated financial statements.

FleetCor Technologies, Inc. and Subsidiaries

Unaudited Consolidated Statements of Cash Flows

(In Thousands)



	Six Months Ended June 30,
	2017			2016¹
Operating activities
Net income	$	254,680		$	227,343
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	21,593			16,311
Stock-based compensation	44,243			32,620
Provision for losses on accounts receivable	27,648			13,729
Amortization of deferred financing costs and discounts	3,800			3,651
Amortization of intangible assets	104,894			66,114
Amortization of premium on receivables	3,088			2,339
Deferred income taxes	(32,660		)	(9,248		)
Equity method investment loss (income)	4,731			(4,991		)
Other non-cash operating income	—			(446		)
Changes in operating assets and liabilities (net of acquisitions):
Restricted cash	(28,739		)	13,555
Accounts and other receivables	(380,196		)	(392,545		)
Prepaid expenses and other current assets	(18,778		)	(4,636		)
Other assets	(15,050		)	(9,362		)
Accounts payable, accrued expenses and customer deposits	189,750			257,608
Net cash provided by operating activities	179,004			212,042
Investing activities
Acquisitions, net of cash acquired	(3,580		)	(5,299		)
Purchases of property and equipment	(32,600		)	(24,757		)
Other	(6,327		)	(7,868		)
Net cash used in investing activities	(42,507		)	(37,924		)
Financing activities
Proceeds from issuance of common stock	16,432			7,964
Repurchase of common stock	(52,393		)	(26,037		)
Borrowings on securitization facility, net	150,000			99,000
Principal payments on notes payable	(66,725		)	(51,750		)
Borrowings from revolver – A Facility	90,000			140,000
Payments on revolver – A Facility	(215,901		)	(290,000		)
Borrowings on swing line of credit, net	10,245			—
Other	537			(666		)
Net cash used in financing activities	(67,805		)	(121,489		)
Effect of foreign currency exchange rates on cash	20,868			(6,696		)
Net increase in cash and cash equivalents	89,560			45,933
Cash and cash equivalents, beginning of period	475,018			447,152
Cash and cash equivalents, end of period	$	564,578		$	493,085
Supplemental cash flow information
Cash paid for interest	$	68,431		$	30,361
Cash paid for income taxes	$	188,157		$	64,345

Nine Months Ended
September 30,
2016 2015
Operating activities
Net income $ 356,961
$ 309,601
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 25,706
22,941
Stock-based compensation 50,025
44,387
Provision for losses on accounts receivable 24,512
18,287
Amortization of deferred financing costs and discounts 5,568
5,295
Amortization of intangible assets 112,455
120,055
Amortization of premium on receivables 3,687
2,439
Deferred income taxes (23,566 ) (27,640 )
Equity method investment (income) loss (2,247 ) 13,926
Other non-cash operating income (690 ) (2,476 )
Changes in operating assets and liabilities (net of acquisitions):
Restricted cash (28,744 ) 5,697
Accounts receivable (527,255 ) (71,310 )
Prepaid expenses and other current assets (1,291 ) 2,724
Other assets (9,115 ) (3,297 )
Excess tax benefits related to stock-based compensation —
(24,455 )
Accounts payable, accrued expenses and customer deposits 418,280
108,278
Net cash provided by operating activities 404,286

524,452
Investing activities
Acquisitions, net of cash acquired (1,331,079 ) (9,239 )
Purchases of property and equipment (41,877 ) (29,526 )
Other 1,411
(7,782 )
Net cash used in investing activities (1,371,545 )
(46,547 )
Financing activities
Excess tax benefits related to stock-based compensation —
24,455
Proceeds from issuance of common stock 18,620
13,977
Repurchase of common stock (35,492 ) —
Borrowings (payments) on securitization facility, net 42,000
(10,000 )
Deferred financing costs paid (2,272 ) —
Borrowings from notes payable 600,000
—
Principal payments on notes payable (85,125 ) (77,625 )
Borrowings from revolver – A Facility 1,105,107
—
Payments on revolver – A Facility (670,940 ) (411,818 )
Borrowings (payments) on swing line of credit, net 5,188
(601 )
Payment of contingent consideration —
(40,310 )
Other (673 ) (342 )
Net cash provided by (used in) financing activities 976,413

(502,264 )
Effect of foreign currency exchange rates on cash (50,871 ) (30,320 )
Net decrease in cash and cash equivalents (41,717 ) (54,679 )
Cash and cash equivalents, beginning of period 447,152
477,069
Cash and cash equivalents, end of period $ 405,435

$ 422,390
Supplemental cash flow information
Cash paid for interest $ 48,525
$ 55,959
Cash paid for income taxes $ 79,599
$ 47,339

See accompanying notes to unaudited consolidated financial statements.

FleetCor Technologies, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

~~September~~June 30, ~~2016~~2017

1. Summary of Significant Accounting Policies

Basis of Presentation

Throughout this report, the terms “our,” “we,” “us,” and the “Company” refers to FleetCor Technologies, Inc. and its subsidiaries. The Company prepared the accompanying interim consolidated financial statements in accordance with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”). The unaudited consolidated financial statements reflect all adjustments considered necessary for fair presentation. These adjustments consist primarily of normal recurring accruals and estimates that impact the carrying value of assets and liabilities. Actual results may differ from these estimates. Operating results for the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2016~~2017 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2016.~~2017.

The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

Foreign Currency Translation

Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at the rates of exchange in effect at period-end. The related translation adjustments are made directly to accumulated other comprehensive income. Income and expenses are translated at the average monthly rates of exchange in effect during the period. Gains and losses from foreign currency transactions of these subsidiaries are included in net income. The Company recognized foreign exchange gains of $0.8 million and foreign exchange losses of ~~$0.7~~$0.2 million for the three months ended ~~September~~June 30, ~~2016~~2017 and no foreign exchange losses or gains for the three months ended September 30, 2015. The Company recognized foreign exchange losses of $1.5 million and $2.6 million for the nine months ended September 30, 2016, ~~and 2015,~~ respectively, which are recorded within other expense, net in the Unaudited Consolidated Statements of Income.

~~Revision of Previously Issued Financial Statements~~

As discussed in footnote 2 to the Company's 2015 consolidated financial statements, the Company corrected a misstatement in other comprehensive income to properly reflect the translation of goodwill and certain acquired intangible assets. Other comprehensive income for the three and nine months ended September 30, 2015 has been revised from our previously reported loss of $89.5 million and $175.7 million, respectively, to be consistent with the presentation in the December 31, 2015 financial statements. The Company ~~does not believe this revision is material to any prior period financial statements.~~

~~Certain amounts related to transactions with our equity method investment have been reclassified to conform to current period presentation in~~recognized foreign exchange losses of $0.8 million for both the ~~Consolidated Statements of Cash Flows within investing activities.~~six month periods ended June 30, 2017 and 2016, respectively.

Adoption of New Accounting Standards

~~Going Concern~~

In August 2013, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-15 “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern”, which requires entities to perform interim and annual assessments of the entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial statements. This ASU is effective for fiscal years ending after December 15, 2016 and interim periods thereafter, with early adoption permitted. The Company’s adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows, as it is disclosure based.

Revenue Recognition

In May 2014, the FASB issued ~~Accounting Standards Codification ("ASC") 606, “Revenue~~ASU 2014-09, "Revenue from Contracts with ~~Customers”, which amends the guidance in former ASC 605, Revenue Recognition. This amended guidance requires~~Customers (Topic 606)." The core principle of ASU 2014-09 is that an entity should recognize revenue to ~~be recognized~~depict the transfer of promised goods or services in an amount that reflects the consideration to which the ~~company~~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 ~~services when~~permits the ~~performance obligation has been satisfied. This amended guidance also~~use of either the retrospective or modified retrospective transition method. The update requires ~~enhanced disclosures regarding~~significant additional disclosure about the nature, amount, timing and uncertainty of revenue and ~~related~~ cash flows arising from customer contracts, ~~with customers. In August 2015, the FASB issued~~including significant judgments and changes in judgments. ASU 2014-09, as amended by ASU 2015-14, “Revenue from Contracts with Customers: Deferral of the Effective Date”, which defers the effective date of the new revenue recognition standard by one year. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus

Net)”, which clarifies how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. In April 2016, the FASB issued ASU 2016-10, "Identifying Performance Obligations and Licensing", which clarifies the accounting for intellectual property licenses and identifying performance obligations. In May 2016, the FASB issued ASU 2016-11, "Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting", which rescinds certain SEC guidance in response to announcements made by the SEC staff at the EITF's March 3, 2016 meeting and ASU 2016-12, "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients", which clarifies the guidance on collectibility, non-cash consideration, the presentation of sales and other similar taxes collected from customers and contract modifications and completed contracts at transition. Additionally, ASU 2016-12 clarifies that entities electing the full retrospective transition method would no longer be required to disclose the effectDeferral of the ~~change in accounting principle on the period of adoption; however, entities would still be required to disclose the effects on preadoption periods that were retrospectively adjusted. These ASUs are~~Effective Date," is effective for ~~the Company for reporting periods~~years beginning after December 15, 2017, but permit companies the option to adopt as of the original effective date. The Company is currently evaluating the impact of the provisions of ASC 606. The guidance permits the use of either a retrospective or cumulative effect transition method. The Company anticipates selecting the modified retrospective method during transition and is currently evaluating the impact of the provisions of ASC 606 on the results of operations, financial condition, and cash flows.

~~Simplification of Guidance on Debt Issuance Costs~~

In April 2015, the FASB issued ASU 2015-3, “Interest—Imputation of Interest”, which changes the presentation of debt issuance costs in financial statements as a direct deduction from the related debt liability rather than as an asset. This ASU is effectiveincluding interim periods, with early adoption permitted for ~~us for fiscal~~ years ending after December 15, 2015 and interim periods. Early adoption is permitted. In August 2015, the FASB issued ASU 2015-15, “Interest-Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements”, which is effective immediately. The SEC staff clarified that entities may continue presenting unamortized debt issuance costs for line-of-credit arrangements as an asset. The Company adopted this new guidance on January 1, 2016. As a result of the adoption of this ASU, $0.6 million and $1.5 million of unamortized debt issuance costs were retrospectively adjusted from prepaid expenses and other current assets to the current portion of notes payable and lines of credit and other assets to notes payable and other obligations, less current portion, respectively, in the Company’s Consolidated Balance Sheet as of December 31, 2015.

~~Simplification of Balance Sheet Classification of Deferred Taxes~~

In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”, which requires entities to present deferred tax assets (DTAs) and deferred tax liabilities (DTLs) as noncurrent in a classified balance sheet. It thus simplifies the current guidance, which requires entities to separately present DTAs and DTLs as current or noncurrent in a classified balance sheet. Netting of DTAs and DTLs by tax jurisdiction is still required under the new guidance. This ASU is effective for the Company for annual reporting periods beginning after December 15, ~~2016,~~2016. Since the issuance of ASU 2014-09, the FASB has issued additional interpretive guidance, including new accounting standards updates, that clarifies certain points of the standard and ~~interim periods within those annual periods. Early adoption~~modifies certain requirements.

The Company has performed a review of the requirements of the new revenue standard and is ~~permitted.~~monitoring the activity of the FASB and the transition resource group as it relates to specific interpretive guidance. The ~~Company’s adoption~~Company has established an implementation team to assess the effects of ~~this ASU~~the new revenue standard in ~~2017~~a multi-phase approach. In the first phase, the Company is ~~not expected~~analyzing customer contracts for its most significant contract categories, applied the five-step model of the new standard to ~~have a material impact on~~each contract category and comparing the results to our current accounting practices. The Company has begun the second phase, which includes quantifying the potential effects identified during the first phase, assessing additional contract categories and principal versus agent considerations, revising accounting policies and considering the effects on related disclosures and/or internal control over financial reporting.

The new standard could change the amount and timing of revenue and expenses to be recognized under certain of our arrangement types. In addition, it could also increase the administrative burden on our operations to 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. The Company has not completed its assessment or quantified the effect the new guidance will have on its consolidated financial ~~condition,~~ statements, related

disclosures and/or ~~cash flows.~~its internal control over financial reporting. This assessment will occur over the remainder of the calendar year. However, the Company's preliminary view is that the expected amount and timing of revenue to be recognized under ASU 2014-09 for its most significant contract categories, fuel card payments, corporate payments, lodging payments and gift cards, will be similar to the amount and timing of revenue recognized under our current accounting practices. The Company also may be required to capitalize additional costs to obtain contracts with customers, and, in some cases, may be required to amortize these costs over a contractual time period. Finally, the Company expects disclosures about its revenues and related customer acquisition costs will be more extensive.

The Company plans 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. The Company will 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 that are not completed at the date of initial application. Under this method, the Company would not restate the prior financial statements presented, therefore the new standard requires the Company 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.

Accounting for Leases

In February 2016, the FASB issued ASU 2016-02, “Leases”, which requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. This ASU also requires disclosures to provide additional information about the amounts recorded in the financial statements. This ASU is effective for the Company for annual periods beginning after December 15, 2018 and interim periods therein. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition and requires application of the new guidance for leases that exist or are entered into after the beginning of the earliest comparative period presented. The Company is currently evaluating the impact of ASU 2016-02 on our consolidated financial statements; however, we expect to recognize right of use assets and liabilities for our operating leases in the consolidated balance sheet upon adoption.

Accounting for Employee Stock-Based Payment

In March 2016, the FASB issued ASU 2016-09, "Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting", which requires excess tax benefits recognized on stock-based compensation expense be reflected in the consolidated statements of operations as a component of the provision for income taxes on a prospective basis. ASU 2016-09 also requires excess tax benefits recognized on stock-based compensation expense be classified as an operating activity in the consolidated statements of cash flows rather than a financing activity. Companies can elect to apply this provision retrospectively or prospectively. ASU 2016-09 also requires entities to elect whether to account for forfeitures as they occur or estimate expected forfeitures over the course of a vesting period. This ASU is effective for the Company for annual periods beginning after December 15, 2016. Early adoption was permitted.

During the third quarter of 2016, the Company elected to early adopt ASU 2016-09. The adoption of this ASU resulted in excess tax benefits being recorded as a reduction of income tax expense prospectively for all periods during 2016, rather than additional paid in capital, and an increase in the number of dilutive shares outstanding at the end of each period. The adoption of ASU 2016-09 resulted in an increase to diluted earnings per share during the respective period. As required by ASU 2016-09, excess tax benefits recognized on stock-based compensation expense are classified as an operating activity in our consolidated statements of cash flows on a prospective basis within changes in accounts payable, accrued expenses and customer deposits. In accordance with ASU 2016-09, the classification of excess tax benefits in prior periods have not been adjusted in periods prior to 2016. The Company also elected to account for forfeitures as they occur, rather than estimate expected forfeitures over the course of a vesting period. As a result of the adoption of ASU 2016-09, the net cumulative effect of this change was not material to the results of operations, financial condition, or cash flows.

The following table shows the impact of retrospectively applying ASU 2016-09 to the previously issued consolidated statements of income for the three and six month periods ended June 30, 2016 (in thousands, except per share amounts):



	Three Months Ended June 30, 2016							Six Months Ended June 30, 2016
	As Previously Reported		Adjustments			As Recast		As Previously Reported		Adjustments			As Recast
Income before income taxes	$	162,348	$	—		$	162,348	$	319,260	$	—		$	319,260
Provision for income taxes	48,163		(2,068		)	46,095		95,103		(3,186		)	$	91,917
Net income	$	114,185	$	2,068		$	116,253	$	224,157	$	3,186		$	227,343
Earnings per share:
Basic earnings per share	$	1.23	$	0.02		$	1.25	$	2.42	$	0.04		$	2.46
Diluted earnings per share	$	1.21	$	0.01		$	1.22	$	2.37	$	0.02		$	2.39
Weighted average common shares outstanding:
Basic	92,665		—			92,665		92,591		—			92,591
Diluted	94,549		729			95,279		94,437		700			95,137

The following table shows the impact of retrospectively applying this guidance to the Consolidated Statement of Cash flows for the six months ended June 30, 2016 (in thousands):



	Six Months Ended June 30, 2016
	As Previously Reported			Adjustments			As Recast
Net cash provided by operating activities	$	208,856		$	3,186		$	212,042
Net cash used in investing activities	(37,924		)	—			(37,924		)
Net cash used in financing activities	(118,303		)	(3,186		)	(121,489		)
Effect of foreign currency exchange rates on cash	(6,696		)	—			(6,696		)
Net increase in cash	$	45,933		$	—		$	45,933

Accounting for Breakage

In March 2016, the FASB issued ASU 2016-04, “Liabilities-Extinguishments of Liabilities: Recognition of Breakage for Certain Prepaid Stored-Value Products”, which requires entities that sell prepaid stored value products redeemable for goods, services or cash at third-party merchants to derecognize liabilities related to those products for breakage. This ASU is effective for the Company for reporting periods beginning after December 15, 2017. Early adoption is permitted. The ASU must be adopted using either a modified retrospective approach with a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption or a full retrospective approach. The Company’s adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.

~~Accounting for Employee Stock-Based Payment~~

consolidated statements of cash flows rather than a financing activity. Companies can elect to apply this provision retrospectively or prospectively. ASU 2016-09 also requires entities to elect whether to account for forfeitures as they occur or estimate expected forfeitures over the course of a vesting period. This ASU is effective for the Company for annual periods beginning after December 15, 2016. Early adoption is permitted.

During the third quarter of 2016, the Company elected to early adopt ASU 2016-09. The adoption of this ASU resulted in excess tax benefits being recorded as a reduction of income tax expense prospectively for all periods during 2016, rather than additional paid in capital, and an increase in the number of dilutive shares outstanding at the end of each period, which resulted in an increase to diluted earnings per share during the respective period. As required by ASU 2016-09, excess tax benefits recognized on stock-based compensation expense are classified as an operating activity in our consolidated statements of cash flows on a prospective basis within changes in accounts payable, accrued expenses and customer deposits. In accordance with ASU 2016-09, prior periods related to the classification of excess tax benefits have not been adjusted. The Company also elected to account for forfeitures as they occur, rather than estimate expected forfeitures over the course of a vesting period. As a result of the adoption of ASU 2016-09, the net cumulative effect of this change was not material.

The following table shows the impact of retrospectively applying ASU 2016-09 to the previously issued consolidated statements of operations for the three month period ended March 31 and the three and six month periods ended June 30 (in thousands, except per share amounts):

Three Months Ended March 31, 2016 Three Months Ended June 30, 2016
As Previously Reported Adjustments As Recast As Previously Reported Adjustments As Recast
Income before income taxes $ 156,912
$ —
$ 156,912
$ 162,348
$ —
$ 162,348
Provision for income taxes 46,940 (1,118 ) 45,822
48,163
(2,068 ) 46,095
Net income $ 109,972
$ 1,118
$ 111,090
$ 114,185
$ 2,068
$ 116,253

Earnings per share:
Basic earnings per share $ 1.19
$ 0.01
$ 1.20
$ 1.23
$ 0.02
$ 1.25
Diluted earnings per share $ 1.17
$ —
$ 1.17
$ 1.21
$ 0.01
$ 1.22

Weighted average common shares outstanding:
Basic 92,516
—
92,516
92,665
—
92,665
Diluted 94,329
701
95,030
94,549
729
95,279

Six Months Ended June 30, 2016
As Previously Reported Adjustments As Recast
Income before income taxes $ 319,260
$ —
$ 319,260
Provision for income taxes 95,103
(3,186 ) $ 91,917
Net income $ 224,157
$ 3,186
$ 227,343

Earnings per share:
Basic earnings per share $ 2.42
$ 0.04
$ 2.46
Diluted earnings per share $ 2.37
$ 0.02
$ 2.39

Weighted average common shares outstanding:
Basic 92,591
—
92,591
Diluted 94,433
703
95,137

The following table shows the impact of retrospectively applying this guidance to the Consolidated Statement of Cash flows for the three months ended March 31, 2016 and six months ended June 30, 2016 (in thousands):

Three Months Ended March 31, 2016 Six Months Ended June 30, 2016
As Previously Reported Adjustments As Recast As Previously Reported Adjustments As Recast
Net cash provided by operating activities $ 121,505
$ 1,118
$ 122,623
$ 208,856
$ 3,186
$ 212,042
Net cash used in investing activities (20,745 ) —
(20,745 ) (37,924 ) —
(37,924 )
Net cash used in financing activities (157,389 ) (1,118 ) (158,507 ) (118,303 ) (3,186 ) (121,489 )
Effect of foreign currency exchange rates on cash 8,795
—
8,795
(6,696 ) —
(6,696 )
Net (decrease) increase in cash $ (47,834 ) $ —
$ (47,834 ) $ 45,933
$ —
$ 45,933

Cash Flow Classification

In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments", which amends the guidance in ASC 230, Statement of Cash Flows. This amended guidance reduces the diversity in practice that has resulted from the lack of consistent principles related to the classification of certain cash receipts and payments in the statement of cash flows. This ASU is effective for the Company for reporting periods beginning after December 15, 2017. Early adoption is permitted. Entities must apply the guidance retrospectively to all periods presented but may apply it prospectively from the earliest date practicable if retrospective application would be impracticable. The Company’s adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.

In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash", which amends the guidance in ASC 230, Statement of Cash Flows, on the classification and presentation of restricted cash in the statement of cash flows. This ASU is effective for the Company for reporting periods beginning after December 15, 2017. Early adoption is permitted. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. The Company’s adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.

Intangibles - Goodwill and Other Impairment

In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of the goodwill impairment test) to measure a goodwill

impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on Step 1). The standard has tiered effective dates, starting in 2020 for calendar-year public business entities that meet the definition of an SEC filer. Early adoption is permitted for interim and annual goodwill impairment testing dates after January 1, 2017. The Company’s adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.

Definition of a Business

In January 2017, the FASB issued ASU 2017-01, "Clarifying the Definition of a Business", which amends the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If so, the set of transferred assets and activities is not a business.The guidance also requires a business to include at least one substantive process and narrows the definition of outputs.The guidance is effective for the Company for reporting periods beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The Company’s adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.

Accounting for Modifications to Stock-Based Compensation

In May 2017, the FASB issued ASU 2017-09, "Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting", which amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. The guidance is effective for the Company for reporting periods beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The Company's adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.

2. Accounts Receivable

The Company maintains a $950 million revolving trade accounts receivable Securitization Facility. Accounts receivable collateralized within our Securitization Facility relate to our U.S. trade receivables resulting from charge card activity. Pursuant to the terms of the Securitization Facility, the Company transfers certain of its domestic receivables, on a revolving basis, to FleetCor Funding LLC (Funding) a wholly-owned bankruptcy remote subsidiary. In turn, Funding sells, without recourse, on a revolving basis, up to $950 million of undivided ownership interests in this pool of accounts receivable to a multi-seller, asset-backed commercial paper conduit (Conduit). Funding maintains a subordinated interest, in the form of over-collateralization, in a portion of the receivables sold to the Conduit. Purchases by the Conduit are financed with the sale of highly-rated commercial paper.

The Company utilizes proceeds from the sale of its accounts receivable as an alternative to other forms of financing to reduce its overall borrowing costs. The Company has agreed to continue servicing the sold receivables for the financial institution at market rates, which approximates the Company’s cost of servicing. The Company retains a residual interest in the accounts receivable sold as a form of credit enhancement. The residual interest’s fair value approximates carrying value due to its short-term nature. Funding determines the level of funding achieved by the sale of trade accounts receivable, subject to a maximum amount.

The Company’s consolidated balance sheets and statements of income reflect the activity related to securitized accounts receivable and the corresponding securitized debt, including interest income, fees generated from late payments, provision for losses on accounts receivable and interest expense. The cash flows from borrowings and repayments, associated with the securitized debt, are presented as cash flows from financing activities.

The Company’s accounts receivable and securitized accounts receivable include the following at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 (in thousands):


	September 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
Gross domestic accounts receivable	$	627,138		$	338,275		$	711,681		$	529,885
Gross domestic securitized accounts receivable	656,000			614,000			741,000			591,000
Gross foreign receivables	737,620			322,582			765,718			704,630
Total gross receivables	2,020,758			1,274,857			2,218,399			1,825,515
Less allowance for doubtful accounts	(30,072		)	(21,903		)	(47,836		)	(32,506		)
Net accounts and securitized accounts receivable	$	1,990,686		$	1,252,954		$	2,170,563		$	1,793,009

A rollforward of the Company’s allowance for doubtful accounts related to accounts receivable for ~~nine~~six months ended ~~September~~June 30 is as follows (in thousands):

2016 2015
Allowance for doubtful accounts beginning of period $ 21,903
$ 23,842
Provision for bad debts 24,512
18,287
Write-offs (16,343 ) (19,586 )
Allowance for doubtful accounts end of period $ 30,072
$ 22,543

Foreign receivables are not included in the Company’s accounts receivable securitization program. At September 30, 2016 and December 31, 2015, there was $656 million and $614 million, respectively, of short-term debt outstanding under the Company’s accounts receivable Securitization Facility.



	2017			2016
Allowance for doubtful accounts beginning of period	$	32,506		$	21,903
Provision for bad debts	27,648			13,729
Write-offs	(12,318		)	(10,396		)
Allowance for doubtful accounts end of period	$	47,836		$	25,236

3. Fair Value Measurements

Fair value is a market-based measurement that reflects assumptions that market participants would use in pricing an asset or liability. GAAP discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions.

As the basis for evaluating such inputs, a three-tier value hierarchy prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.

Level 2: Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The following table presents the Company’s financial assets and liabilities which are measured at fair values on a recurring basis as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, (in thousands).


	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
September 30, 2016
June 30, 2017
Assets:
Repurchase agreements	$	142,379	$	—	$	142,379	$	—	$	310,034	$	—	$	310,034	$	—
Money market	55,159		—		55,159		—		50,254		—		50,254		—
Certificates of deposit	46		—		46		—		7,759		—		7,759		—
Total cash equivalents	$	197,584	$	—	$	197,584	$	—	$	368,047	$	—	$	368,047	$	—

December 31, 2015
December 31, 2016
Assets:
Repurchase agreements	$	144,082	$	—	$	144,082	$	—	$	232,131	$	—	$	232,131	$	—
Money market	55,062		—		55,062		—		50,179		—		50,179		—
Certificates of deposit	9,373		—		9,373		—		48		—		48		—
Total cash equivalents	$	208,517	$	—	$	208,517	$	—	$	282,358	$	—	$	282,358	$	—

The Company has ~~highly liquid~~highly-liquid investments classified as cash equivalents, with original maturities of 90 days or less, included in our Consolidated Balance Sheets. The Company utilizes Level 2 fair value determinations derived from directly or indirectly observable (market based) information to determine the fair value of these highly liquid investments. The Company has certain cash and cash equivalents that are invested on an overnight basis in repurchase agreements, money markets and certificates of deposit. The value of overnight repurchase agreements is determined based upon the quoted market prices for the treasury securities associated with the repurchase agreements. The value of money market instruments is the financial institutions'

month-end statement, as these instruments are not tradeable and must be settled directly by us with the respective financial institution. Certificates of deposit are valued at cost, plus interest accrued. Given the ~~short term~~short-term nature of these instruments, the carrying value approximates fair value.

The level within the fair value hierarchy and the measurement technique are reviewed quarterly. Transfers between levels are deemed to have occurred at the end of the quarter. There were no transfers between fair value levels during the periods presented for ~~2016~~2017 and ~~2015.~~2016.

The Company’s ~~nonfinancial~~ assets that are measured at fair value on a nonrecurring basis ~~include those in connection~~and are evaluated with periodic testing for impairment include property, plant and equipment, ~~equity method investment,~~investments, goodwill and other intangible assets. ~~While completing the preliminary acquisition accounting in 2016, the Company generally uses projected cash flows, discounted as appropriate, to estimate~~Estimates of the fair ~~values~~value of ~~the~~ assets acquired and liabilities assumed in business combinations are generally developed using key inputs such as management’s projections of cash flows on a held-and-used basis (if applicable), discounted as appropriate, management’s projections of cash flows upon disposition and discount rates. Accordingly, these fair value measurements are in Level 3 of the fair value hierarchy.

The fair value of the Company’s cash, accounts receivable, securitized accounts receivable and related facility, prepaid expenses and other current assets, accounts payable, accrued expenses, customer deposits and short-term borrowings approximate their respective carrying values due to the short-term maturities of the instruments. The carrying value of the Company’s debt obligations approximates fair value as the interest rates on the debt are variable market based interest rates that reset on a quarterly basis. These are each Level 2 fair value measurements, except for cash, which is a Level 1 fair value measurement.

4. Stockholders' Equity

On February 4, 2016, the Company's Board of Directors approved a stock repurchase program (the "Program") under which the Company may ~~begin purchasing~~purchase up to an aggregate of $500 million of its common stock over the following 18 month period. On July 27, 2017, the Company's Board of Directors authorized an increase in the size of the Program by an additional $250 million and an extension of the Program by an additional 18 months. With the increase and giving effect to the Company's $240 million of previous repurchases, the Company may repurchase up to $510 million in shares of its common stock at any time prior to February 1, 2019. Any stock repurchases may be made at times and in such amounts as deemed appropriate. The timing and amount of stock repurchases, if any, will depend on a variety of factors including the stock price, market conditions, corporate and regulatory requirements, and any additional constraints related to material inside information ~~that~~ the Company may possess. Any repurchases have been and are expected to be funded by a combination of available cash flow from the business, working capital and ~~working capital.~~debt. Since the beginning of the Program, 1,670,311 shares for an aggregate purchase price of $240.1 million have been repurchased. There were ~~259,145~~411,166 shares totaling ~~$35.5~~$52.4 million repurchased under the Program during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017.

On August 3, 2017, as part of the Program, the Company entered an Accelerated Share Repurchase agreement ("ASR Agreement") with a third-party financial institution to repurchase $250 million of its common stock. Pursuant to the ASR Agreement, approximately 85% of the shares expected to be repurchased were received by the Company on August 8, 2017. The total number of shares ultimately repurchased under the Program will be determined upon final settlement and will be based on a discount to the volume-weighted average price of the Company's common stock during the ASR period. The Company anticipates that all repurchases under the ASR will be completed by the end of the third quarter of 2017.

5. Stock-Based Compensation

The Company has Stock Incentive Plans (the ~~"Plans")~~Plans) pursuant to which the Company’s ~~board~~Board of ~~directors~~Directors may grant stock options or restricted stock to employees. The table below summarizes the expense recognized related to ~~stock-based~~share-based payments recognized for the three and ~~nine~~six month periods ended ~~September~~June 30 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Stock options	$	8,304	$	4,348	$	25,942	$	13,190	$	13,949	$	8,394	$	26,038	$	17,638
Restricted stock	9,101		9,539		24,083		31,197		7,201		9,041		18,205		14,982
Stock-based compensation	$	17,405	$	13,887	$	50,025	$	44,387	$	21,150	$	17,435	$	44,243	$	32,620

The tax benefits recorded on stock based compensation were ~~$28.4~~$24.3 million and ~~$13.9~~$14.2 million for the ~~nine~~six month periods ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

The following table summarizes the Company’s total unrecognized compensation cost related to stock-based compensation as of ~~September~~June 30, ~~2016~~2017 (cost in thousands):


	Unrecognized Compensation Cost		Weighted Average Period of Expense Recognition (in Years)	Unrecognized Compensation Cost		Weighted Average Period of Expense Recognition (in Years)
Stock options	$	50,191	1.39	$	108,831	1.67
Restricted stock	10,090		0.44	16,431		0.51
Total	$	60,281		$	125,262

Stock Options

Stock options are granted with an exercise price estimated to be equal to the fair market value of the Company's stock on the date of grant as authorized by the Company’s ~~board~~Board of ~~directors.~~Directors. Options granted have vesting provisions ranging from one to ~~six~~five years and vesting of the options is generally based on the passage of time or performance. Stock option grants are subject to forfeiture if employment terminates prior to vesting.

The following summarizes the changes in the number of shares of common stock under option for the ~~nine~~six month period ended ~~September~~June 30, ~~2016~~2017 (shares and aggregate intrinsic value in thousands):


	Shares		Weighted Average Exercise Price		Options Exercisable at End of Period	Weighted Average Exercise Price of Exercisable Options		Weighted Average Fair Value of Options Granted During the Period		Aggregate Intrinsic Value		Shares		Weighted Average Exercise Price		Options Exercisable at End of Period	Weighted Average Exercise Price of Exercisable Options		Weighted Average Fair Value of Options Granted During the Period		Aggregate Intrinsic Value
Outstanding at December 31, 2015	5,003		$	72.72	2,545	$	26.82			$	351,277
Outstanding at December 31, 2016												6,146		$	91.20	3,429	$	55.00			$	309,238
Granted	1,418		122.88					$	26.27			2,550		144.44					$	32.57
Exercised	(431	)	43.17							56,330		(267	)	61.59							22,047
Forfeited	(137	)	140.67									(60	)	142.14
Outstanding at September 30, 2016	5,853		$	85.43	3,240	$	47.84			$	516,756
Expected to vest as of September 30, 2016	5,853		$	85.43
Outstanding at June 30, 2017												8,369		$	108.00	3,862	$	66.43			$	303,003
Expected to vest as of June 30, 2017												8,369		$	108.00

The aggregate intrinsic value of stock options exercisable at ~~September~~June 30, ~~2016~~2017 was ~~$407.9~~$300.4 million. The weighted average remaining contractual term of options exercisable at ~~September~~June 30, ~~2016~~2017 was ~~5.1~~5.2 years.

The fair value of stock option awards granted was estimated using the Black-Scholes option pricing model during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, with the following weighted-average assumptions for grants or modifications during the period:


	September 30				June 30,
	2016		2015		2017		2016
Risk-free interest rate	1.09	%	1.27	%	1.65	%	1.10	%
Dividend yield	—		—		—		—
Expected volatility	27.37	%	27.71	%	28.00	%	27.37	%
Expected life (in years)	3.4		3.8		3.4		3.4

Restricted Stock

Awards of restricted stock and restricted stock units are independent of stock option grants and are subject to forfeiture if employment terminates prior to vesting. The vesting of shares granted is generally based on the passage of time or performance, or a combination of these. Shares vesting based on the passage of time have vesting provisions of one year.

The following table summarizes the changes in the number of shares of restricted stock and restricted stock units for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 (shares in thousands):


	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2015	497		$	149.40
Outstanding at December 31, 2016					379		$	140.39
Granted	131		126.31		136		149.94
Vested	(227	)	151.68		(200	)	136.22
Cancelled	(42	)	145.56		(38	)	155.55
Outstanding at September 30, 2016	359		$	142.48
Outstanding at June 30, 2017					277		$	148.57

6. Acquisitions

2017 Acquisitions

On April 28, 2017, the Company signed a definitive agreement to acquire Cambridge Global Payments (“Cambridge”), a leading business to business (B2B) international payments provider, for approximately $690 million in cash. Cambridge processes B2B cross-border payments, assisting business clients in making international payments to suppliers and employees. The purpose of this acquisition is to further expand the Company's corporate payments footprint. This acquisition is expected to be completed by September 1, 2017.

2016 Acquisitions

During the nine months ended September 30, 2016, the Company completed acquisitions with an aggregate purchase price of $1.33 billion, net of cash acquired of $51.4 million, which includes deferred payments made during the period related to prior acquisitions of $5.3 million.

During the nine months ended September 30, 2016, the Company made additional investments of $7.9 million related to its equity method investment at Masternaut Group Holdings Limited ("Masternaut"). Additionally, during the nine months ended September 30, 2016, the Company recorded an approximately $9.3 million non-recurring gain recorded within operating results related to its investment at Masternaut.

STP

On August 31, 2016, the Company acquired all of the outstanding stock of Serviços e Tecnologia de Pagamentos S.A. (“STP”), for approximately ~~$1.25~~$1.23 billion, net of cash acquired of ~~$40.3~~$40.2 million. STP is an electronic toll payments company in Brazil and provides cardless fuel payments at a number of Shell sites throughout Brazil. The purpose of this acquisition was to ~~enter~~expand the Company's presence in the toll market in ~~Brazil.The~~Brazil. The Company financed the acquisition using a combination of existing cash and borrowings under its existing credit facility. Results from the acquired business have been reported in the Company's international segment since the date of acquisition. The following table summarizes the preliminary acquisition accounting for STP (in thousands):


Trade and other receivables	$	238,997		$	243,157
Prepaid expenses and other	5,163			6,998
Deferred tax assets	2,353			9,365
Property and equipment	46,024			38,732
Other long term assets	1,029			14,280
Goodwill	621,741			645,766
Customer relationships and other identifiable intangible assets	642,012			584,274
Deferred tax liabilities	(4,905		)
Liabilities assumed	(303,369		)	(315,082		)
Aggregate purchase price	$	1,249,045		$	1,227,490

The estimated fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):

Useful Lives
(in Years)

Value

Customer relationships and other identifiable intangible assets 4-10 $ 642,012
$ 642,012



	Useful Lives (in Years)	Value
Customer relationships	8.5-17	$	349,310
Trade names and trademarks - indefinite	N/A	189,547
Technology	6	45,417
		$	584,274

In connection with the STP acquisition, the Company recorded contingent liabilities aggregating $13.5 million in the consolidated balance sheet, recorded within other noncurrent liabilities and accrued expenses in the consolidated balance sheet at the date of acquisition. A portion of these acquired liabilities have been indemnified by the respective sellers. As a result, an indemnification asset of $13.0 million was recorded within prepaid and other current assets and other long term assets in the

consolidated balance sheet. The ~~purchase price allocation~~contingent liabilities and the indemnification asset are included in the preliminary acquisition accounting for STP at the date of acquisition. The potential range of acquisition related contingent liabilities that the Company estimates could be incurred and ultimately expected to ~~this~~be recoverable is $13.5 million to $18.6 million. Along with the Company's acquisition of STP, the Company signed noncompete agreements with certain parties for approximately $21.6 million.

Acquisition accounting for STP is preliminary as the Company is still completing the valuation for intangible assets, income taxes, certain acquired contingencies and the working capital adjustment period remains open. Goodwill recognized is comprised primarily of expected synergies from combining the operations of the Company and STP, ~~and~~as well as assembled workforce. The ~~allocation of the~~ goodwill ~~to the reporting units has not been completed. The goodwill~~and definite lived intangibles acquired with this business is expected to be deductible for tax purposes.

Other

During ~~the nine months ended September 30,~~ 2016, the Company acquired additional fuel card portfolios in the U.S. and the United Kingdom, additional Shell fuel card markets in Europe and Travelcard in the Netherlands totaling approximately $76.7 million, net of cash acquired of $11.1 million. The following table summarizes the preliminary acquisition accounting for these acquisitions (in thousands):


Trade and other receivables	$	27,810		$	27,810
Prepaid expenses and other	5,097			5,097
Property and equipment	992			992
Goodwill	21,820			28,540
Other intangible assets	63,410			61,823
Deferred tax asset	146			146
Liabilities assumed	(42,541		)	(42,550		)
Deferred tax liabilities				(5,123		)
Aggregate purchase prices	$	76,734		$	76,735

The estimated fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):

Useful Lives
(in Years)

Value

Customer relationships and other identifiable intangible assets 10-20 $ 63,410
$ 63,410



	Useful Lives (in Years)	Value
Customer relationships and other identifiable intangible assets	10-18	$	61,823
		$	61,823

The other 2016 acquisitions were not material individually or in the aggregate to the Company’s consolidated financial statements. The accounting for certain of these acquisitions is preliminary as the Company is still completing the valuation of intangible assets, income taxes and evaluation of acquired contingencies.

~~2015 Acquisitions~~

During 2015, the Company completed acquisitions of Shell portfolios related to its fuel card businesses in Europe, as well as a small acquisition internationally, with an aggregate purchase price of $46.3 million, made additional investments of $8.4 million related to Masternaut and deferred payments of $3.4 million related to acquisitions occurring in prior years.

~~The following table summarizes the acquisition accounting for the acquisitions completed during 2015 (in thousands):~~

Trade and other receivables $ 521
Prepaid expenses and other 996
Property and equipment 197
Goodwill 9,561
Other intangible assets 39,791
Deferred tax liabilities (2,331 )
Liabilities assumed (2,437 )
Aggregate purchase prices $ 46,298

~~The fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):~~

Useful Lives
(in Years)

Value

Customer relationships 14-20 $ 39,791
$ 39,791

~~The 2015 acquisitions were not material individually or in the aggregate to the Company’s consolidated financial statements.~~

7. Goodwill and Other Intangible Assets

A summary of changes in the Company’s goodwill by reportable business segment is as follows (in thousands):


	December 31, 2015		Acquisitions/ Dispositions		Acquisition Accounting Adjustments		Foreign Currency			September 30, 2016		December 31, 2016		Acquisitions/ Dispositions		Acquisition Accounting Adjustments			Foreign Currency		June 30, 2017
Segment
North America	$	2,640,409	$	—	$	—	$	—		$	2,640,409	$	2,640,409	$	—	$	—		$	—	$	2,640,409
International	905,625		642,876		163		(5,092		)	1,543,572		1,554,741				(13,522		)	30,895		1,572,114
	$	3,546,034	$	642,876	$	163	$	(5,092	)	$	4,183,981	$	4,195,150	$	—	$	(13,522	)	$	30,895	$	4,212,523

As of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, other intangible assets consisted of the following (in thousands):


		September 30, 2016							December 31, 2015								June 30, 2017							December 31, 2016
	Weighted- Avg Useful Lives (Years)	Gross Carrying Amounts		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amounts		Accumulated Amortization			Net Carrying Amount		Weighted- Avg Useful Lives (Years)	Gross Carrying Amounts		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amounts		Accumulated Amortization			Net Carrying Amount
Customer and vendor agreements	15.8	$	2,760,942	$	(418,166	)	$	2,342,776	$	2,071,928	$	(329,664	)	$	1,742,264	17.0	$	2,462,866	$	(539,965	)	$	1,922,901	$	2,449,389	$	(458,118	)	$	1,991,271
Trade names and trademarks—indefinite lived	N/A	320,408		—			320,408		318,048		—			318,048		N/A	510,314		—			510,314		510,952		—			510,952
Trade names and trademarks—other	14.4	2,825		(1,986		)	839		3,067		(2,058		)	1,009		14.6	2,797		(2,093		)	704		2,746		(2,021		)	725
Software	5.1	167,573		(76,851		)	90,722		170,085		(54,250		)	115,835		5.3	211,712		(104,710		)	107,002		211,331		(85,167		)	126,164
Non-compete agreements	4.8	14,326		(10,194		)	4,132		15,209		(8,770		)	6,439		4.9	35,907		(14,502		)	21,405		35,191		(11,070		)	24,121
Total other intangibles		$	3,266,074	$	(507,197	)	$	2,758,877	$	2,578,337	$	(394,742	)	$	2,183,595		$	3,223,596	$	(661,270	)	$	2,562,326	$	3,209,609	$	(556,376	)	$	2,653,233

Changes in foreign exchange rates resulted in a ~~$18.0~~$14.0 million ~~decrease~~increase to the carrying values of other intangible assets in the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. Amortization expense related to intangible assets for the ~~nine~~six months ended ~~September~~June 30, 2017 and 2016 ~~and 2015~~ was ~~$112.5~~$104.9 million and ~~$120.1~~$66.1 million, respectively.

8. Debt

The Company’s debt instruments consist primarily of term notes, revolving lines of credit and a Securitization Facility as follows (in thousands):


	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
Term notes payable—domestic(a), net of discounts	$	2,671,875	$	2,157,376	$	2,574,080	$	2,639,279
Revolving line of credit A Facility—domestic(a)	430,000		160,000		400,000		465,000
Revolving line of credit A Facility—foreign(a)	162,128		—		67,614		123,412
Revolving line of credit A Facility—swing line(a)	5,188		—		38,807		26,608
Other debt(c)	10,929		3,624		16,564		12,934
Total notes payable and other obligations	3,280,120		2,321,000		3,097,065		3,267,233
Securitization Facility(b)	656,000		614,000		741,000		591,000
Total notes payable, credit agreements and Securitization Facility	$	3,936,120	$	2,935,000	$	3,838,065	$	3,858,233
Current portion	$	1,383,763	$	875,100	$	1,443,444	$	1,336,506
Long-term portion	2,552,357		2,059,900		2,394,621		2,521,727
Total notes payable, credit agreements and Securitization Facility	$	3,936,120	$	2,935,000	$	3,838,065	$	3,858,233

______________________

(a)

On October 24, 2014, the Company entered into a $3.36 billion Credit Agreement, which provides for senior secured credit facilities consisting of (a) a revolving A credit facility in the amount of $1.0 billion, with sublimits for letters of credit, swing line loans and multi-currency borrowings, (b) a revolving B facility in the amount of $35 million for loans in Australian Dollars or New Zealand Dollars, (c) a term loan A facility in the amount of $2.02 billion and (d) a term loan B facility in the amount of $300 million. On August 22, 2016, the Company entered into the first Amendment to the existing Credit Agreement, which established an incremental term A loan in the amount of $600 million under the Credit Agreement accordion feature. The proceeds from the additional $600 million in term A loans were used to partially finance the STP acquisition. The Amendment also established an accordion feature for borrowing an additional $500 million in term A, term B or revolver A debt. On January 20, 2017, the Company entered into the second amendment to the Credit Agreement, which established a new term B loan (Term B-2 loan) in the amount of $245.0 million to replace the existing Term B loan. In addition, the Company pays a quarterly commitment fee at a rate per annum ranging from 0.20% to 0.40% of the daily unused portion of the credit facility. The Company has unamortized debt discounts of $5.0 million related to the term A facility and $0.9 million related to the term B facility at June 30, 2017.

On August 2, 2017, the ~~existing~~Company entered into the third amendment (the "Amendment") to the Credit Agreement, which ~~established an incremental~~increased the facility by $708.7 million and extended the terms of the credit facilities. The Amendment increased the term A loan into $2.69 billion, increased the amount of $600 million under the Credit Agreement accordion feature. The proceeds from the additional $600 million in term A loans were used to partially finance the STP acquisition. The Amendment also established an accordion feature for borrowing an additional $500 million in term A, term B or revolver A ~~debt. The stated maturity dates for the term A loans, revolving loans,~~credit facility to $1.285 billion and letters of credit under the Credit Agreement is November 14, 2019 and November 14, 2021 for the term loan B. The Company has unamortized debt discounts of $6.8 million related to the term A facility and $1.0 million related toincreased the term B ~~facility at September 30, 2016.~~loan to $350.0 million. The term A and revolver maturity dates are now August 2, 2022 and the term B maturity date is now August 2, 2024. The term A and revolver pricing remains the same and the term B pricing was reduced by 25 basis points to LIBOR plus 200 basis points.

(b)

The Company is party to a $950 million receivables purchase agreement ~~("Securitization Facility")~~(Securitization Facility) that was amended and restated on December 1, 2015. There is a program fee equal to one month LIBOR and the Commercial Paper Rate of ~~0.66%~~1.23% plus 0.90% and ~~0.43%~~0.85% plus 0.90% as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. The unused facility fee is payable at a rate of 0.40% per annum as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015.~~2016.


(c)	Other debt includes the long-term portion of contingent consideration and deferred payments associated with certain of our businesses.

The Company was in compliance with all financial and non-financial covenants at ~~September~~June 30, ~~2016.~~2017.

9. Income Taxes

The provision for income taxes differs from amounts computed by applying the U.S. federal tax rate of 35% to income before income taxes for the three months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 due to the following (in thousands):


	2016					2015					2017					2016
Computed “expected” tax expense	$	59,571		35.0	%	$	57,875		35.0	%
Computed tax expense at the U.S. federal tax rate											$	66,636		35.0	%	$	56,822		35.0	%
Changes resulting from:
Foreign income tax differential	(4,265		)	(2.5	)%	(5,860		)	(3.5	)%	(7,473		)	(3.9	)%	(4,424		)	(2.7	)%
Excess tax benefits related to stock-based compensation	(8,247		)	(4.9	)%	—			—	%	(803		)	(0.4	)%	(2,068		)	(1.3	)%
State taxes net of federal benefits	1,678			1.0	%	2,501			1.5	%	2,361			1.2	%	1,909			1.2	%
Foreign-sourced nontaxable income	(6,691		)	(3.9	)%	(2,344		)	(1.4	)%	1,373			0.7	%	(2,020		)	(1.2	)%
Domestic production activities deduction	(4,282		)	(2.5	)%	(7,950		)	(4.8	)%
Other	2,822			1.7	%	4,365			2.6	%	(2,692		)	(1.4	)%	(4,124		)	(2.6	)%
Provision for income taxes	$	40,586		23.9	%	$	48,587		29.4	%	$	59,402		31.2	%	$	46,095		28.4	%

The adoption of ASU 2016-09, "Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting" resulted in excess tax benefits being recorded as a reduction of income tax expense beginning January 1, 2016, rather than additional paid in capital as discussed in Note 1- Summary of Significant Accounting Policies.

10. Earnings Per Share

The Company reports basic and diluted earnings per share. Basic earnings per share is computed by dividing net income attributable to shareholders of the Company by the weighted average number of common shares outstanding during the reported period. Diluted earnings per share reflect the potential dilution related to equity-based incentives using the treasury stock method. The calculation and reconciliation of basic and diluted earnings per share for the three and ~~nine~~six months ended ~~September~~June 30 (in thousands, except per share data) follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Net income	$	129,618	$	116,770	$	356,961	$	309,601	$	130,987	$	116,253	$	254,680	$	227,343
Denominator for basic earnings per share	92,631		92,110		92,604		91,923		92,013		92,665		92,060		92,591
Dilutive securities	2,676		2,047		2,600		2,146		2,210		2,614		2,332		2,546
Denominator for diluted earnings per share	95,307		94,157		95,204		94,069		94,223		95,279		94,392		95,137
Basic earnings per share	$	1.40	$	1.27	$	3.85	$	3.37	$	1.42	$	1.25	$	2.77	$	2.46
Diluted earnings per share	$	1.36	$	1.24	$	3.75	$	3.29	$	1.39	$	1.22	$	2.70	$	2.39

~~There were 0.1 million antidilutive shares during the three month period ended September 30, 2016.~~ Diluted earnings per share for the three month ~~period~~periods ended ~~September~~June 30, ~~2015~~2017 and 2016 excludes the effect of ~~0.6~~3.7 million and 1.5 million shares of common stock, respectively, that may be issued upon the exercise of employee stock options because such effect would be antidilutive. Diluted earnings per share also excludes the effect of ~~0.3~~0.2 million and ~~0.4~~0.3 million shares of performance based restricted stock for which the performance criteria have not yet been achieved for the three month ~~period~~periods ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

11. Segments

The Company reports information about its operating segments in accordance with the authoritative guidance related to segments. The Company’s reportable segments represent components of the business for which separate financial information is evaluated regularly by the chief operating decision maker in determining how to allocate resources and in assessing performance. The Company operates in two reportable segments, North America and International. There were no inter-segment sales.

The Company’s segment results are as follows for the three and ~~nine~~six month periods ended ~~September~~June 30 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Revenues, net:
North America	$	345,868	$	334,944	$	950,542	$	918,333	$	342,995	$	301,126	$	672,943	$	604,674
International	138,558		116,549		366,051		353,931		198,242		116,779		388,727		227,493
	$	484,426	$	451,493	$	1,316,593	$	1,272,264	$	541,237	$	417,905	$	1,061,670	$	832,167
Operating income:
North America	$	135,760	$	132,428	$	367,221	$	351,778	$	134,926	$	117,611	$	255,898	$	231,461
International	55,295		56,032		170,957		169,607		81,117		53,557		155,213		115,662
	$	191,055	$	188,460	$	538,178	$	521,385	$	216,043	$	171,168	$	411,111	$	347,123
Depreciation and amortization:
North America	$	32,739	$	32,257	$	96,351	$	96,200	$	33,384	$	32,180	$	66,561	$	63,612
International	24,345		16,269		45,497		49,235		31,325		16,256		63,014		21,152
	$	57,084	$	48,526	$	141,848	$	145,435	$	64,709	$	48,436	$	129,575	$	84,764
Capital expenditures:
North America	$	11,980	$	6,493	$	28,501	$	14,510	$	12,102	$	8,579	$	21,734	$	16,521
International	5,140		6,799		13,376		15,016		5,702		4,439		10,866		8,236
	$	17,120	$	13,292	$	41,877	$	29,526	$	17,804	$	13,018	$	32,600	$	24,757

12. Commitments and Contingencies

In the ordinary course of business, the Company is involved in various pending or threatened legal ~~actions.~~actions, arbitration proceedings, claims, subpoenas, and matters relating to compliance with laws and regulations (collectively, legal proceedings). The Company has recorded reserves for certain legal proceedings. The amounts recorded are estimated and as additional information becomes available, the Company will reassess the potential liability related to legal actions and revise its estimate in the period that information becomes known. InBased on our current knowledge, management presently does not believe that the ~~opinion of management, the amount of ultimate liability, if any, with respect to~~liabilities arising from these ~~actions~~legal proceedings will ~~not~~ have a material adverse effect on ~~the Company’s~~our consolidated financial ~~position,~~condition, results of operations or ~~liquidity.~~cash flows. However, it is possible that the ultimate resolution of these legal proceedings could have a material adverse effect on our results of operations and financial condition for any particular period.

Shareholder Class Action and Derivative Lawsuits

On June 14, 2017, a shareholder filed a class action complaint in the United States District Court for the Northern District of Georgia against the Company and certain of its officers and directors on behalf of all persons who purchased or otherwise acquired the Company’s stock between February 5, 2016 and May 2, 2017. The complaint alleges that the defendants made false or misleading statements regarding fee charges and the reasons for its earnings and growth in certain press releases and other public statements in violation of the federal securities laws. Plaintiff seeks class certification, unspecified monetary damages, costs, and attorneys’ fees. The Company disputes the allegations in the complaint and intends to vigorously defend against the claims.

On July 10, 2017, a shareholder derivative complaint was filed against the Company and certain of the Company’s directors and officers in the United States District Court for the Northern District of Georgia seeking recovery on behalf of the Company. The derivative complaint alleges that the defendants issued a false and misleading proxy statement in violation of the federal securities laws; that defendants breached their fiduciary duties by causing or permitting the Company to make allegedly false and misleading public statements concerning the Company’s fee charges, and financial and business prospects; and that certain defendants breached their fiduciary duties through allegedly improper sales of stock. The complaint seeks unspecified monetary damages on behalf of the Company, corporate governance reforms, disgorgement of profits, benefits and

compensation by the defendants, restitution, costs, and attorneys’ and experts’ fees. The defendants dispute the allegations in the complaint and intend to vigorously defend against the claims.

Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, and are in the early stages of the proceedings. For these reasons, the Company is currently unable to predict the ultimate timing or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from the matters described above.

13. Asset Dispositions and Assets Held for Sale

SVS

On March 3, 2017, the Company signed a definitive agreement to contribute our Stored Value Solutions (SVS) prepaid card services and gift card program management assets into a venture with First Data Corp’s ("First Data") core gift card business, Transactions Wireless, Inc. and Gyft, that will consolidate these various gift solutions to drive new value for clients. In July 2017, the Company decided to terminate the definitive agreement with First Data. The combination of the regulatory review and on-going conversations with SVS customers led the Company to reconsider its decision. As such, SVS is no longer classified as held for sale.

NexTraq

On June 14, 2017, the Company signed a definitive agreement to sell NexTraq, a U.S. fleet telematics business, to Michelin Group for approximately $320 million. This transaction closed on July 17, 2017. The Company expects to record a pre-tax gain on the disposal of NexTraq of approximately $155 million during the third quarter of 2017, which includes transaction closing costs. The Company has preliminarily calculated taxes on the gain upon disposal of approximately $64 million. NexTraq has historically been included in our North America segment.



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 the unaudited consolidated financial statements and related notes appearing elsewhere in this report. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. See “Special Cautionary Notice Regarding Forward-Looking Statements”. All foreign currency amounts that have been converted into U.S. dollars in this discussion are based on the exchange rate as reported by OANDA for the applicable periods.

This management’s discussion and analysis should also be read in conjunction with the management’s discussion and analysis and consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

General Business

~~FleetCor~~Fleetcor is a leading ~~independent~~ global provider of ~~fuel cards,~~ commercial payment solutions. We primarily go to market with our fuel card payments product solutions, corporate payments products, toll products, lodging cards and ~~data solutions, stored value solutions,~~gift cards. Our products are used in 53 countries around the world, with our primary geographies in the U.S., Brazil and ~~workforce payment~~the U.K., which accounted for approximately 92% of our revenue in 2016. Our core products ~~and services~~are primarily sold to businesses, retailers, ~~commercial fleets,~~ major oil companies ~~petroleum~~and marketers and government ~~entities in countries throughout North America, South America, Europe, Australia and New Zealand.~~entities. Our payment programs enable our customers to better manage and control their commercial payments, card programs, and employee spending and provide card-accepting merchants with a high volume customer base that can increase their sales and customer loyalty. We also provide a suite of fleet related and workforce payment solution products, including a mobile telematics ~~service,~~services, fleet maintenance management and employee benefit and transportation related payments. In ~~2015,~~2016, we processed approximately ~~1.9~~2.2 billion transactions on our proprietary networks and third-party networks (which includes approximately 1.3 billion transactions related to our ~~Stored Value Solutions ("SVS")~~SVS product, acquired with Comdata). We believe that our size and scale, geographic reach, advanced technology and our expansive suite of products, services, brands and proprietary networks contribute to our leading industry position.

We provide our payment products and services in a variety of combinations to create customized payment solutions for our customers and partners. We collectively refer to our suite of product offerings as workforce productivity enhancement products for commercial businesses. We sell a range of customized fleet and lodging payment programs directly and indirectly to our customers through partners, such as major oil companies, leasing companies and petroleum marketers. We refer to these major oil companies, leasing companies, petroleum marketers, value-added resellers (VARs) and other referral partners with whom we have strategic relationships as our ~~“partners”.~~“partners.” We provide our customers with various card products that typically function like a charge card to purchase fuel, lodging, food, toll, transportation and related products and services at participating locations. While we refer to companies with whom we have strategic relationships as "partners", our legal relationships with these companies are contractual, and do not constitute legal partnerships.

We support our products with specialized issuing, processing and information services that enable us to manage card accounts, facilitate the routing, authorization, clearing and settlement of transactions, and provide value-added functionality and data, including customizable card-level controls and productivity analysis tools. In order to deliver our payment programs and services and process transactions, we own and operate proprietary “closed-loop” networks through which we electronically connect to merchants and capture, analyze and report customized information in North America and internationally. We also use third-party networks to deliver our payment programs and services in order to broaden our card acceptance and use. To support our payment products, we also provide a range of services, such as issuing and processing, as well as specialized information services that provide our customers with value-added functionality and data. Our customers can use this data to track important business productivity metrics, combat fraud and employee misuse, streamline expense administration and lower overall workforce and fleet operating costs. Depending on our ~~customer’s~~customers’ and ~~partner’s~~partners’ needs, we provide these services in a variety of outsourced solutions ranging from a comprehensive “end-to-end” solution (encompassing issuing, processing and network services) to limited back office processing services.

Executive Overview

~~Segments~~

We operate in two segments, which we refer to as our North America and International segments. Our revenue is reported net of the wholesale cost for underlying products and services. In this report, we refer to this net revenue as “revenue.” See “Results of Operations” for additional segment information.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, our North America and International segments generated the following ~~revenue:~~revenue (in millions):


	Three Months Ended September 30,								Nine Months Ended September 30,								Three Months Ended June 30,								Six Months Ended June 30,
	2016				2015				2016				2015				2017				2016				2017				2016
(dollars in millions)	Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net
(Unaudited)																	Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net
North America	$	345.9	71.4	%	$	334.9	74.2	%	$	950.5	72.2	%	$	918.4	72.2	%	$	343.0	63.4	%	$	301.1	72.1	%	$	672.9	63.4	%	$	604.7	72.7	%
International	138.6		28.6	%	116.6		25.8	%	366.1		27.8	%	353.9		27.8	%	198.2		36.6	%	116.8		27.9	%	388.7		36.6	%	227.5		27.3	%
	$	484.4	100.0	%	$	451.5	100.0	%	$	1,316.6	100.0	%	$	1,272.3	100.0	%	$	541.2	100.0	%	$	417.9	100.0	%	$	1,061.7	100.0	%	$	832.2	100.0	%

Revenues, net, Net Income and Net Income Per Diluted Share. Set forth below are revenues, net, net income and net income per diluted share for the three and ~~nine~~six months ended ~~September~~June 30, 2017 and 2016 ~~and 2015.~~(in thousands, except per share amounts).


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share amounts)	2016		2015		2016		2015
(Unaudited)									2017		2016		2017		2016
Revenues, net	$	484,426	$	451,493	$	1,316,593	$	1,272,264	$	541,237	$	417,905	$	1,061,670	$	832,167
Net income	$	129,618	$	116,770	$	356,961	$	309,601	$	130,987	$	116,253	$	254,680	$	227,343
Net income per diluted share	$	1.36	$	1.24	$	3.75	$	3.29	$	1.39	$	1.22	$	2.70	$	2.39

Adjusted Revenues, Adjusted Net Income and Adjusted Net Income Per Diluted Share. Set forth below are adjusted revenues, adjusted net income and adjusted net income per diluted share for the three and six months ended June 30, 2017 and 2016 (in thousands, except per share amounts).



	Three Months Ended June 30,				Six Months Ended June 30,
(Unaudited)	2017		2016		2017		2016
Adjusted revenues	$	510,618	$	395,597	$	1,006,667	$	781,626
Adjusted net income	$	187,049	$	149,960	$	372,026	$	295,650
Adjusted net income per diluted share	$	1.99	$	1.57	$	3.94	$	3.11

We use adjusted revenues as a basis to evaluate our revenues, net of the commissions that are paid to merchants that participate in certain of our card programs. The commissions paid to merchants can vary when market spreads fluctuate in much the same way as revenues are impacted when market spreads fluctuate. Thus, we believe this is an effective way to evaluate our revenue performance on a consistent basis. We use adjusted net income and adjusted net income per diluted share to eliminate the effect of items that we do not consider indicative of our core operating performance on a consistent basis. Adjusted revenues, adjusted net income and adjusted net income per diluted share are supplemental non-GAAP financial measures of operating performance. See the heading entitled “Management’s Use of Non-GAAP Financial Measures.”

Sources of Revenue

Transactions. In both of our segments, we derive revenue from transactions. As illustrated in the diagram below, a transaction is defined as a purchase by a customer. Our customers include holders of our card products and those of our partners, for whom we manage card programs, members of our proprietary networks who are provided access to our products and services and commercial businesses to whom we provide workforce payment productivity solutions. Revenue from transactions is derived from our merchant and network relationships, as well as our customers and partners. Through our merchant and network relationships we primarily offer fuel cards, corporate cards, virtual cards, purchasing cards, T&E cards, gift cards, stored value payroll cards, vehicle maintenance, food, fuel, toll and transportation cards and vouchers and lodging services to our customers.

The following diagram illustrates a typical ~~card~~ transaction flow, ~~but may also be applied to~~for our fuel card, vehicle maintenance, lodging and food, ~~fuel,~~ toll and transportation card and voucher ~~products, substituting transactions for gallons.~~products. This ~~representative model may~~illustration is not ~~include~~applicable to all of our businesses.

Illustrative Transaction Flow

From our customers and partners, we derive revenue from a variety of program fees, including transaction fees, card fees, network fees and charges, which can be fixed fees, cost plus a mark-up or based on a percentage discount from retail prices. Our programs include other fees and charges associated with late payments and based on customer credit risk.

From our merchant and network relationships, we derive revenue mostly from the difference between the price charged to a customer for a transaction and the price paid to the merchant or network for the same transaction, as well as network fees and charges in certain businesses. As illustrated in the table below, the price paid to a merchant or network may be calculated as (i) the merchant’s wholesale cost of the product plus a markup; (ii) the transaction purchase price less a percentage discount; or (iii) the transaction purchase price less a fixed fee per unit.

The following table presents an illustrative revenue model for transactions with the merchant, which is primarily applicable to fuel based product transactions, but may also be applied to our vehicle maintenance, lodging and food, fuel, toll and transportation card and voucher products, substituting transactions for gallons. This representative model may not include all of our businesses.

Illustrative Revenue Model for Fuel Purchases

(unit of one gallon)


Illustrative Revenue Model				Merchant Payment Methods
																		Merchant Payment Methods
Retail Price	$	3.00		i) Cost Plus Mark-up:			ii) Percentage Discount:				iii) Fixed Fee:				$	3.00		i) Cost Plus Mark-up:			ii) Percentage Discount:				iii) Fixed Fee:
Wholesale Cost	(2.86		)	Wholesale Cost	$	2.86	Retail Price	$	3.00		Retail Price	$	3.00		(2.86		)	Wholesale Cost	$	2.86	Retail Price	$	3.00		Retail Price	$	3.00
				Mark-up	0.05		Discount (3%)	(0.09		)	Fixed Fee	(0.09		)				Mark-up	0.05		Discount (3%)	(0.09		)	Fixed Fee	(0.09		)
FleetCor Revenue	$	0.14													$	0.14
Merchant Commission	$	(0.05	)	Price Paid to Merchant	$	2.91	Price Paid to Merchant	$	2.91		Price Paid to Merchant	$	2.91		$	(0.05	)	Price Paid to Merchant	$	2.91	Price Paid to Merchant	$	2.91		Price Paid to Merchant	$	2.91
Price Paid to Merchant	$	2.91													$	2.91

Revenues by geography, product and source. Set forth below are ~~our sources~~further breakdowns of revenue by geography, product and source for the three and ~~nine~~six months ended ~~September~~June 30, 2017 and 2016 ~~and 2015, expressed as a percentage of consolidated revenues:~~

(in millions).

Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015
Revenue from customers and partners 57.0 % 53.3 % 55.3 % 52.5 %
Revenue from merchants and networks 43.0 % 46.7 % 44.7 % 47.5 %
100.0 %
100.0 %
100.0 %
100.0 %
Revenue directly tied to fuel-price spreads¹
11.2 % 13.0 % 11.2 % 12.4 %
Revenue directly influenced by the absolute price of fuel ¹
14.0 % 15.3 % 14.3 % 15.5 %
Revenue from program fees, late fees, interest and other 74.8 % 71.7 % 74.5 % 72.1 %
100.0 %
100.0 %
100.0 %
100.0 %



	Three Months Ended June 30,								Six Months Ended June 30,
Revenue by Geography*	2017				2016				2017				2016
(Unaudited)	Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net
United States	$	343	63	%	$	301	72	%	$	673	63	%	$	605	73	%
United Kingdom	58		11	%	61		14	%	112		11	%	119		14	%
Brazil	93		17	%	19		4	%	186		18	%	35		4	%
Other	47		9	%	38		9	%	90		8	%	73		9	%
Consolidated revenues, net	$	541	100	%	$	418	100	%	$	1,062	100	%	$	832	100	%

^*Columns may not calculate due to impact of rounding.

Subsequent to 2016, as we continued to refine the level of detail behind the product category splits, we reclassified certain amounts into 'Other' that we believe are more representative of that category. This reclassification has been applied to the 2016 comparable data disclosed in the "Revenue by Product Category" table below.



	Three Months Ended June 30,								Six Months Ended June 30,⁸
Revenue by Product Category*	2017				2016				2017				2016
(Unaudited)	Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net
Fuel cards	$	278	51	%	$	241	58	%	$	539	51	%	$	483	58	%
Corporate Payments	50		9	%	45		11	%	97		9	%	86		10	%
Tolls	76		14	%	2		1	%	153		14	%	5		1	%
Lodging	29		5	%	25		6	%	53		5	%	46		5	%
Gift	41		8	%	37		9	%	90		8	%	80		10	%
Other⁹	67		12	%	68		16	%	131		12	%	133		16	%
Consolidated revenues, net	$	541	100	%	$	418	100	%	$	1,062	100	%	$	832	100	%

^*Columns may not calculate due to impact of rounding.



	Three Months Ended June 30,								Six Months Ended June 30,⁸
Major Sources of Revenue*	2017				2016				2017				2016
(Unaudited)	Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net
Customer
Processing and program revenue¹	$	248	46	%	$	173	42	%	$	493	46	%	$	345	41	%
Late fees and finance charges²	34		6	%	27		6	%	71		7	%	55		7	%
Miscellaneous fees³	33		6	%	31		7	%	65		6	%	59		7	%
	314		58	%	231		55	%	629		59	%	459		55	%
Merchant
Discount revenue (fuel)⁴	$	74	14	%	$	66	16	%	$	146	14	%	$	126	15	%
Discount revenue (nonfuel)⁵	44		8	%	39		9	%	85		8	%	76		9	%
Tied to fuel-price spreads⁶	62		12	%	41		10	%	112		11	%	93		11	%
Program revenue⁷	47		9	%	40		10	%	91		9	%	78		9	%
	227		42	%	187		45	%	433		41	%	373		45	%
Consolidated revenues, net	$	541	100	%	$	418	100	%	$	1,062	100	%	$	832	100	%

¹Includes revenue from customers based on accounts, cards, devices, transactions, load amounts and/or purchase amounts, etc. for participation in our various fleet and workforce related programs; as well as, revenue from partners (e.g., major retailers, leasing companies, oil companies, petroleum marketers, etc.) for processing and network management services. Primarily represents revenue from North American trucking, lodging, prepaid benefits, telematics, gift cards and toll related businesses.

~~Although we cannot precisely calculate the absolute impact of fuel price spreads~~

²Fees for late payment and interest charges for carrying a balance charged to a customer.

³Non-standard fees charged to customers based on customer behavior or optional participation, primarily including high credit risk surcharges, over credit limit charges, minimum processing fees, printing and mailing fees, environmental fees, etc.

⁴Interchange revenue directly influenced by the absolute price of fuel ~~on our consolidated revenues, we believe~~and other interchange related to fuel products.

⁵Interchange revenue related to nonfuel products.

⁶Revenue derived from the difference between the price charged to a fleet customer for a transaction and the price paid to the merchant for the same transaction.

⁷Revenue derived primarily from the sale of equipment, software and related maintenance to merchants.

⁸Amounts shown for the six months ended June 30, 2017 and 2016 reflect immaterial corrections in estimated allocation of revenue by product and sources of revenue from previously disclosed amounts for the prior period.

⁹Other includes telematics, maintenance, food and transportation related businesses.

*We may not be able to precisely calculate revenue by source, as certain estimates were made in these ~~percentages approximate their relative impacts.~~allocations. Columns may not calculate due to impact of rounding. This table reflects how management views the sources of revenue and may not be consistent with prior disclosure.

Revenue per transaction. Set forth below is revenue per transaction information for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015:~~2016:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Transactions (in millions)²
(Unaudited)									2017		2016		2017		2016
Transactions (in millions)
North America	371.2		371.5		1,217.3		1,145.3		430.7		411.6		904.7		846.1
International	127.4		45.6		233.3		138.0		271.3		53.4		542.2		106.0
Total transactions	498.6		417.1		1,450.6		1,283.3		702.0		465.0		1,446.9		952.0
Revenue per transaction
North America	$	0.93	$	0.90	$	0.78	$	0.80	$	0.80	$	0.73	$	0.74	$	0.71
International	1.09		2.56		1.57		2.56		0.73		2.19		0.72		2.15
Consolidated revenue per transaction	0.97		1.08		0.91		0.99		0.77		0.90		0.73		0.87
Consolidated adjusted revenue per transaction³	0.92		1.01		0.85		0.93

For the three months ended June 30, 2017, total transactions increased from 465.0 million to 702.0 million, an increase of 237.0 million transactions, or 51%. For the six months ended June 30, 2017, total transactions increased from 952.0 million to 1,446.9 million, an increase of 494.9 million transactions, or 52%. North American segment transactions increased approximately 5% and 7% in the three and six months ended June 30, 2017 as compared to 2016, respectively, due primarily to growth in our SVS and fuel card businesses. Transaction volumes in our international segment increased by 408% and 412% in the three and six months ended June 30, 2017 as compared to 2016, respectively, primarily due to the acquisition of STP and Travelcard during the third quarter of 2016.

SVS, Stored Value Solutions, is our global provider of gift card and stored value solutions, which is part of the Comdata business acquired in November 2014, and has a low revenue per transaction product. Transactions in the three month periods ended September 30, 2016 and 2015 include approximately 270 million and 274 million transactions, respectively, and approximately 924 million and 872 million transactions in the nine months ended September 30, 2016 and 2015, respectively.

Adjusted revenues is a non-GAAP financial measure defined as revenues, net less merchant commissions. We believe this measure is a more effective way to evaluate our revenue performance. We use adjusted revenues as a basis to evaluate our revenues, net of the commissions that are paid to merchants to participate in our card programs. Adjusted revenues is a supplemental non-GAAP financial measure of operating performance. See the heading entitled “Management’s Use of Non-GAAP Financial Measures.”

Set forth below is further breakdown of revenue and revenue per transaction, by product category for the three months ended June 30, 2017 and 2016 (in millions except revenues, net per transaction)*:



	As Reported									Pro Forma and Macro Adjusted²
	Three Months Ended June 30,									Three Months Ended June 30,
(Unaudited)	2017		2016		Change			% Change		2017³		2016⁴		Change			% Change
FUEL CARDS
‑Transactions	117.3		108.1		9.1			8	%	117.3		111.3		5.9			5	%
‑Revenues, net per transaction	$	2.37	$	2.23	$	0.15		7	%	$	2.24	$	2.18	$	0.06		3	%
‑ Revenues, net	$	278.2	$	240.7	$	37.5		16	%	$	263.0	$	242.9	$	20.0		8	%
CORPORATE PAYMENTS
‑Transactions	10.4		9.9		0.5			5	%	10.4		9.9		0.5			5	%
‑Revenues, net per transaction	$	4.85	$	4.54	$	0.31		7	%	$	4.84	$	4.54	$	0.30		7	%
‑ Revenues, net	$	50.2	$	44.8	$	5.4		12	%	$	50.1	$	44.8	$	5.3		12	%
TOLLS
‑Transactions	222.5		9.6		212.9			2,211	%	222.5		223.6		(1.0		)	—	%
‑Revenues, net per transaction	$	0.34	$	0.25	$	0.09		37	%	$	0.31	$	0.27	$	0.04		14	%
‑ Revenues, net	$	76.0	$	2.4	$	73.6		3,063	%	$	69.6	$	61.3	$	8.3		13	%
LODGING
‑Transactions	3.4		3.3		0.1			2	%	3.4		3.3		0.1			2	%
‑Revenues, net per transaction	$	8.57	$	7.50	$	1.06		14	%	$	8.57	$	7.50	$	1.06		14	%
‑ Revenues, net	$	29.0	$	24.9	$	4.1		16	%	$	29.0	$	24.9	$	4.1		16	%
GIFT
‑Transactions	328.3		312.8		15.5			5	%	328.3		312.8		15.5			5	%
‑Revenues, net per transaction	$	0.13	$	0.12	$	0.01		5	%	$	0.13	$	0.12	$	0.01		5	%
‑ Revenues, net	$	41.3	$	37.4	$	3.9		11	%	$	41.3	$	37.4	$	3.9		11	%
OTHER¹
‑Transactions	20.1		21.3		(1.1		)	(5	)%	20.1		21.3		(1.1		)	(5	)%
‑Revenues, net per transaction	$	3.31	$	3.18	$	0.12		4	%	$	3.34	$	3.18	$	0.16		5	%
‑ Revenues, net	$	66.6	$	67.7	$	(1.1	)	(2	)%	$	67.3	$	67.7	$	(0.4	)	(1	)%
FLEETCOR CONSOLIDATED REVENUES
‑Transactions	702.0		465.0		237.0			51	%	702.0		682.2		19.9			3	%
‑Revenues, net per transaction	$	0.77	$	0.90	$	(0.13	)	(14	)%	$	0.74	$	0.70	$	0.04		6	%
‑ Revenues, net	$	541.2	$	417.9	$	123.3		30	%	$	520.2	$	479.1	$	41.1		9	%

* Columns may not calculate due to the impact of rounding.

¹Other includes telematics, maintenance, food and transportation related businesses.

²Pro forma and macro adjusted revenue is a non-GAAP financial measure defined as revenues, net adjusted for the impact of the macroeconomic environment and acquisitions and dispositions and other one-time items. We use pro forma and macro adjusted revenue as a basis to evaluate our organic growth. See the heading entitled “Management’s Use of Non-GAAP Financial Measures” for reconciliation of revenue, net to pro forma and macro adjusted revenue, net.

³2017 is adjusted to remove the impact of changes in the macroeconomic environment to be consistent with the same period of prior year, using constant fuel prices, fuel price spreads and foreign exchange rates.

⁴2016 is pro forma to include acquisitions and exclude dispositions consistent with 2017 ownership.

Revenue per transaction is derived from the various revenue types as discussed above and can vary based on geography, the relevant merchant relationship, the payment product utilized and the types of products or services purchased, the mix of which would be influenced by our acquisitions, organic growth in our business, and the overall macroeconomic environment, including fluctuations in foreign currency exchange ~~rates.~~rates, fuel prices and fuel spread margins. Revenue per transaction per customer changes as the level of services we provide to a customer increases or decreases, as macroeconomic factors change and as adjustments are made to merchant and customer rates. See “Results of Operations” for further discussion of transaction volumes and revenue per transaction.

For the three months ended September 30, 2016, transaction volumes increased 19.5% to 498.6 million transactions from 417.1 million transactions in the comparable period of 2015. For the nine months ended September 30, 2016, transaction volumes increased 13.0% to 1,450.6 million transactions from 1,283.3 million transactions in the comparable period of 2015. Excluding the impact of the SVS business, North American segment transactions increased approximately 5% in the three months ended September 30, 2016 as compared to 2015 and grew by approximately 7% in the nine months ended September 30, 2016 over the comparable period in 2015, primarily due to growth in our MasterCard and corporate payments businesses. Transaction volumes in our international segment increased by 179.4% and 69.0% in the three and nine months ended September 30, 2016, respectively, over the comparable periods in 2015, primarily due to the acquisition of STP and Travelcard during the third quarter of 2016, the addition of new Shell fuel card markets in 2015 and 2016 and additional transactions from a small acquisition in Brazil in the first quarter of 2016.

Sources of Expenses

We incur expenses in the following categories:

Merchant commissions—In certain of our card programs, we incur merchant commissions expense when we reimburse merchants with whom we have direct, contractual relationships for specific transactions where a customer purchases products or services from the merchant. In the card programs where it is paid, merchant commissions equal the difference between the price paid by us to the merchant and the merchant’s wholesale cost of the underlying products or services.

Processing—Our processing expense consists of expenses related to processing transactions, servicing our customers and merchants, bad debt expense and cost of goods sold related to our hardware sales in certain businesses.

Selling—Our selling expenses consist primarily of wages, benefits, sales commissions (other than merchant commissions) and related expenses for our sales, marketing and account management personnel and activities.

General and administrative—Our general and administrative expenses include compensation and related expenses (including stock-based compensation) for our executives, finance and accounting, information technology, human resources, legal and other administrative personnel. Also included are facilities expenses, third-party professional services fees, travel and entertainment expenses, and other corporate-level expenses.

Depreciation and amortization—Our depreciation expenses include depreciation of property and equipment, consisting of computer hardware and software (including proprietary software development amortization expense), card-reading equipment, furniture, fixtures, vehicles and buildings and leasehold improvements related to office space. Our amortization expenses include amortization of intangible assets related to customer and vendor relationships, trade names and trademarks, software and non-compete agreements. We are amortizing intangible assets related to business acquisitions and certain private label contracts associated with the purchase of accounts receivable.

Other operating, net—Our other operating, net includes other operating expenses and income items unusual to the period and presented separately.

Equity method investment loss (income)—Our equity method investment results relate to our minority interest in Masternaut, a provider of telematics solutions to commercial fleets in Europe, which we account for using the equity method.

Other expense (income), net—Our other expense (income), net includes foreign currency transaction gains or losses, proceeds/costs from the sale of assets and other miscellaneous operating costs and revenue.

Interest expense, net—Our interest expense, net includes interest income on our cash balances and interest expense on our outstanding debt and on our Securitization Facility. We have historically invested our cash primarily in short-term money market funds.

Provision for income taxes—Our provision for income taxes consists primarily of corporate income taxes related to profits resulting from the sale of our products and services in the United States and internationally. ~~Our worldwide effective tax rate is lower than the U.S. statutory rate of 35%, due primarily to lower rates in foreign jurisdictions and foreign-sourced non-taxable income.~~

~~Adjusted Revenues, Adjusted Net Income and Adjusted Net Income Per Diluted Share.~~ ~~Set forth below are adjusted revenues, adjusted net income and adjusted net income per diluted share for the three and nine months ended September 30, 2016 and 2015.~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share amounts) 2016 2015 2016 2015
Adjusted revenues $ 456,212
$ 419,767
$ 1,237,838
$ 1,191,487
Adjusted net income $ 183,310
$ 157,570
$ 478,679
$ 432,424
Adjusted net income per diluted share $ 1.92
$ 1.67
$ 5.03
$ 4.60

Adjusted revenues, adjusted net income and adjusted net income per diluted share are supplemental non-GAAP financial measures of operating performance. We use adjusted revenues as a basis to evaluate our revenues, net of the commissions that are paid to merchants that participate in certain of our card programs. The commissions paid to merchants can vary when market spreads fluctuate in much the same way as revenues are impacted when market spreads fluctuate. Thus, we believe this is a more effective way to evaluate our revenue performance on a consistent basis. We use adjusted net income and adjusted net income per diluted share to eliminate the effect of items that we do not consider indicative of our core operating performance on a consistent basis. See the heading entitled “Management’s Use of Non-GAAP Financial Measures.”

Factors and Trends Impacting our Business

We believe that the following factors and trends are important in understanding our financial performance:

Fuel prices—Our fleet customers use our products and services primarily in connection with the purchase of fuel. Accordingly, our revenue is affected by fuel prices, which are subject to significant volatility. A change in retail fuel prices could cause a decrease or increase in our revenue from several sources, including fees paid to us based on a percentage of each customer’s total purchase. Changes in the absolute price of fuel may also impact unpaid account balances and the late fees and charges based on these amounts. See “Sources of Revenue” above for further information related to the absolute price of fuel.

Fuel-price spread volatility—A portion of our revenue involves transactions where we derive revenue from fuel-price spreads, which is the difference between the price charged to a fleet customer for a transaction and the price paid to the merchant for the same transaction. In these transactions, the price paid to the merchant is based on the wholesale cost of fuel. The merchant’s wholesale cost of fuel is dependent on several factors including, among others, the factors described above affecting fuel prices. The fuel price that we charge to our customer is dependent on several factors

including, among others, the fuel price paid to the merchant, posted retail fuel prices and competitive fuel prices. We experience fuel-price spread contraction when the merchant’s wholesale cost of fuel increases at a faster rate than the fuel price we charge to our customers, or the fuel price we charge to our customers decreases at a faster rate than the merchant’s wholesale cost of fuel. See “Sources of Revenue” above for further information related to fuel-price spreads.

Acquisitions—Since 2002, we have completed over 70 acquisitions of companies and commercial account portfolios. Acquisitions have been an important part of our growth strategy, and it is our intention to continue to seek opportunities to increase our customer base and diversify our service offering through further strategic acquisitions.

The impact of acquisitions has, and may continue to have, a significant impact on our results of operations and may make it difficult to compare our results between periods.

Interest rates—Our results of operations are affected by interest rates. We are exposed to market risk to changes in interest rates on our cash investments and debt.

Global economic ~~environment~~conditions—Our results of operations are materially affected by conditions in the economy generally, both in North America and internationally. Factors affected by the economy include our transaction volumes and the credit risk of our customers. These factors affected our businesses in both our North America and International segments.

Foreign currency changes—Our results of operations are significantly impacted by changes in foreign currency rates; namely, by movements of the Australian dollar, Brazilian real, British pound, Canadian dollar, Czech koruna, Euro, Mexican peso, New Zealand dollar and Russian ruble, relative to the U.S. dollar. Approximately ~~72%~~63% and 73% of our revenue in ~~both~~ the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, respectively, was derived in U.S. dollars and was not affected by foreign currency exchange rates. See “Results of Operations” for information related to foreign currency impact on our total revenue, net.

Expenses— Over the long term, we expect that our general and administrative expense will decrease as a percentage of revenue as our revenue increases. To support our expected revenue growth, we plan to continue to incur additional sales and marketing expense by investing in our direct marketing, third-party agents, internet marketing, telemarketing and field sales force.

Acquisitions and Investments

~~2016 Acquisitions~~

On April 28, 2017, the Company signed a definitive agreement to acquire Cambridge Global Payments (“Cambridge”), a leading business to business (B2B) international payments provider, for approximately $690 million in cash. Cambridge processes B2B cross-border payments, assisting business clients in making international payments to suppliers and employees. The purpose of this acquisition is to further expand our corporate payments footprint. This acquisition is expected to be completed by September 1, 2017.

During 2016, the ~~nine months ended September 30, 2016, we~~Company completed acquisitions with an aggregate purchase price of ~~$1.33~~$1.3 billion, net of cash acquired of ~~$51.4~~$51.3 million, which includes deferred payments made during the period related to prior acquisitions of ~~$5.3~~$6.1 million.

~~STP~~

OnIn August ~~31,~~ 2016, we acquired all of the outstanding stock of STP for approximately ~~$1.25~~$1.23 billion, net of cash acquired of ~~$40.3~~$40.2 million. STP is an electronic toll payments company in Brazil and provides cardless fuel payments at a number of Shell sites throughout Brazil. The purpose of this acquisition was to ~~enter~~expand our presence in the toll market in ~~the~~ Brazil. We financed the acquisition using a combination of existing cash and borrowings under our existing credit facility.

~~Other~~

During ~~the nine months ended September 30,~~ 2016, we ~~also~~ acquired aadditional fuel card ~~portfolio~~portfolios in the U.S.~~, a fuel card portfolio in~~ and the United Kingdom, additional Shell ~~markets related to our~~ fuel card ~~products~~markets in Europe ~~a travel card portfolio~~and Travelcard in the Netherlands ~~and a small business in Brazil totally~~totaling approximately $76.7 million, net of cash acquired of $11.1 million.

During 2016, we made additional investments of $7.9 million related to our equity method investment at Masternaut. We also received a $9.2 million return of our investment in Masternaut.

The results of operations from the fuel card portfolio acquired in the U.S. are included within our North America segment, from the date of acquisition. The results of operations of STP, the fuel card portfolio in the United Kingdom, the additional Shell markets, the ~~travel card portfolio~~Travelcard business in the Netherlands and the small business in Brazil are included within our International segment, from the date of acquisition.

~~Equity Method Investment~~Asset Dispositions and Assets Held for Sale

~~During~~

SVS

On March 3, 2017, we signed a definitive agreement to contribute our Stored Value Solutions (SVS) prepaid card services and gift card program management assets into a venture with First Data’s core gift card business, Transactions Wireless, Inc. and Gyft, that will consolidate these various gift solutions to drive new value for clients. In July 2017, we decided to terminate the ~~nine months ended September 30, 2016,~~definitive agreement with First Data. The combination of the regulatory review and on-going conversations with SVS customers led us to reconsider our decision. As such, SVS is no longer classified as held for sale.

NexTraq

On June 14, 2017, we ~~made additional investments~~signed a definitive agreement to sell NexTraq, U.S. fleet telematics business, to Michelin Group for approximately $320 million. This transaction closed on July 17, 2017. We expect to record a pre-tax gain on the disposal of ~~$7.9~~NexTraq of approximately $155 million ~~related to our equity method investment at Masternaut Group Holdings Limited ("Masternaut"). Additionally,~~ during the ~~nine months ended~~third quarter of 2017, which includes transaction closing costs. We have

~~September 30, 2016, we recorded an~~preliminarily calculated taxes on the gain upon disposal of approximately ~~$9.3 million non-recurring gain recorded within operating results related to its investment at Masternaut.~~$64 million. NexTraq has historically been included in the North America segment.

Results of Operations

Three months ended ~~September~~June 30, ~~2016~~2017 compared to the three months ended ~~September~~June 30, ~~2015~~2016

The following table sets forth selected consolidated statement of income data for the three months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 (in thousands).


	Three Months Ended September 30, 2016			% of total revenue		Three Months Ended September 30, 2015			% of total revenue		Increase (decrease)			% Change
(Unaudited)																Three Months Ended June 30, 2017			% of total revenue		Three Months Ended June 30, 2016			% of total revenue		Increase (decrease)			% Change
Revenues, net:
North America	$	345,868		71.4	%	$	334,944		74.2	%	$	10,924		3.3	%	$	342,995		63.4	%	$	301,126		72.1	%	$	41,869		13.9	%
International	138,558			28.6	%	116,549			25.8	%	22,009			18.9	%	198,242			36.6	%	116,779			27.9	%	81,463			69.8	%
Total revenues, net	484,426			100.0	%	451,493			100.0	%	32,933			7.3	%	541,237			100.0	%	417,905			100.0	%	123,332			29.5	%
Consolidated operating expenses:
Merchant commissions	28,214			5.8	%	31,726			7.0	%	(3,512		)	(11.1	)%	30,619			5.7	%	22,308			5.3	%	8,311			37.3	%
Processing	96,233			19.9	%	90,959			20.1	%	5,274			5.8	%	103,322			19.1	%	80,691			19.3	%	22,631			28.0	%
Selling	34,180			7.1	%	27,383			6.1	%	6,797			24.8	%	38,957			7.2	%	31,947			7.6	%	7,010			21.9	%
General and administrative	77,904			16.1	%	66,142			14.6	%	11,762			17.8	%	87,569			16.2	%	63,586			15.2	%	23,983			37.7	%
Depreciation and amortization	57,084			11.8	%	48,526			10.7	%	8,558			17.6	%	64,709			12.0	%	48,436			11.6	%	16,273			33.6	%
Other operating, net	(244		)	(0.1	)%	(1,703		)	(0.4	)%	1,459			85.7	%	18			—	%	(231		)	(0.1	)%	249			107.8	%
Operating income	191,055			39.4	%	188,460			41.7	%	2,595			1.4	%	216,043			39.9	%	171,168			41.0	%	44,875			26.2	%
Equity method investment loss (income)	2,744			0.6	%	6,108			1.4	%	(3,364		)	(55.1	)%	2,354			0.4	%	(7,184		)	(1.7	)%	9,538			(132.8	)%
Other expense, net	293			0.1	%	(168		)	—	%	461			(274.4	)%
Other (income) expense, net																(551		)	(0.1	)%	104			—	%	(655		)	(629.8	)%
Interest expense, net	17,814			3.7	%	17,163			3.8	%	651			3.8	%	23,851			4.4	%	15,900			3.8	%	7,951			50.0	%
Provision for income taxes	40,586			8.4	%	48,587			10.8	%	(8,001		)	(16.5	)%	59,402			11.0	%	46,095			11.0	%	13,307			28.9	%
Net income	$	129,618		26.8	%	$	116,770		25.9	%	$	12,848		11.0	%	$	130,987		24.2	%	$	116,253		27.8	%	$	14,734		12.7	%
Operating income for segments:
North America	$	135,760				$	132,428				$	3,332		2.5	%	$	134,926				$	117,611				$	17,315		14.7	%
International	55,295					56,032					(737		)	(1.3	)%	81,117					53,557					27,560			51.5	%
Operating income	$	191,055				$	188,460				$	2,595		1.4	%	$	216,043				$	171,168				$	44,875		26.2	%
Operating margin for segments:
North America	39.3		%			39.5		%			(0.2		)%			39.3		%			39.1		%			0.3		%
International	39.9		%			48.1		%			(8.2		)%			40.9		%			45.9		%			(4.9		)%
Total	39.4		%			41.7		%			(2.3		)%			39.9		%			41.0		%			(1.0		)%

The sum of the columns and rows may not calculate due to rounding.

Revenues ~~and revenue per transaction~~

Our consolidated revenues increased from ~~$451.5~~$417.9 million in the three months ended ~~September~~June 30, ~~2015~~2016 to ~~$484.4~~$541.2 million in the three months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$32.9~~$123.3 million, or ~~7.3%~~29.5%. The increase in our consolidated revenue was primarily due to:

The impact of acquisitions during ~~the three months ended September 30,~~ 2016, which contributed approximately ~~$25~~$61 million in additional revenue.

Organic growth ~~in certain~~ of ~~our payment programs~~approximately 9% on a constant fuel price, fuel spread margin, foreign currency and pro forma basis, driven by increases in both volume and ~~revenue.~~

approximately $28 million. We believe the impact of lower fuel prices, primarily in the U.S., and lower fuel spread margins, had an unfavorable impact on consolidated revenues of approximately $18 million. Additionally, changes in foreign exchange rates had an unfavorable impact on consolidated revenues of approximately $10 million due to unfavorable fluctuations in rates in most geographies in the three months ended September 30, 2016 compared to 2015.

~~Consolidated~~ revenue per transaction decreased from $1.08 in the three months ended September 30, 2015 to $0.97 in the three months ended September 30, 2016, a decrease of $0.11, or 10.2%. This decrease was due primarily to the unfavorable impact of the macroeconomic environment, the mix impact of acquisitions (STP, Travelcard and a small acquisition in Brazil), which have transactions at much lower revenue per transaction than the historical average, and the impact of SVS, partially offset by organic growth. Excluding these items, revenue per transaction increased approximately 3% to $2.88 in the third quarter of 2016 compared to $2.78 in 2015.

Revenue per transaction can vary based on the geography, the relevant merchant and customer relationship, the payment product utilized, and the types of products or services purchased. The revenue mix was influenced by our acquisitions, organic growth in the business, and fluctuations in the macroeconomic environment, including fuel prices, fuel spread margins and foreign exchange rates.

~~North America segment revenues and revenue per transaction~~

North America revenues increased from $334.9 million in the three months ended September 30, 2015 to $345.9 million in the three months ended September 30, 2016, an increase of $10.9 million, or 3.3%. The increase in our North America segment revenue was primarily due to:

~~Organic growth~~ in certain of our payment ~~programs driven by increases in both volume and revenue.~~programs.

~~Partially offsetting the organic growth was the negative~~The positive impact of macroeconomic environment. Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a ~~negative~~favorable impact on our consolidated revenue for the three months ended June 30, 2017 over the comparable period in 2016 of approximately $15 million. We believe the impact

of favorable fuel prices, and higher fuel spread margins primarily in the U.S. had a favorable impact on consolidated revenues of approximately $20 million. Conversely, changes in foreign exchange rates had an unfavorable impact on consolidated revenues of approximately $5 million due to unfavorable fluctuations in rates primarily in the United Kingdom and Europe in the three months ended June 30, 2017 compared to 2016.

North America segment revenues

North America revenues increased from $301.1 million in the three months ended June 30, 2016 to $343.0 million in the three months ended June 30, 2017, an increase of $41.9 million, or 13.9%. The increase in our North America segment revenue was primarily due to:

Organic growth of approximately 8%, on a constant fuel price, fuel spread margin and pro forma basis, driven by increases in both volume and revenue per transaction in certain of our payment programs.

The positive impact of macroeconomic environment. Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a positive impact on our North America segment revenue in three months ended ~~September~~June 30, ~~2016~~2017 over the comparable period in ~~2015~~2016 of approximately ~~$18~~$19 million, primarily due to the impact of ~~lower~~favorable fuel prices and ~~lower~~higher fuel spread margins.

North America segment revenue per transaction increased from $0.90 in the September 30, 2015 to $0.93 in the three months ended September 30, 2016, an increase of $0.03, or 3.4%. When discussing revenue per transaction in the North America segment, we typically exclude the impact of the SVS business, which had approximately 270 million and 274 million transactions in the third quarter of 2016 and 2015, respectively. Revenue per transaction in our North America segment for the third quarter of 2016, excluding SVS, decreased 2% to $2.83 from $2.89 in the third quarter of 2015, due primarily to the impact of lower fuel prices during the quarter and lower fuel spread margins over the comparable period in 2015. Excluding the negative impact of the macroeconomic environment of approximately $18 million and SVS, revenue per transaction increased approximately 4% to $3.00 in the third quarter of 2016 compared to $2.89 in 2015.

International segment revenues ~~and revenue per transaction~~

International segment revenues increased from ~~$116.5~~$116.8 million in the three months ended ~~September~~June 30, ~~2015~~2016 to ~~$138.6~~$198.2 million in the three months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$22.0~~$81.5 million, or ~~18.9%~~69.8%. The increase in our International segment revenue was primarily due to:

The impact of acquisitions during ~~the three months ended September 30,~~ 2016 which contributed approximately ~~$25~~$61 million in additional revenue.

Organic growth ~~in certain~~ of ~~our payment programs~~approximately 10% on a constant macroeconomic and pro forma basis, driven by increases in both volume and ~~revenue.~~revenue per transaction in certain of our payment programs.

Partially offsetting this growth was the negative impact of the macroeconomic environment. Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a negative impact on our International segment revenue for the three months ended ~~September~~June 30, ~~2016~~2017 over the comparable period in ~~2015~~2016 of approximately ~~$10~~$4 million. We believe the changes in foreign exchange rates had an unfavorable impact on consolidated revenues of approximately $5 million ~~primarily~~ due to unfavorable fluctuations in foreign exchange rates ~~in most geographies where we do business and slightly lower fuel prices.~~

~~International segment revenue per transaction decreased from $2.56~~primarily in the three months ended September 30, 2015 to $1.09 in the three months ended September 30, 2016, a decrease of $1.47 per transaction, or 57.5%. This decrease was due primarily to the unfavorable impact of foreign exchange rates across most geographiesUnited Kingdom and ~~the mix impact of acquisitions (STP, Travelcard and a small acquisition in Brazil), which have transactions at much lower revenue per transaction than the historical average,~~Europe, partially offset by ~~organic growth. Excluding these items, our International revenue per transaction increased~~the favorable impact of changes in fuel price of approximately ~~2% to $2.61 in the third quarter of 2016 compared to $2.56 in 2015.~~$1 million.

Consolidated operating expenses

Merchant commissions. Merchant commissions ~~decreased~~increased from ~~$31.7~~$22.3 million in the three months ended ~~September~~June 30, ~~2015~~2016 to ~~$28.2~~$30.6 million in the three months ended ~~September~~June 30, ~~2016, a decrease~~2017, an increase of ~~$3.5~~$8.3 million, or ~~11.1%~~37.3%. This ~~decrease~~increase was primarily due ~~primarily~~ to the fluctuation of the margin between the wholesale cost and retail price of fuel, ~~which impacted merchant commissions in certain card programs,~~ as well as the impact of ~~fluctuations~~higher volume in ~~foreign exchange rates.~~certain revenue streams where merchant commissions are paid.

Processing. Processing expenses increased from ~~$91.0~~$80.7 million in the three months ended ~~September~~June 30, ~~2015~~2016 to ~~$96.2~~$103.3 million in the three months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$5.3~~$22.6 million, or ~~5.8%~~28.0%. Increases in processing expenses were primarily due to ~~ongoing~~ expenses related to acquisitions completed in the third quarter of 2016 ~~partially offset by~~of approximately $19 million, inclusive of incremental bad debt expense of $8 million, and lower negotiated vendor processing costs. The increase in bad debt was primarily due to bad debt inherent in the ~~impact~~acquired STP business, the addition of new Euro Shell locations and normal quarterly fluctuations ~~in foreign exchange rates.~~of certain businesses.

Selling. Selling expenses increased from ~~$27.4~~$31.9 million in the three months ended ~~September~~June 30, ~~2015~~2016 to ~~$34.2~~$39.0 million in the three months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$6.8~~$7.0 million, or ~~24.8%~~21.9%. Increases in spending were primarily due to ongoing expenses related to acquisitions completed in the third quarter of 2016 of approximately $6 million, as well as increases in spending and ~~Comdata, partially offset by the impact of fluctuations~~investment in ~~foreign exchange rates.~~existing portfolios.

General and administrative. General and administrative expenses increased from ~~$66.1~~$63.6 million in the three months ended ~~September~~June 30, ~~2015~~2016 to ~~$77.9~~$87.6 million in the three months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~11.8~~$24.0 million, or ~~17.8%~~37.7%. The increase was primarily due to ongoing expenses related to acquisitions completed in the third quarter of 2016 ~~incremental acquisition related expenses~~ of approximately $3$11 million, ~~and an increase in~~increased stock based compensation expense of approximately $4 million and increases in other professional fees of approximately $3 ~~million, partially offset by the impact of fluctuations in foreign exchange rates.~~million.

Depreciation and amortization. Depreciation and amortization increased from ~~$48.5~~$48.4 million in the three months ended ~~September~~June 30, ~~2015~~2016 to ~~$57.1~~$64.7 million in the three months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$8.6~~$16.3 million, or ~~17.6%~~33.6%. The increase was primarily due to ~~ongoing expenses~~amortization of intangible assets related to acquisitions of STP and Travelcard completed in ~~2016, which resulted in an increase~~the third quarter of approximately $7.6 million related to the amortization of acquired intangible assets, as well as depreciation of acquired fixed assets, partially offset by decreases due to the impact of fluctuations in foreign exchange rates.2016.

Equity method investment loss (income). Equity method investment loss ~~decreased to $2.7~~was $2.4 million in the three months ended ~~September~~June 30, ~~2016,~~2017, compared to ~~$6.1~~income of $7.2 million in the three months ended ~~September~~June 30, ~~2015. Included in 2015, were higher costs incurred~~2016 due primarily to ~~restructure~~a non-recurring net recovery of purchase price of approximately $11 million during the ~~operations~~second quarter of ~~the business.~~2016.

Interest expense, net. Interest expense increased from ~~$17.2~~$15.9 million in the three months ended ~~September~~June 30, ~~2015~~2016 to ~~$17.8~~$23.9 million in the three months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$0.7~~$8.0 million, or ~~3.8%~~50.0%. The increase in interest expense is primarily due to the impact of additional borrowings ~~for~~to finance the acquisitions of STP and Travelcard completed during the third quarter of ~~2016.~~2016 and increases in LIBOR. The following table sets forth the average interest rates paid on borrowings under our Credit Facility, excluding the ~~relevant~~related unused credit facility fees.


	Three Months Ended September 30,				Three Months Ended June 30,
	2016		2015
(Unaudited)					2017		2016
Term loan A	1.99	%	1.94	%	2.76	%	1.94	%
Term loan B	3.75	%	3.75	%	3.31	%	3.75	%
Domestic Revolver A	2.08	%	1.94	%	2.76	%	2.00	%
Foreign Revolver A	1.77	%	—	%	2.01	%	—	%
Foreign swing line	1.73	%	2.23	%	1.97	%	—	%

The average unused credit facility fee for Domestic Revolver A was ~~0.30%~~0.35% and ~~0.35%~~0.30% in the three month period ending ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016, respectively.

Provision for income taxes. The provision for income taxes ~~decreased~~increased from ~~$48.6~~$46.1 million in the three months ended ~~September~~June 30, ~~2015~~2016 to ~~$40.6~~$59.4 million in the three months ended ~~September~~June 30, ~~2016, a decrease~~2017, an increase of ~~$8.0~~$13.3 million, or ~~16.5%~~28.9%. We provide for income taxes during interim periods based on an estimate of our effective tax rate for the year. Discrete items and changes in the estimate of the annual tax rate are recorded in the period they occur. Our effective tax rate ~~decreased~~increased from ~~29.4%~~28.4% for three months ended ~~September~~June 30, ~~2015~~2016 to ~~23.9%~~31.2% for the three months ended ~~September~~June 30, ~~2016.~~2017. The ~~decrease in the provision for income taxes and~~increase in the effective tax rate was due primarily to a decrease in the ~~early adoption of new guidance~~excess tax benefits on ~~accounting for stock-based payments~~share based compensation during the three months ended June 30, 2017 as compared to ~~employees. In addition,~~2016 and a one-time nonrecurring net gain recorded in the ~~U.K. corporate~~three months ended June 30, 2016 by our equity method investment, which favorably impacted pre-tax earnings but was not subject to U.S. income tax rate was reduced from 18% to 17% beginning on April 1, 2020. The rate reduction was enacted on September 15, 2016. The total effect of tax rate changes on deferred tax balances is recorded as a component of the income tax provision related to continuing operations for the period in which the law is enacted.taxes.

We pay taxes in many different taxing jurisdictions, including the U.S., most U.S. states and many non-U.S. jurisdictions. The tax rates in certain non-U.S. taxing jurisdictions are lower than the U.S. tax rate. Consequently, as our earnings fluctuate between taxing jurisdictions, our effective tax rate fluctuates.

Net income. For the reasons discussed above, our net income increased from ~~$116.8~~$116.3 million in the three months ended ~~September~~June 30, ~~2015~~2016 to ~~$129.6~~$131.0 million in the three months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$12.8~~$14.7 million, or ~~11.0%~~12.7%.

Operating income and operating margin

Consolidated operating income. Operating income increased from ~~$188.5~~$171.2 million in the three months ended ~~September~~June 30, ~~2015~~2016 to ~~$191.1~~$216.0 million in the three months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$2.6~~$44.9 million, or ~~1.4%~~26.2%. Our operating margin was ~~41.7%~~41.0% and ~~39.4%~~39.9% for the three months ended ~~September~~June 30, ~~2015~~2016 and ~~2016,~~2017, respectively. The increase in operating income was primarily due to acquisitions completed in the third quarter of 2016 and organic growth, inas well as the ~~business, partially offset by the negative~~positive impact of the macroeconomic environment of approximately ~~$23~~$8 million, driven by ~~lower~~favorable fuel prices and ~~spreads, as well as unfavorable fluctuations~~higher fuel spread margins. The lower operating margin was driven by the negative impact of higher amortization and depreciation expense related to acquisitions of STP and Travelcard completed in ~~foreign exchange rates.~~the third quarter of 2016, additional bad debt expense of $8 million, due to bad debt inherent in the acquired STP business, and additional stock based compensation of approximately $4 million.

For the purpose of segment operating results, we calculate segment operating income by subtracting segment operating expenses from segment revenue. Segment operating margin is calculated by dividing segment operating income by segment revenue.

North America segment operating income. North America operating income increased from ~~$132.4~~$117.6 million in the three months ended ~~September~~June 30, ~~2015~~2016 to ~~$135.8~~$134.9 million in the three months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$3.3~~$17.3 million, or ~~2.5%~~14.7%. North America operating margin was ~~39.5%~~relatively constant at 39.1% and 39.3% for the three months ended ~~September~~June 30, ~~2015~~2016 and ~~2016,~~2017, respectively. The increase in operating income was due primarily to organic growth and the positive impact of the macroeconomic environment of approximately $12 million, driven by favorable fuel prices and higher fuel spread margins. These increases were partially offset by additional stock based compensation of approximately $2 million abd bad debt expense of $2 million.

International segment operating income. International operating income increased from $53.6 million in the ~~business,~~three months ended June 30, 2016 to $81.1 million in the three months ended June 30, 2017, an increase of $27.6 million, or 51.5%. International operating margin was 45.9% and 40.9% for the three months ended June 30, 2016 and 2017, respectively. The increase in operating income was due primarily to the impact of acquisitions completed in the third quarter of 2016 and organic growth, partially offset by the negative impact of the macroeconomic environment of approximately ~~$15~~$4 million, driven primarily by ~~lower fuel prices and spreads.~~

~~International segment operating income.~~ ~~International operating income decreased from $56.0 million~~changes in ~~the three months ended September 30, 2015 to $55.3 million in the three months ended September 30, 2016, a decrease~~foreign exchange rates, as well as higher stock based compensation of ~~$0.7 million, or 1.3%. International~~approximately $2 million. The lower operating margin was ~~48.1% and 39.9% for the three months ended September 30, 2015 and 2016, respectively. The decrease in operating income was due primarily to~~driven by the negative impact of higher amortization and depreciation expense related to acquisitions of STP and Travelcard completed in the ~~macroeconomic environment~~third quarter of 2016, additional bad debt expense of $6 million, due to bad debt inherent in the acquired STP business, and additional stock based compensation expense of approximately ~~$8 million, driven by unfavorable fluctuations in foreign exchange rates, which was partially offset by the impact of acquisitions completed in 2016 and organic growth in the business.~~$2 million.

~~Nine~~Six months ended ~~September~~June 30, ~~2016~~2017 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016

The following table sets forth selected consolidated statement of income data for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 (in thousands).


	Nine Months Ended September 30, 2016			% of total revenue		Nine Months Ended September 30, 2015			% of total revenue		Increase (decrease)			% Change
(Unaudited)																Six Months Ended June 30, 2017			% of total revenue		Six Months Ended June 30, 2016			% of total revenue		Increase (decrease)			% Change
Revenues, net:
North America	$	950,542		72.2	%	$	918,333		72.2	%	$	32,209		3.5	%	$	672,943		63.4	%	$	604,674		72.7	%	$	68,269		11.3	%
International	366,051			27.8	%	353,931			27.8	%	12,120			3.4	%	388,727			36.6	%	227,493			27.3	%	161,234			70.9	%
Total revenues, net	1,316,593			100.0	%	1,272,264			100.0	%	44,329			3.5	%	1,061,670			100.0	%	832,167			100.0	%	229,503			27.6	%
Consolidated operating expenses:
Merchant commissions	78,755			6.0	%	80,777			6.3	%	(2,022		)	(2.5	)%	55,003			5.2	%	50,541			6.1	%	4,462			8.8	%
Processing	256,738			19.5	%	246,879			19.4	%	9,859			4.0	%	205,146			19.3	%	160,505			19.3	%	44,641			27.8	%
Selling	92,680			7.0	%	81,011			6.4	%	11,669			14.4	%	77,794			7.3	%	58,500			7.0	%	19,294			33.0	%
General and administrative	209,084			15.9	%	199,252			15.7	%	9,832			4.9	%	183,003			17.2	%	131,180			15.8	%	51,823			39.5	%
Depreciation and amortization	141,848			10.8	%	145,435			11.4	%	(3,587		)	(2.5	)%	129,575			12.2	%	84,764			10.2	%	44,811			52.9	%
Other operating, net	(690		)	(0.1	)%	(2,475		)	(0.2	)%	1,785			72.1	%	38			—	%	(446		)	(0.1	)%	484			108.5	%
Operating income	538,178			40.9	%	521,385			41.0	%	16,793			3.2	%	411,111			38.7	%	347,123			41.7	%	63,988			18.4	%
Equity method investment (income) loss	(2,247		)	(0.2	)%	13,926			1.1	%	(16,173		)	(116.1	)%
Other expense, net	1,056			0.1	%	2,345			0.2	%	(1,289		)	(55.0	)%
Equity method investment loss (income)																4,731			0.4	%	(4,991		)	(0.6	)%	9,722			(194.8	)%
Other (income) expense, net																1,645			0.2	%	763			0.1	%	882			115.6	%
Interest expense, net	49,905			3.8	%	54,818			4.3	%	(4,913		)	(9.0	)%	46,978			4.4	%	32,091			3.9	%	14,887			46.4	%
Provision for income taxes	132,503			10.1	%	140,695			11.1	%	(8,192		)	(5.8	)%	103,077			9.7	%	91,917			11.0	%	11,160			12.1	%
Net income	$	356,961		27.1	%	$	309,601		24.3	%	$	47,360		15.3	%	$	254,680		24.0	%	$	227,343		27.3	%	$	27,337		12.0	%
Operating income for segments:
North America	$	367,221				$	351,778				$	15,443		4.4	%	$	255,898				$	231,461				$	24,437		10.6	%
International	170,957					169,607					1,350			0.8	%	155,213					115,662					39,551			34.2	%
Operating income	$	538,178				$	521,385				$	16,793		3.2	%	$	411,111				$	347,123				$	63,988		18.4	%
Operating margin for segments:
North America	38.6		%			38.3		%			0.3		%			38.0		%			38.3		%			(0.3		)%
International	46.7		%			47.9		%			(1.2		)%			39.9		%			50.8		%			(10.9		)%
Total	40.9		%			41.0		%			(0.1		)%			38.7		%			41.7		%			(3.0		)%

The sum of the columns and rows may not calculate due to rounding.

Revenues ~~and revenue per transaction~~

Our consolidated revenues increased from ~~$1,272.3~~$832.2 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$1,316.6~~$1,061.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$44.3~~$229.5 million, or ~~3.5%~~27.6%. The increase in our consolidated revenue was primarily due to:

The impact of acquisitions during ~~the nine months ended September 30,~~ 2016, which contributed approximately ~~$25~~$117 million in additional revenue.

~~Partially offsetting this growth was the negative~~The positive impact of ~~the~~ macroeconomic environment. Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a ~~negative~~positive impact on our

consolidated ~~segment~~ revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 over the comparable period in ~~2015~~2016 of approximately ~~$90~~$13 million. We believe the favorable impact of ~~lower~~changes in fuel prices and ~~lower~~higher fuel spread margins, primarily in the U.S., had ~~an unfavorable~~a favorable impact on consolidated

revenues of approximately ~~$58~~$23 million. ~~Additionally,~~Conversely, changes in foreign exchange rates had an unfavorable impact on consolidated revenues of approximately ~~$32~~$9 million due to unfavorable fluctuations in rates ~~in most geographies~~primarily in the ~~nine~~United Kingdom and Europe in the six months ended ~~September~~June 30, ~~2016~~2017 compared to ~~2015.~~

Consolidated revenue per transaction decreased from $0.99 in the nine months ended September 30, 2015 to $0.91 in the nine months ended September 30, 2016, a decrease of $0.08, or 8.5%. This decrease was due primarily to the unfavorable impact of the macroeconomic environment, the mix impact of acquisitions (STP, Travelcard and a small acquisition in Brazil), which have transactions at much lower revenue per transaction than the historical average, and the impact of SVS, partially offset by organic growth. Excluding these items, revenue per transaction increased approximately 4% to $2.88 in the nine months ended September 30, 2016 compared to $2.78 in 2015.

Revenue per transaction can vary based on the geography, the relevant merchant and customer relationship, the payment product utilized, and the types of products and services purchased. The revenue mix was influenced by our acquisitions, organic growth in the business, and fluctuations in the macroeconomic environment, including fuel prices, fuel spread margins and foreign exchange rates.2016.

North America segment revenues ~~and revenue per transaction~~

North America revenues increased from ~~$918.3~~$604.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$950.5~~$672.9 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$32.2~~$68.3 million, or ~~3.5%~~11.3%. The increase in our North America segment revenue was primarily due to:

Organic growth ~~in certain~~ of ~~our payment programs~~approximately 9%, on a constant fuel price, fuel spread margin and pro forma basis, driven by increases in both volume and ~~revenue.~~revenue per transaction in certain of our payment programs.

~~Partially offsetting the organic growth was the negative~~The positive impact of ~~the~~ macroeconomic environment. Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a ~~negative~~positive impact on our North America segment revenue ~~for the nine~~in six months ended ~~September~~June 30, ~~2016~~2017 over the comparable period in ~~2015 by~~2016 of approximately ~~$57~~$21 million, primarily due to the favorable impact of ~~lower~~changes in fuel prices and ~~lower~~higher fuel spread margins.

North America segment revenue per transaction decreased from $0.80 in the nine months ended September 30, 2015 to $0.78 in the nine months ended September 30, 2016, a decrease of $0.02, or 2.6%. When discussing revenue per transaction in the North America segment, we typically exclude the impact of the SVS business, which had approximately 924 million and 872 million transactions in the nine months ended September 30, 2016 and 2015, respectively, at a very low revenue per transaction. Revenue per transaction in our North America segment for the nine months ended September 30, 2016, excluding SVS, decreased 4% to $2.77 from $2.89 compared to 2015, due primarily to the impact of lower fuel prices during the period and lower fuel spread margins over the comparable period in 2015. Excluding the negative impact of the macroeconomic environment of approximately $57 million and SVS, revenue per transaction increased approximately 3% to $2.97 in the nine months ended September 30, 2016 compared to $2.89 in 2015.

International segment revenues ~~and revenue per transaction~~

International segment revenues increased from ~~$353.9~~$227.5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$366.1~~$388.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$12.1~~$161.2 million, or ~~3.4%~~70.9%. The increase in our International segment revenue was primarily due to:

The impact of acquisitions during ~~the nine months ended September 30,~~ 2016 which contributed approximately ~~$25~~$117 million in additional revenue.

Organic growth ~~in certain~~ of ~~our payment programs~~approximately 9% on a constant macroeconomic and pro forma basis, driven by increases in both volume and ~~revenue.~~revenue per transaction in certain of our payment programs.

Partially offsetting this growth was the negative impact of the macroeconomic environment. Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a negative impact on our International segment revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 over the comparable period in ~~2015,~~2016 of approximately ~~$33~~$9 million, primarily due to unfavorable fluctuations in foreign exchange rates ~~in most geographies where we do business and slightly lower fuel prices.~~

~~International segment revenue per transaction decreased from $2.56~~primarily in the nine months ended September 30, 2015 to $1.57 in the nine months ended September 30, 2016, a decrease of $1.00 per transaction, or 38.8%. This decrease was due primarily to the unfavorable impact of foreign exchange rates across most geographiesUnited Kingdom and the mix impact of acquisitions (STP, Travelcard and a small acquisition in Brazil), which have transactions at much lower revenue per transaction than the historical average, partially offset by organic growth. Excluding these items, our International revenue per transaction increased approximately 5% to $2.69 in the nine months ended September 30, 2016 compared to $2.56 in 2015.

Europe.

Consolidated operating expenses

Merchant commissions. Merchant commissions ~~decreased~~increased from ~~$80.8~~$50.5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$78.8~~$55.0 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016, a decrease~~2017, an increase of ~~$2.0~~$4.5 million, or ~~2.5%~~8.8%. This ~~decrease~~increase was primarily due to the fluctuation of the margin between the wholesale cost and retail price of fuel, ~~which impacted merchant commissions in certain card programs,~~ as well as the impact of ~~fluctuations~~higher volume in ~~foreign exchange rates.~~certain revenue streams where merchant commissions are paid.

Processing. Processing expenses increased from ~~$246.9~~$160.5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$256.7~~$205.1 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$9.9~~$44.6 million, or ~~4.0%~~27.8%. Increases in processing expenses were primarily due to expenses related to acquisitions completed in the third quarter of 2016 of approximately $36 million, inclusive of incremental bad debt expense of $14 million, offset by the impact of lower negotiated vendor processing costs. The increase in bad debt was primarily due to bad debt inherent in the acquired STP business, the addition of new Euro Shell locations and normal quarterly fluctuations of certain businesses.

Selling. Selling expenses increased from $58.5 million in the six months ended June 30, 2016 to $77.8 million in the six months ended June 30, 2017, an increase of $19.3 million, or 33.0%. Increases in spending were primarily due to ongoing expenses related to acquisitions completed in the third quarter of 2016 ~~partially offset by the impact~~ of ~~fluctuations in foreign exchange rates.~~

~~Selling.~~ ~~Selling expenses increased from $81.0~~approximately $12 million, ~~in the nine months ended September 30, 2015 to $92.7 million in the nine months ended September 30, 2016, an increase of $11.7 million, or 14.4%. Increases~~as well as increases in spending ~~primarily due to ongoing expenses related to acquisitions completed~~and investment in ~~2016 and Comdata, were partially offset by the impact of fluctuations in foreign exchange rates.~~existing portfolios.

General and administrative. General and administrative expenses increased from ~~$199.3~~$131.2 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$209.1~~$183.0 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$9.8~~$51.8 million, or ~~4.9%,~~39.5%. The increase was primarily due to ~~increased stock based compensation of approximately $5 million over the comparable period in 2015,~~ ongoing expenses related to acquisitions completed in the third quarter of 2016 ~~and incremental acquisition related expenses~~ of approximately $3$21 million, ~~partially offset by the impact~~increased stock based compensation expense of ~~fluctuations~~approximately $12 million and increases in ~~foreign exchange rates.~~other professional fees of approximately $9 million.

Depreciation and amortization. Depreciation and amortization ~~decreased~~increased from ~~$145.4~~$84.8 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$141.8~~$129.6 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016, a decrease~~2017, an increase of ~~$3.6~~$44.8 million, or ~~2.5%~~52.9%. The ~~decrease~~increase was primarily due to ~~movements in and adjustments from changes in foreign exchange rates~~amortization of ~~approximately $2.9 million, partially offset by ongoing expenses~~intangible assets related to acquisitions of STP and Travelcard completed in the third quarter of 2016.

Equity method investment loss (income) ~~loss.~~. Equity method investment ~~income~~loss was ~~$2.2~~$4.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016 as~~2017, compared to ~~a loss~~equity method investment income of ~~$13.9~~$5.0 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015. Included in~~ 2016 ~~was~~due primarily to a non-recurring net recovery of purchase price of approximately $11 million ~~and included in 2015, were higher costs incurred to restructure~~during the ~~operations~~second quarter of ~~the business.~~2016.

Interest expense, net. Interest expense ~~decreased~~increased from ~~$54.8~~$32.1 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$49.9~~$47.0 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016, a decrease~~2017, an increase of ~~$4.9~~$14.9 million, or ~~9.0%~~46.4%. The ~~decrease~~increase in interest expense is primarily due to the impact of ~~delevering from~~additional borrowings to finance the ~~first quarter~~acquisitions of ~~2015 through~~STP and Travelcard completed during the third quarter of 2016 and ~~overall lower interest rates, partially offset by the impact of additional borrowings for acquisitions~~increases in ~~2016.~~LIBOR. The following table sets forth the average interest rates paid on borrowings under our Credit Facility, excluding the ~~relevant~~related unused credit facility fees.


	Nine Months Ended September 30,				Six Months Ended June 30,
	2016		2015
(Unaudited)					2017		2016
Term loan A	1.96	%	1.99	%	2.65	%	1.94	%
Term loan B	3.75	%	3.75	%	3.26	%	3.75	%
Domestic Revolver A	2.00	%	1.99	%	2.65	%	1.96	%
Foreign Revolver A	1.77	%	2.36	%	2.01	%	—	%
Foreign swing line	1.73	%	2.29	%	1.97	%	—	%

The average unused credit facility fee for Domestic Revolver A was ~~0.30%~~0.34% and ~~0.36%~~0.30% in the ~~nine~~six month period ending ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

Provision for income taxes. The provision for income taxes ~~decreased~~increased from ~~$140.7~~$91.9 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$132.5~~$103.1 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016, a decrease~~2017, an increase of ~~$8.2~~$11.2 million, or ~~5.8%~~12.1%. We provide for income taxes during interim periods based on an estimate of our effective tax rate for the year. Discrete items and changes in the estimate of the annual tax rate are recorded in the period they occur. Our effective tax rate ~~decreased from 31.2%~~was 28.8% for ~~nine~~the six months ended ~~September~~June 30, ~~2015 to 27.1% for the nine months ended September 30,~~2017 and 2016. The ~~decrease~~increase in the provision for income taxes ~~and the effective tax rate~~ was due primarily to ~~a one-time net gain recorded by our equity method investment, which favorably impacted pre-tax~~an increase in book earnings ~~but was not subject to U.S. income taxes, and~~during the ~~impact of~~six months ended June 30, 2017 over the ~~early adoption of the new guidance on accounting for stock-based payments to employees.~~comparable period in 2016,

Net income. For the reasons discussed above, our net income increased from ~~$309.6~~$227.3 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$357.0~~$254.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$47.4~~$27.3 million, or ~~15.3%~~12.0%.

Operating income and operating margin

Consolidated operating income. Operating income increased from ~~$521.4~~$347.1 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$538.2~~$411.1 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$16.8~~$64.0 million, or ~~3.2%~~18.4%. Our operating margin was ~~41.0%~~41.7% and ~~40.9%~~38.7% for the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 and ~~2016,~~2017, respectively. The increase in operating income was primarily due to ~~organic growth in the business and the impact of~~ acquisitions completed in the third quarter of 2016 ~~partially offset by~~and organic growth, as well as the ~~negative~~positive impact of the macroeconomic environment of approximately ~~$68~~$9 million, driven by ~~lower~~favorable fuel prices and ~~spreads, as well as unfavorable fluctuations~~higher fuel spread margins. The lower operating margin was driven by the negative impact of higher amortization and depreciation expense related to acquisitions of STP and Travelcard completed in ~~foreign exchange rates.~~the third quarter of 2016, and additional bad debt expense of $14 million, due to bad debt inherent in the acquired STP business, and additional stock based compensation of approximately $12 million

North America segment operating income. North America operating income increased from ~~$351.8~~$231.5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$367.2~~$255.9 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$15.4~~$24.4 million, or ~~4.4%~~10.6%. North America operating margin was 38.3% and ~~38.6%~~38.0% for the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 and ~~2016,~~2017, respectively. The increase in operating income was due primarily to organic growth inand the ~~business, partially offset by the negative~~positive impact of the macroeconomic environment of approximately ~~$51~~$16 million, driven by ~~lower~~favorable fuel prices and ~~spreads.~~higher fuel spread margins. These increases were partially offset by additional stock based compensation of approximately $8 million and additional bad debt expense of approximately $4 million.

International segment operating income. International operating income increased from ~~$169.6~~$115.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$171.0~~$155.2 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$1.4~~$39.6 million, or ~~0.8%~~34.2%. International operating margin was ~~47.9%~~50.8% and ~~46.7%~~39.9% for the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 and ~~2016,~~2017, respectively. The increase in operating income was due primarily to the impact of acquisitions completed in the third quarter of 2016 and organic growth, ~~in the business,~~ partially offset by the negative impact of the macroeconomic environment of approximately ~~$18~~$7 million, driven primarily by ~~unfavorable fluctuations~~changes in foreign exchange ~~rates.~~rates, as well as higher stock based compensation of approximately $4 million. The lower operating margin was driven by the negative impact of higher amortization and depreciation expense related to acquisitions of STP and Travelcard completed in the third quarter of 2016, additional bad debt expense of $10 million, due to bad debt inherent in the acquired STP business, and additional stock based compensation of approximately $4 million.

Liquidity and capital resources

Our principal liquidity requirements are to service and repay our indebtedness, make acquisitions of businesses and commercial account portfolios, repurchase shares of our common stock and meet working capital needs, tax and capital expenditure needs.

Sources of liquidity

At ~~September~~June 30, ~~2016,~~2017, our cash balances totaled ~~$604.8~~$765.6 million, with approximately ~~$199.3~~$201.0 million restricted. Restricted cash primarily represents customer deposits in the Czech Republic and in our Comdata business in the U.S., which we are restricted from using other than to repay customer deposits.

At ~~September~~June 30, ~~2016,~~2017, cash and cash equivalents held in foreign subsidiaries where we have determined we are permanently reinvested is ~~$250.2~~$439.4 million. All of the cash and cash equivalents held by our foreign subsidiaries, excluding restricted cash, are available for general corporate purposes. Our current intent is to permanently reinvest these funds outside of the U.S. Our current expectation for funds held in our foreign subsidiaries is to use the funds to finance foreign organic growth, to pay for potential future foreign acquisitions and to repay any foreign borrowings that may arise from time to time. We currently believe that funds generated from our U.S. operations, along with available borrowing capacity in the U.S. will be sufficient to fund our U.S. operations for the foreseeable future, and therefore do not foresee a need to repatriate cash held by our foreign subsidiaries in a taxable transaction to fund our U.S. operations. However, if at a future date or time these funds are needed for our operations in the U.S. or we otherwise believe it is in our best interests to repatriate all or a portion of such funds, we may be required to accrue and pay U.S. taxes to repatriate these funds. No assurances can be provided as to the amount or timing thereof, the tax consequences related thereto or the ultimate impact any such action may have on our results of operations or financial condition.

We utilize an accounts receivable Securitization Facility to finance a majority of our domestic fuel card receivables, to lower our cost of borrowing and more efficiently use capital. We generate and record accounts receivable when a customer makes a purchase from a merchant using one of our ~~charge~~ card products and generally pay merchants ~~within seven days of receiving~~before collecting the ~~merchant billing.~~receivable. As a result, we utilize the Securitization Facility as a source of liquidity to provide the cash flow required to fund merchant payments while we collect customer balances. These balances are primarily composed of charge balances,

which are typically billed to the customer on a weekly, semimonthly or monthly basis, and are generally required to be paid within 14 days of billing. We also consider the undrawn amounts under our Securitization Facility and Credit Facility as funds available for working capital purposes and acquisitions. At ~~September~~June 30, ~~2016,~~2017, we had the ability to generate approximately ~~$75~~$45 million of additional liquidity under our Securitization Facility. At ~~September~~June 30, ~~2016,~~2017, we had approximately ~~$438~~$529 million available under our Credit Facility.

Based on our current forecasts and anticipated market conditions, we believe that our current cash balances, our available borrowing capacity and our ability to generate cash from operations, will be sufficient to fund our liquidity needs for at least the next twelve months. However, we regularly evaluate our cash requirements for current operations, commitments, capital requirements and acquisitions, and we may elect to raise additional funds for these purposes in the future, either through the issuance of debt or equity securities. We may not be able to obtain additional financing on terms favorable to us, if at all.

Cash flows

The following table summarizes our cash flows for the ~~nine~~six months ended ~~September~~June 30, 2017 and 2016 ~~and 2015.~~

(in millions).


	Nine Months Ended September 30,						Six Months Ended June 30,
(in millions)	2016			2015
(Unaudited)							2017			2016
Net cash provided by operating activities	$	404.3		$	524.5		$	179.0		$	212.0
Net cash used in investing activities	(1,371.5		)	(46.5		)	(42.5		)	(37.9		)
Net cash provided by (used in) financing activities	976.4			(502.3		)
Net cash used in financing activities							(67.8		)	(121.5		)

Operating activities. Net cash provided by operating activities decreased from ~~$524.5~~$212.0 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$404.3~~$179.0 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. Net income and non-cash expense items increased operating cash flow by $84.6 million from $347.4 million in the first half of 2016 to $432.0 million in 2017, driven primarily by higher amortization of acquired intangible assets of $39 million and higher net income of $27 million. Net working capital was a use of cash of $135.4 million in the first half of 2016 compared to $253.0 million in 2017. The ~~decrease is~~primary reason for the increased use of working capital was $124 million in higher income tax payments made in the first half of 2017 than 2016, which was primarily due to ~~changes~~tax payments normally due in ~~working capital. Fluctuations~~the third and fourth quarters of 2016 being deferred until the first quarter of 2017, and higher earnings in receivables and payables, which affect working capital the most significantly, are largely due to timing of month end transactions and volume. The decrease was partially offset by additional net income of $47.4 million during the nine months ended September 30, 20162017 over the comparable period in ~~2015~~2016. The remaining increase in use of working capital related to the overall growth of the business and ~~a one-time nonrecurring net gain~~the timing of ~~approximately $11 million recorded by our equity method investment.~~settlement of receivables and payables during the six months ended June 30, 2017 over the comparable period in 2016.

Investing activities. Net cash used in investing activities increased from ~~$46.5~~$37.9 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$1,371.5~~$42.5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016. This increase is primarily due to the increase in cash paid for acquisitions completed in 2016.~~2017.

Financing activities. Net cash used in financing activities ~~was $502.3~~decreased from $121.5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015 compared~~2016 to ~~net cash provided by financing activities of $976.4~~$67.8 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The ~~increase~~decrease in cash ~~provided by~~used in financing activities is primarily due to a reduction in debt repayments of $59 million on our credit facility in the first half of 2017 as compared to 2016 as well as an increase in ~~net~~ borrowings of $51 million on our ~~revolving A~~Securitization Facility, partially offset by a decrease in borrowings of $40 million on our credit facility in the first half of 2017 over the comparable period in 2016 and increased spending to repurchase our ~~term loans~~common stock of ~~$852 million and $593 million, respectively, to fund acquisitions during the nine months ended September 30, 2016.~~$26 million.

Capital spending summary

Our capital expenditures increased from ~~$29.5~~$24.8 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 to ~~$41.9~~$32.6 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, an increase of ~~$12.4~~$7.8 million, or ~~41.8%~~31.7%. This increase is primarily due to increased spending on strategic projects, including continued investment in our ~~GFN application.~~operating systems.

Credit Facility

~~We are party to~~On October 24, 2014, FleetCor Technologies Operating Company, LLC, and certain of our domestic and foreign owned subsidiaries, as designated co-borrowers (the “Borrowers”), entered into a ~~$3.96~~new $3.36 billion Credit Agreement (the ~~“Credit Facility”)~~Credit Agreement), with Bank of America, N.A., as administrative agent, swing line lender and local currency issuer, and a syndicate of ~~banks, which we originally entered into on October 24, 2014.~~financial institutions (the “Lenders”). The Credit ~~Facility provides~~Agreement provided for senior secured credit facilities consisting of (a) a revolving A credit facility in the amount of $1.0 billion, with sublimits for letters of credit, swing line loans and multicurrency borrowings, (b) a revolving B facility in the amount of $35 million for loans in Australian Dollars or New Zealand Dollars, (c) a term A loan A facility in the amount of $2.02 billion and (d) a term B loan B facility in the amount $300 million. ~~On August 22, 2016, we entered into the first Amendment to the existing Credit Agreement.~~ The ~~Amendment established an incremental term A loan~~revolving line of credit contains a $20 million sublimit for letters of credit, a $20 million sublimit for swing line loans and sublimits for multicurrency borrowings in ~~the amount of $600 million under the~~Euros, Sterling, Japanese Yen, Australian Dollars and New Zealand Dollars. The Credit Agreement ~~accordion feature. The proceeds from the additional $600 million in term A loans were used to partially finance the STP acquisition. The Amendment~~ also ~~established~~contains an accordion feature for borrowing an additional $500 million in term A ~~term B~~ or revolver A ~~debt. The~~and term B. Proceeds from the Credit Facility ~~contains representations, warranties~~may be used for working capital purposes, acquisitions, and ~~events of default, as well as certain affirmative and negative covenants, customary for financings of this nature. These covenants include limitations on our ability to pay dividends and make~~ other ~~restricted payments under certain circumstances and compliance with certain financial ratios. As of September 30, 2016, we were in compliance with each~~general corporate purposes. The proceeds of the ~~covenants~~Credit Facility were used to paydown borrowings under the Credit ~~Facility.~~Agreement. On November 14, 2014 in order to finance a portion of the Comdata Acquisition and to refinance our existing Credit Agreement, we made initial borrowings under the Credit Agreement.

On August 22, 2016, we entered into the first amendment to the Credit Agreement, which increased the size of the Term A loan from $2.02 billion to $2.62 billion. The proceeds from the additional $600 million in term A loan were used to partially finance the STP acquisition. On January 20, 2017, we entered into the second amendment to the Credit Agreement, which established a new term B loan (Term B-2 loan) in the amount of $245.0 million to replace the existing Term B loan.

~~The stated maturity dates for our term A loans, revolving loans, and letters of credit under the New Credit Agreement is November 14, 2019 and November 14, 2021 for our term loan B.~~

The term loans are payable in quarterly installments and are due on the last business day of each March, June, September, and December with the final principal payment due on the respective maturity date. Borrowings on the revolving line of credit are repayable at our option of one, two, three or nine months after borrowing, depending on the term of the borrowing on the facility. Borrowings on the foreign swing line of credit are due no later than ten business days after such loan is made.

The Credit Facility contains representations, warranties and events of default, as well as certain affirmative and negative covenants, customary for financings of this nature. These covenants include limitations on the ability to pay dividends and make other restricted payments under certain circumstances and compliance with certain financial ratios. As of June 30, 2017, we were in compliance with each of the covenants under the Credit Facility.

At ~~September~~June 30, ~~2016,~~2017, we had ~~$2,435.8~~$2,337.5 million in borrowings outstanding on the term A loan, ~~A, $245.6~~excluding the related debt discount, $243.8 million in borrowings outstanding on ~~term~~Term B-2 loan, ~~B, $430.0~~excluding the related debt discount, $400.0 million in borrowings outstanding on the domestic revolving A facility, ~~$162.1~~$67.6 million in borrowings outstanding on the foreign revolving A facility and ~~$5.2~~$38.8 million in borrowings outstanding on the swing line revolving A facility. ~~Unamortized~~We have unamortized debt discounts ~~are $7.8~~of $5.0 million related to the term A facility and $0.9 million related to the term B facility at ~~September~~June 30, ~~2016.~~ 2017.

During the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, we made principal payments of ~~$83.3~~$65.5 million on the term A loan, ~~A, $1.9~~$1.2 million on the ~~term~~Term B-2 loan, ~~B, $645.0~~$155.0 million on the domestic revolving A facility, ~~and $188.1~~$60.9 million on the foreign revolving A facility and $35.1 million on the swing line revolving A facility.

On August 2, 2017, we entered into the third amendment (the "Amendment") to the Credit Agreement, which increased the facility by $708.7 million and extended the terms of the credit facilities. The Amendment increased the term A loan to $2.69 billion, increased the revolver A credit facility to $1.285 billion and increased the term B loan to $350.0 million. The term A and revolver maturity dates are now August 2, 2022 and the term B maturity date is now August 2, 2024. The term A and revolver pricing remained the same and the term B pricing was reduced by 25 basis points to LIBOR plus 200 basis points.

Securitization Facility

We are a party to a receivables purchase agreement among FleetCor Funding LLC, as seller, PNC Bank, National Association as administrator, and various purchaser agents, conduit purchasers and related committed purchasers parties thereto, which was amended and restated for the fifth time as of ~~December 1, 2015.~~November 14, 2014. We refer to this arrangement as the Securitization Facility. There have been several amendments to the Securitization Facility. The current purchase limit under the Securitization Facility is $950 ~~million.~~million and the Securitization Facility expires on November 14, 2017. The Securitization Facility contains certain customary financial covenants. There is a program fee equal to one month LIBOR ~~and~~or the Commercial Paper Rate of ~~0.66%~~1.23% plus 0.90% and ~~0.43%~~0.85% plus 0.90% as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. The unused facility fee is payable at a rate of 0.40% ~~per annum~~ as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

The Securitization Facility provides for certain termination events, which includes nonpayment, upon the occurrence of which the administrator may declare the facility termination date to have occurred, may exercise certain enforcement rights with respect to the receivables, and may appoint a successor servicer, among other things.

We were in compliance with the financial covenant requirements related to our Securitization Facility as of ~~September~~June 30, ~~2016.~~

~~Other Liabilities~~

~~In connection with our acquisition of certain businesses, we owe final payments of $3.9 million, which are payable in the next twelve months.~~2017.

Stock Repurchase Program

On February 4, 2016, our Board of Directors approved a stock repurchase program (the "Program") under which we may ~~begin purchasing~~purchase up to an aggregate of $500 million of ~~the Company's~~our common stock over the ~~next~~following 18 month period. On July 27, 2017, our Board of Directors authorized an increase in the size of the Program by an additional $250 million and an extension of the Program by an additional 18 months. With the increase and giving effect to our $240 million of previous repurchases, we may repurchase up to $510 million in shares of our common stock at any time prior to February 1, 2019. Any stock repurchases may be made at times and in such amounts as ~~we deem~~deemed appropriate. The timing and amount of stock repurchases, if any, will depend on a variety of factors including the stock price, market conditions, corporate and regulatory requirements, and any additional constraints related to material inside information we may possess. Any repurchases have been and are expected to be funded by a combination of available cash flow from the business, working capital and ~~working capital.~~debt. Since the beginning of the Program, 1,670,311 shares for an aggregate purchase price of $240.1 million have been repurchased. There were ~~259,145~~411,166 shares totaling ~~$35.5~~$52.4 million repurchased under the Program during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017.

On August 3, 2017, as part of the Program, we entered an Accelerated Share Repurchase agreement ("ASR Agreement") with a third-party financial institution to repurchase $250 million of our common stock. Pursuant to the ASR Agreement, approximately 85% of the shares expected to be repurchased were received by us on August 8, 2017. The total number of shares ultimately repurchased under the Program will be determined upon final settlement and will be based on a discount to the volume-weighted average price of our common stock during the ASR period. We anticipate that all repurchases under the ASR will be completed by the end of the third quarter of 2017.

Sale of NexTraq

On June 14, 2017, we signed a definitive agreement to sell NexTraq, a U.S. fleet telematics business, to Michelin Group for approximately $320 million. This transaction closed on July 17, 2017. We expect to record a pre-tax gain on the disposal of NexTraq of approximately $155 million during the third quarter of 2017, which includes transaction closing costs. We have preliminarily calculated taxes on the gain upon disposal of approximately $64 million. NexTraq has historically been included in our North America segment.

Critical accounting policies and estimates

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

Accounting estimates necessarily require subjective determinations about future events and conditions. During the ~~three~~six months ended ~~September~~June 30, ~~2016,~~2017, we have not adopted any new critical accounting policies that had a significant impact upon our consolidated financial statements, have not changed any critical accounting policies and have not changed the application of any critical accounting policies from the year ended December 31, ~~2015.~~2016. For critical accounting policies, refer to the Critical Accounting Estimates in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

included in our Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 and our summary of significant accounting policies in Note 1 of our notes to the unaudited consolidated financial statements in this Form 10-Q.

Management’s Use of Non-GAAP Financial Measures

We have included in the discussion above certain financial measures that were not prepared in accordance with GAAP. Any analysis of non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP. Below, we define the non-GAAP financial measures, provide a reconciliation of the non-GAAP financial measure to the most directly comparable financial measure calculated in accordance with GAAP, and discuss the reasons that we believe this information is useful to management and may be useful to investors.

Adjusted revenues

We have defined the non-GAAP measure adjusted revenues as revenues, net less merchant commissions as reflected in our income statement.

We use adjusted revenues as a basis to evaluate our revenues, net of the commissions that are paid to merchants to participate in our card programs. The commissions paid to merchants can vary when market spreads fluctuate in much the same way as revenues are impacted when market spreads fluctuate. We believe that adjusted revenue is an appropriate supplemental measure of financial performance and may be useful to investors to understanding our revenue performance on a consistent basis. Adjusted revenues are not intended to be a substitute for GAAP financial measures and should not be used as such.

Set forth below is a reconciliation of adjusted revenues to the most directly comparable GAAP measure, revenues, net (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
(Unaudited)													2017			2016			2017			2016
Revenues, net	$	484,426		$	451,493		$	1,316,593		$	1,272,264		$	541,237		$	417,905		$	1,061,670		$	832,167
Merchant commissions	(28,214		)	(31,726		)	(78,755		)	(80,777		)	(30,619		)	(22,308		)	(55,003		)	(50,541		)
Total adjusted revenues	$	456,212		$	419,767		$	1,237,838		$	1,191,487		$	510,618		$	395,597		$	1,006,667		$	781,626

Adjusted net income and adjusted net income per diluted share

We have defined the non-GAAP measure adjusted net income as net income as reflected in our statement of income, adjusted to eliminate (a) non-cash stock-based compensation expense related to stock-based compensation awards, (b) amortization of deferred financing costs, discounts and intangible assets, (c) amortization of the premium recognized on the purchase of receivables, (d) our proportionate share of amortization of intangible assets at our equity method investment, and (e) ~~a non-recurring net gain at our equity method investment.~~other non-cash adjustments.

We have defined the non-GAAP measure adjusted net income per diluted share as the calculation previously noted divided by the weighted average diluted shares outstanding as reflected in our statement of income.

We use adjusted net income to eliminate the effect of items that we do not consider indicative of our core operating performance. We believe it is useful to exclude non-cash stock based compensation expense from adjusted net income because non-cash equity grants made at a certain price and point in time do not necessarily reflect how our business is performing at any particular time and stock based compensation expense is not a key measure of our core operating performance. We also believe that amortization expense can vary substantially from company to company and from period to period depending upon their financing and accounting methods, the fair value and average expected life of their acquired intangible assets, their capital structures and the method by which their assets were acquired. Therefore, we have excluded amortization expense from adjusted net income. We believe that adjusted net income and adjusted net income per diluted share are appropriate supplemental measures of financial performance and may be useful to investors to understanding our operating performance on a consistent basis. Adjusted net income and adjusted net income per diluted share are not intended ~~t o~~to be a substitute for GAAP financial measures and should not be used as such.

Set forth below is a reconciliation of adjusted net income and adjusted net income per diluted share to the most directly comparable GAAP measure, net income and net income per diluted share (in thousands, except shares and per share amounts):*



	Three Months Ended June 30,						Six Months Ended June 30,
(Unaudited)	2017			2016¹			2017			2016¹
Net income	$	130,987		$	116,253		$	254,680		$	227,343
Net income per diluted share	1.39			1.22			2.70			2.39
Stock based compensation	21,150			17,434			44,243			32,620
Amortization of intangible assets	52,240			38,752			104,894			66,114
Amortization of premium on receivables	1,544			1,349			3,088			2,339
Amortization of deferred financing costs and discounts	1,886			1,829			3,800			3,651
Amortization of intangibles at equity method investment	2,917			2,824			5,376			5,127
Non-recurring net gain at equity method investment	—			(10,845		)	—			(10,845		)
Total pre-tax adjustments	79,737			51,343			161,401			99,006
Income tax impact of pre-tax adjustments at the effective tax rate²	(23,675		)	(17,635		)	(44,055		)	(30,699		)
Adjusted net income	$	187,049		$	149,960		$	372,026		$	295,650
Adjusted net income per diluted share	$	1.99		$	1.57		$	3.94		$	3.11
Diluted shares	94,223			95,279			94,392			95,137

Three Months Ended September 30, Nine Months Ended September 30,

2016²
2015
2016²
2015
Net income $ 129,618
   $ 116,770
$ 356,961
$ 309,601

Net income per diluted share 1.36
   1.24
3.75
3.29

Stock based compensation 17,405
   13,887
50,025
44,387

Amortization of intangible assets 46,341
   39,869
112,455
120,055

Amortization of premium on receivables 1,348
   812
3,687
2,439

Amortization of deferred financing costs and discounts 1,917
   1,778
5,568
5,295

Amortization of intangibles at equity method investment 2,406
   3,032
7,533
8,404

Non-recurring net gain at equity method investment —
—
(10,845 ) —

Total pre-tax adjustments 69,417

59,378

168,423

180,580

Income tax impact of pre-tax adjustments at the effective tax rate^*
(15,726 ) (18,579 )
¹
(46,705 ) (57,758 )
¹
Adjusted net income $ 183,310
   $ 157,570
$ 478,679
$ 432,424

Adjusted net income per diluted share $ 1.92
   $ 1.67
$ 5.03
$ 4.60

Diluted shares 95,307
   94,157
95,204
94,069

*Columns may not calculate due to impact of rounding.

¹~~Effective tax rate utilized excludes the impact of a one time tax benefit recognized during the three months ended September 30, 2015 of approximately $7.9 million.~~Reflects the impact of the Company's adoption of Accounting Standards Update 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, to simplify several aspects of the accounting for the share-based compensation, including the income tax consequences.

²Excludes the results of our equity method investment on our effective tax rate, as results from our equity method investment are reported within the Consolidated Income Statements on a post-tax basis and no tax-over-book outside basis differences related to our equity method investment reversed during 2016 or are expected to reverse in 2017.

²~~Reflects~~

Pro Forma and Macro Adjusted Revenue and Transactions by Product

We define pro forma and macro adjusted revenue as revenue, net as reflected in our statement of income, adjusted to eliminate the impact of the ~~Company's adoption~~macroeconomic environment and the impact of ~~Accounting Standards Update 2016-09, "Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting", to simplify several aspects of~~acquisitions and dispositions. The macroeconomic environment includes the ~~accounting for the stock-based compensation, including the income tax consequences.~~

^*~~Excludes the results of our equity method investment~~impact that market fuel spread margins, fuel prices and foreign exchange rates have on our ~~effective tax rate, as results from~~business. We use pro forma and macro adjusted revenue and transactions to evaluate the organic growth in our ~~equity method investment are reported within~~revenue and the ~~Consolidated Income Statements on~~associated transactions. Set forth below is a ~~post-tax basis~~reconciliation of pro forma and ~~no tax-over-book outside basis differences related~~macro adjusted revenue and transactions to ~~our equity method investment reversed during 2016.~~the most directly comparable GAAP measure, revenue, net and transactions (in millions):*



	Revenue						Transactions
	Three Months Ended June 30,						Three Months Ended June 30,
(Unaudited)	2017			2016			2017		2016
FUEL CARDS
Pro forma and macro adjusted^2,3	$	263.0		$	242.9		$	117.3	$	111.3
Impact of acquisitions/dispositions	—			(2.3		)	—		(3.2		)
Impact of fuel prices/spread	19.5			—			—		—
Impact of foreign exchange rates	(4.3		)	—			—		—
As reported	$	278.2		$	240.7		$	117.3	$	108.1
CORPORATE PAYMENTS
Pro forma and macro adjusted^2,3	$	50.1		$	44.8		$	10.4	$	9.9
Impact of acquisitions/dispositions	—			—			—		—
Impact of fuel prices/spread	0.1			—			—		—
Impact of foreign exchange rates	—			—			—		—
As reported	$	50.2		$	44.8		$	10.4	$	9.9
TOLLS
Pro forma and macro adjusted^2,3	$	69.6		$	61.3		$	222.5	$	223.6
Impact of acquisitions/dispositions	—			(58.9		)	—		(213.9		)
Impact of fuel prices/spread	—			—			—		—
Impact of foreign exchange rates	6.4			—			—		—
As reported	$	76.0		$	2.4		$	222.5	$	9.6
LODGING
Pro forma and macro adjusted^2,3	$	29.0		$	24.9		$	3.4	$	3.3
Impact of acquisitions/dispositions	—			—			—		—
Impact of fuel prices/spread	—			—			—		—
Impact of foreign exchange rates	—			—			—		—
As reported	$	29.0		$	24.9		$	3.4	$	3.3
GIFT
Pro forma and macro adjusted^2,3	$	41.3		$	37.4		$	328.3	$	312.8
Impact of acquisitions/dispositions	—			—			—		—
Impact of fuel prices/spread	—			—			—		—
Impact of foreign exchange rates	—			—			—		—
As reported	$	41.3		$	37.4		$	328.3	$	312.8
OTHER¹
Pro forma and macro adjusted^2,3	$	67.3		$	67.7		$	20.1	$	21.3
Impact of acquisitions/dispositions	—			—			—		—
Impact of fuel prices/spread	—			—			—		—
Impact of foreign exchange rates	(0.7		)	—			—		—
As reported	$	66.6		$	67.7		$	20.1	$	21.3

FLEETCOR CONSOLIDATED REVENUES
Pro forma and macro adjusted^2,3	$	520.2		$	479.1		$	702.0	$	682.2
Impact of acquisitions/dispositions	—			(61.2		)	—		(217.1		)
Impact of fuel prices/spread	19.7			—			—		—
Impact of foreign exchange rates	1.4			—			—		—
As reported	$	541.2		$	417.9		$	702.0	$	465.0

* Columns may not calculate due to impact of rounding.
¹Other includes telematics, maintenance, food and transportation related businesses.
²2016 is pro forma to include acquisitions and exclude dispositions, consistent with 2017 ownership.
³2017 is adjusted to remove the impact of changes in the macroeconomic environment to be consistent with the same period of prior year, using constant fuel prices, fuel price spreads and foreign exchange rates.

Special Cautionary Notice Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about ~~our~~FleetCor's beliefs, expectations and future performance, are forward-looking statements. Forward-looking statements can be identified by the use of words such as “anticipate,” “intend,” “believe,” “estimate,” “plan,” “seek,” “project” or “expect,” “may,” “will,” “would,” “could” or “should,” the negative of these terms or other comparable terminology.

These forward-looking statements are not a guarantee of performance, and you should not place undue reliance on such statements. We have based these forward-looking statements largely on our current expectations and projections about future events. Forward-looking statements are subject to many uncertainties and other variable circumstances, such as delays or failures associated with implementation; fuel price and spread volatility; changes in credit risk of customers and associated losses; the actions of regulators relating to payment cards or investigations; failure to maintain or renew key business relationships; failure to maintain competitive offerings; failure to maintain or renew sources of financing; failure to complete, or delays in completing, anticipated new partnership arrangements or acquisitions and the failure to successfully integrate or otherwise achieve anticipated benefits from such partnerships or acquired businesses; failure to successfully expand business internationally; other risks related to our international operations, including the potential impact to our business as a result of the United Kingdom's recent referendum to leave the European Union; the impact of foreign exchange rates on operations, revenue and income; the effects of general economic and political conditions on fueling patterns and the commercial activity of fleets, risks related to litigation; our ability to complete an accelerated share repurchase, as well as the other risks and uncertainties identified under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016. These factors could cause our actual results and experience to differ materially from any forward-looking statement. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof. We do not

undertake, and specifically disclaim, any obligation to update any such statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments.



Item 3.	Quantitative and Qualitative Disclosures About Market Risk

As of ~~September~~June 30, ~~2016,~~2017, there have been no material changes to our market risk from that disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~

2016.



Item 4.	Controls and Procedures

As of ~~September~~June 30, ~~2016,~~2017, management carried out, under the supervision and with the participation of our Chief Executive Officer and Chief 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 Chief Executive Officer and Chief Financial Officer concluded that, as of ~~September~~June 30, ~~2016,~~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 Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting during the quarter ended ~~September~~June 30, ~~2016,~~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

As of the date of this filing, we are not currently party to any legal proceedings or governmental inquiries or investigations that we consider to be material and we were not involved in any material legal proceedings that terminated during the third quarter. We are and may become, however, subject to lawsuits from time to time inIn the ordinary course of business, we are subject to various pending and potential legal actions, arbitration proceedings, claims, subpoenas, and matters relating to compliance with laws and regulations (collectively, legal proceedings). Based on our ~~business.~~current knowledge, management presently does not believe that the liabilities arising from these legal proceedings will have a material adverse effect on our consolidated financial condition, results of operations or cash flows. However, it is possible that the ultimate resolution of these legal proceedings could have a material adverse effect on our results of operations and financial condition for any particular period. The Company settled certain matters during the second quarter of 2017 that did not individually or in the aggregate have a material impact on the Company’s financial condition or results of operations for the quarter.

Shareholder Class Action and Derivative Lawsuits

Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, and are in the early stages of the proceedings. For these reasons, we are currently unable to predict the ultimate timing or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from the matters described above.



Item 1A.	Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2015,~~2016, which could materially affect our business, financial condition or future results. Other than the risk factor set forth below, there have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

We are named in a federal securities class action lawsuit and derivative complaint; if we are unable to resolve these matters favorably, then our business, operating results and financial condition may be adversely affected.

On June 14, 2017, a shareholder filed a class action complaint in the Unites States District Court for the Northern District of Georgia against the Company and certain of its officers and directors on behalf of all persons who purchased or otherwise acquired the Company’s stock between February 5, 2016 and May 2, 2017. On July 10, 2017, a shareholder derivative complaint was filed against certain of the Company’s directors and officers in the United States District Court for the Northern District of Georgia seeking recovery on behalf of the Company. See “Part II-Item 1 - Legal Proceedings” above for additional information about the lawsuit and the derivative complaint. We cannot at this time predict the outcome of these matters or reasonably determine the probability of a material adverse result or reasonably estimate range of potential exposure, if any, that these matters might have on us, our business, our financial condition or our results of operations, although such effects could be materially adverse. In addition, in the future, we may need to record litigation reserves with respect to these matters. Further, regardless of how these matters proceed, it could divert our management’s attention and other resources away from our business.



Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

On February 4, 2016, our Board of Directors approved a stock repurchase program (the "Program") under which we may begin purchasing up to an aggregate of $500 million of the Company's common stock over the ~~next~~following 18 month period. On July 27, 2017, the Company's Board of Directors authorized an increase in the size of the Program by an additional $250 million and an extension of the Program by an additional 18 months. Since the beginning of the Program, 1,670,311 shares for an aggregate purchase price of $240.1 million have been repurchased.

The following table presents information with respect to purchases of common stock of the Company made during the three months ended ~~September~~June 30, ~~2016~~2017 by the Company as defined in Rule 10b-18(a)(3) under the Exchange Act:


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of the Publicly Announced Plan	Maximum Value that May Yet be Purchased Under the Publicly Announced Plan (in thousands)		Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of the Publicly Announced Plan	Maximum Value that May Yet be Purchased Under the Publicly Announced Plan (in thousands)
July 1, 2016 through July 31, 2016	67,854	$	139.31	259,145	$	464,514

May 1, 2017 through May 31, 2017							411,166	$	127.40	1,670,311	$	259,930



Item 3.	Defaults Upon Senior Securities

Not applicable.



Item 4.	Mine Safety Disclosures

Not applicable.



Item 5.	Other Information

Not applicable.

Item 6. Exhibits




Exhibit No.
2.1		Acquisition agreement to acquire Serviços e Tecnologia de Pagamentos S.A. (incorporated by reference to Exhibit 2.1 to the Registrant's Form 8-K, File No. 001-35004, filed with the Securities and Exchange Commission ("SEC") on March 18, 2016)

3.1		Amended and Restated Certificate of Incorporation of FleetCor Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K, File No. 001-35004, filed with the SEC on March 25, 2011)

3.2		Amended and Restated Bylaws of FleetCor Technologies, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K, File No. 001-35004, filed with the SEC on ~~March 25, 2011)~~October 28, 2016)

4.1		Form of Stock Certificate for Common Stock (incorporated by reference to Exhibit 4.1 to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1, File No. 333-166092, filed with the SEC on June 29, 2010)

10.1		~~First~~Third Amendment to Credit Agreement, ~~and Lender Joinder Agreement, dated~~date as of August ~~22, 2016, by and~~2, 2017, among ~~FleetCor Funding LLC,~~ FleetCor Technologies Operating Company, LLC, as the Company, FleetCor Technologies, Inc., as the Parent, the designated borrowers party hereto, the other guarantors party hereto, Bank of America, N.A., as administrative agent, swing line lender and ~~PNC Bank, National Association,~~l/c issuer, and the other lenders party hereto Merrill Lynch, Pierce, Fenner & Smith Incorporated, as ~~administrator for a group of purchasers~~sole lead arranger and ~~purchaser agents, and certain other parties~~sole book runner

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2001

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2001

101		The following financial information for the Registrant formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Unaudited Consolidated Statements of Income, (iii) the Unaudited Consolidated Statements of Comprehensive Income; (iv) the Unaudited Consolidated Statements of Cash Flows and (v) the Notes to Unaudited Consolidated Financial Statements

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, in their capacities indicated on ~~November 9, 2016.~~August 8, 2017.



				��
				FleetCor Technologies, Inc.
				(Registrant)

Signature				Title

/s/ Ronald F. Clarke				President, Chief Executive Officer and Chairman of the Board of Directors (Duly Authorized Officer and Principal Executive Officer)
Ronald F. Clarke

/s/ Eric R. Dey				Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
Eric R. Dey

4144



	Three Months Ended March 31, 2016							Three Months Ended June 30, 2016
	As Previously Reported		Adjustments			As Recast		As Previously Reported		Adjustments			As Recast
Income before income taxes	$	156,912	$	—		$	156,912	$	162,348	$	—		$	162,348
Provision for income taxes	46,940		(1,118		)	45,822		48,163		(2,068		)	46,095
Net income	$	109,972	$	1,118		$	111,090	$	114,185	$	2,068		$	116,253

Earnings per share:
Basic earnings per share	$	1.19	$	0.01		$	1.20	$	1.23	$	0.02		$	1.25
Diluted earnings per share	$	1.17	$	—		$	1.17	$	1.21	$	0.01		$	1.22

Weighted average common shares outstanding:
Basic	92,516		—			92,516		92,665		—			92,665
Diluted	94,329		701			95,030		94,549		729			95,279



	Useful Lives (in Years)	Value
Customer relationships and other identifiable intangible assets	4-10	$	642,012
		$	642,012



	Three Months Ended September 30,							Nine Months Ended September 30,
	2016²			2015				2016²			2015
Net income	$	129,618		$	116,770			$	356,961		$	309,601
Net income per diluted share	1.36			1.24				3.75			3.29
Stock based compensation	17,405			13,887				50,025			44,387
Amortization of intangible assets	46,341			39,869				112,455			120,055
Amortization of premium on receivables	1,348			812				3,687			2,439
Amortization of deferred financing costs and discounts	1,917			1,778				5,568			5,295
Amortization of intangibles at equity method investment	2,406			3,032				7,533			8,404
Non-recurring net gain at equity method investment	—			—				(10,845		)	—
Total pre-tax adjustments	69,417			59,378				168,423			180,580
Income tax impact of pre-tax adjustments at the effective tax rate^*	(15,726		)	(18,579		)	¹	(46,705		)	(57,758		)	¹
Adjusted net income	$	183,310		$	157,570			$	478,679		$	432,424
Adjusted net income per diluted share	$	1.92		$	1.67			$	5.03		$	4.60
Diluted shares	95,307			94,157				95,204			94,069