~~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.~~


•	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 that do not relate to our core operations or that occur infrequently.


•	Investment loss—Our investment results primarily relate to impairment charges related to our investments.


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


•	Interest expense, net—Our interest expense, net includes interest expense on our outstanding debt, interest income on our cash balances and interest on our interest rate swaps.


•	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 on a global basis.

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 75 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 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 63% and 72%


•	Global economic 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, the credit risk of our customers and changes in tax laws across the globe. 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 exchange 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 60% of our revenue in both the nine months ended September 30, 2019 and 2018, 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.

•

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. We believe approximately 13% and 14% of revenues, net were directly impacted by changes in fuel price in the three months ended September 30, 2019 and 2018, respectively. We believe approximately 13% and 15% of revenues, net were directly impacted by changes in fuel price in the nine months ended September 30, 2019 and 2018, respectively.

•

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. The inverse of these situations produces fuel-price spread expansion. We believe

approximately 5% of revenues, net were directly impacted by fuel-price spreads in both the three months ended September 30, 2019 and 2018, respectively. We believe approximately 5% of revenues, net were directly impacted by fuel-price spreads in both the nine months ended September 30, ~~2017~~2019 and 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.2018, respectively.

•

Acquisitions—Since 2002, we have completed over 75 acquisitions of companies and commercial account portfolio. 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. On January 22, 2019, the Company entered into three swap contracts. The objective of these swap contracts is to reduce the variability of cash flows in the previously unhedged interest payments associated with $2.0 billion of variable rate debt, the sole source of which is due to changes in the LIBOR benchmark interest rate. For each of these swap contracts, we will pay a fixed monthly rate and receive one month LIBOR.


•	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.


•	Taxes—We pay taxes in various 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 different than the U.S. tax rate. Consequently, as our earnings fluctuate between taxing jurisdictions, our effective tax rate fluctuates.

~~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

On October 1, 2019, the Company acquired Travelliance, an airline lodging provider primarily located in the U.S for approximately $120 million. This acquisition is not expected to be material to the financial results of the Company.

On ~~August 9, 2017,~~April 1, 2019, we ~~acquired Cambridge Global Payments (“Cambridge”),~~completed the acquisition of NvoicePay, a ~~leading business to business (B2B) international payments~~ provider of full accounts payable automation for businesses in the U.S. The aggregate purchase price of this acquisition was approximately ~~$584.1~~$208 million, ~~in cash,~~ net of cash acquired of ~~$132.3 million and inclusive of a note payable of $23.9~~$4.1 million. 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.

~~On September 26, 2017,~~Additionally, on April 1, 2019, we acquired a ~~fuel~~small maintenance software platform based in the U.K. On July 8, 2019, we made another small acquisition in the payroll card provider space in ~~Russia. On October 13, 2017, we completed~~ the ~~acquisition~~U.S. The aggregate purchase price of ~~Creative Lodging Solutions ("CLS"), a small lodging tuck-in business.~~

these acquisitions was approximately $104 million, net of cash.

During ~~2016,~~2018, we completed acquisitions with an aggregate purchase price of ~~$1.30 billion, net of cash acquired of $51.3 million, which includes deferred payments made during the period related to prior year acquisitions of $6.1 million.~~

In August 2016, we acquired all of the outstanding stock of STP for $1.23 billion, net of cash acquired of $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 expand our presence in the toll market in Brazil. We financed the acquisition using a combination of existing cash and borrowings under our credit facility.

~~During 2016, we 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 $76.7~~$16.8 million, net of cash acquired of ~~$11.1 million.~~

~~During 2016, we~~$11.0 million and made ~~additional investments~~deferred payments of ~~$7.9~~$3.9 million related to ~~our investment~~acquisitions occurring in ~~Masternaut. We also received~~prior years. During 2018, we made investments in other businesses of $4.2 million and payments on a ~~$9.2 million return~~seller note for a prior acquisition of ~~our investment in Masternaut.~~$1.6 million.

~~We report our results from Cambridge acquired in~~Asset Disposition

In October 2018, we completed the ~~third quarter of 2017 in our North America segment for Cambridge's business in the United States and Canada and within our International segment for Cambridge's business in all other countries outside~~sale of the ~~United States and Canada. We are continuing to evaluate the allocation of Cambridge results to our reporting units and segments. The results of operations from the fuel card business~~Chevron portfolio, resulting in Russia are included within our International segment, from the date of acquisition. 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 Travelcard business in the Netherlands and the small business in Brazil are included within our International segment, from the date of acquisition.

~~Asset Dispositions~~

~~Telematics Businesses~~

~~As part of our plan to exit the telematics business, on July 27, 2017, we sold NexTraq, a U.S. fleet telematics business, to Michelin Group for $316 million. We recorded~~ a pre-tax gain ~~on the disposal~~ of ~~NexTraq of $175.0~~$152.8 million during the ~~third~~fourth quarter of ~~2017, which is net of transaction closing costs. We recorded tax on~~2018. Revenues generated from the ~~gain of disposal of $65.8 million. The gain~~

~~on the disposal is included in other (income) expense, net in the accompanying Unaudited Consolidated Statements of Income. NexTraq has~~Chevron portfolio had historically been included in our North America segment.

On September 30, 2017, we entered into an amended Masternaut investment agreement that resulted in the loss of significant influence, and we began accounting for the Masternaut investment by applying the cost method.

We regularly evaluate the carrying value of our Masternaut investment and during the third quarter of 2017, we determined that the fair value of our 44% investment in Masternaut had declined as a result of our loss of significant influence due to the amendment of the Masternaut investment agreement, executed September 30, 2017. As a result, we determined that the carrying value of our investment exceeded its fair value, and concluded that this decline in value was other than temporary. We recorded a $44.6 million impairment loss in the Masternaut investment that includes adjustment for $31.4 million of currency losses previously recognized in accumulated other comprehensive income, in the three and nine months ended September 30, 2017, in the accompanying Unaudited Consolidated Statements of Income.

Results of Operations

Three months ended September 30, ~~2017~~2019 compared to the three months ended September 30, ~~2016~~2018

The following table sets forth selected consolidated statement of income and selected operational data for the three months ended September 30, 2019 and 2018 (in millions, except percentages)*.



(Unaudited)	Three Months Ended September 30, 2019			% of total revenue			Three Months Ended September 30, 2018¹			% of total revenue		Increase (decrease)			% Change
Revenues, net:
North America	$	442.7		65.0	%		$	412.8		66.6	%	$	29.9		7.2	%
International	238.3			35.0	%		206.8			33.4	%	31.6			15.3	%
Total revenues, net	681.0			100.0	%		619.6			100.0	%	61.5			9.9	%
Consolidated operating expenses:
Processing	135.0			19.8	%		128.4			20.7	%	6.6			5.2	%
Selling	51.8			7.6	%		44.8			7.2	%	7.0			15.6	%
General and administrative	98.1			14.4	%		98.1			15.8	%	—			—	%
Depreciation and amortization	67.3			9.9	%		67.3			10.9	%	0.1			0.1	%
Other operating, net	(0.3		)	—	%	��	—			—	%	(0.3		)	NM
Operating income	329.1			48.3	%		281.1			45.4	%	48.1			17.1	%
Investment loss	—			—	%		7.1			1.2	%	(7.1		)	(100.0	)%
Other (income) expense, net	(0.1		)	—	%		0.3			—	%	0.4			NM
Interest expense, net	36.5			5.4	%		36.1			5.8	%	0.4			1.2	%
Provision for income taxes	67.0			9.8	%		79.9			12.9	%	(12.9		)	(16.2	)%
Net income	$	225.8		33.2	%		$	157.7		25.5	%	$	68.1		43.2	%
Operating income for segments:
North America	$	207.0					$	177.8				$	29.2		16.4	%
International	122.2						103.3					18.9			18.2	%
Operating income	$	329.1					$	281.1				$	48.1		17.1	%
Operating margin for segments:
North America	46.8		%				43.1		%			3.7		%
International	51.3		%				50.0		%			1.3		%
Total	48.3		%				45.4		%			3.0		%

NM = Not Meaningful

¹Reflects reclassifications from previously disclosed amounts to conform to current presentation.

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

Revenues

Our consolidated revenues were $681.0 million in the three months ended September 30, 2019, an increase of $61.5 million or 9.9%, from $619.6 million in the three months ended September 30, 2018. The increase in our consolidated revenue was primarily due to:

Organic growth of approximately 11% on a constant fuel price, fuel spread margin, foreign currency and acquisition basis, driven by increases in both volume and revenue per transaction in certain of our payment programs.

The impact of acquisitions completed in 2019, which contributed approximately $9 million in additional revenue.

Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a negative impact on our consolidated revenue for the three months ended September 30, 2019 over the comparable period in 2018 of approximately $7 million. Foreign exchange rates had an unfavorable impact on consolidated revenues in the three months ended September 30, 2019 over the comparable period in 2018 of approximately $7

million, primarily due to unfavorable changes in foreign exchange rates mostly in Brazil and the U.K. Favorable fuel spread margins of approximately $3 million were offset by unfavorable fuel prices of approximately $3 million, in the three months ended September 30, 2019 over the comparable period in 2018.

The increases were partially offset by a decrease to consolidated revenues of approximately $11 million due to the disposition of fuel portfolio during the fourth quarter of 2018.

North America segment revenues

North America revenues were $442.7 million in the three months ended September 30, 2019, an increase of $29.9 million or 7.2%, from $412.8 million in the three months ended September 30, 2018. 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 acquisition and disposition basis, driven by increases in both volume and revenue per transaction in certain of our payment programs.

The impact of acquisitions completed in 2019, which contributed approximately $8 million in additional revenue.

•

Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a negative impact on our North America segment revenue in three months ended September 30, 2019 over the comparable period in 2018 of approximately $1 million, primarily due to unfavorable impact of foreign exchanges rates in Canada. Favorable fuel spread margins of approximately $3 million were offset by unfavorable fuel prices of approximately $3 million, in the three months ended September 30, 2019 over the comparable period in 2018.

The increases were partially offset by a decrease to North America revenues of approximately $11 million due to the disposition of fuel portfolio during the fourth quarter of 2018.

International segment revenues

International segment revenues were $238.3 million in the three months ended September 30, 2019, an increase of $31.6 million or 15.3%, from $206.8 million in the three months ended September 30, 2018. The increase in our International segment revenue was primarily due to:

Organic growth of approximately 17% on a constant fuel price, fuel spread margin and acquisition basis, driven by increases in both volume and revenue per transaction in certain of our payment programs.

The impact of an acquisition completed in 2019, which contributed approximately $1 million in additional revenue.

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 30, 2019 over the comparable period in 2018 of approximately $6 million primarily due to unfavorable foreign exchange rates mostly in Brazil and the U.K.

Revenues by geography and product category. Set forth below are further breakdowns of revenue by geography and product category for the three months ended September 30, 2019 and 2018 (in millions).



	Three Months Ended September 30,
Revenues, net by Geography*	2019				2018
(Unaudited)	Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net
United States	$	414	61	%	$	391	63	%
Brazil	106		16	%	92		15	%
United Kingdom	68		10	%	63		10	%
Other	93		14	%	73		12	%
Consolidated revenues, net	$	681	100	%	$	620	100	%

* Columns may not calculate due to rounding.



	Three Months Ended September 30,
Revenues, net by Product Category*¹	2019				2018
(Unaudited)	Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net
Fuel	$	296	44	%	$	283	46	%
Corporate Payments	138		20	%	105		17	%
Tolls	89		13	%	76		12	%
Lodging	56		8	%	48		8	%
Gift	48		7	%	57		9	%
Other	53		8	%	50		8	%
Consolidated revenues, net	$	681	100	%	$	620	100	%

¹Reflects certain reclassifications of revenue in 2018 between product categories as the Company realigned its Brazil business into product lines, resulting in refinement of revenue classified as fuel versus tolls and the eCash/OnRoad product being fuel versus other.

* Columns may not calculate due to rounding.

Consolidated operating expenses

Processing. Processing expenses were $135.0 million in the three months ended September 30, 2019, an increase of $6.6 million or 5.2%, from $128.4 million in the comparable prior period. Increases in processing expenses were primarily due to organic growth in the business, as well as expenses related to acquisitions completed in 2019 of approximately $4 million, partially offset by the favorable impact of fluctuations in foreign exchange rates of approximately $1 million and a decrease in bad debt expense of approximately $2 million.

Selling. Selling expenses were $51.8 million in the three months ended September 30, 2019, an increase of $7.0 million or 15.6%, from $44.8 million in the comparable prior period. Increases in selling expenses are primarily due to additional spending in certain lines of business, as well as expenses related to acquisitions completed in 2019 of approximately $3 million, partially offset by the favorable impact of fluctuations in foreign exchange rates of approximately $1 million.

General and administrative. General and administrative expenses remained constant at $98.1 million in both the three months ended September 30, 2019 and 2018, respectively. Increases in general and administrative expenses were primarily due to acquisitions completed in 2019 of approximately $4 million and additional investments in information technology of approximately $4 million. These increases were partially offset by a decrease in stock compensation expense of approximately $4 million and by the favorable impact of fluctuations in foreign exchange rates of approximately $1 million.

Depreciation and amortization. Depreciation and amortization expenses remained constant at $67.3 million in both the three months ended September 30, 2019 and 2018. Depreciation and amortization expenses remained consistent primarily due to expenses related to acquisitions completed in 2019 of approximately $1 million, offset by the favorable impact of fluctuations in foreign exchange rates of approximately $1 million.

Investment loss. Investment loss of $7 million was recorded in the three months ended September 30, 2018, related to a non-cash impairment charge recorded to a cost method investment.

Interest expense, net. Interest expense was $36.5 million in the three months ended September 30, 2019, an increase of $0.4 million or 1.2%, from $36.1 million in the comparable prior period. The increase in interest expense is primarily due to the impact of acquisitions closed in 2019 and increases in LIBOR. The following table sets forth the average interest rates paid on borrowings under our Credit Facility, excluding the related unused facility fees and swaps.



	Three Months Ended September 30,
(Unaudited)	2019		2018
Term loan A	3.73	%	3.59	%
Term loan B	4.25	%	4.09	%
Revolver A, B & C USD Borrowings	3.87	%	3.59	%
Revolver B GBP Borrowings	2.21	%	2.12	%
Foreign swing line	2.17	%	2.16	%

The average unused facility fee for the Credit Facility was 0.30% in both the three month periods ending September 30, 2019 and 2018, respectively.

On January 22, 2019, we entered into three interest rate swap cash flow contracts. The objective of these interest rate swap contracts is to reduce the variability of cash flows in the previously unhedged interest payments associated with $2 billion of variable rate debt, tied to the one month LIBOR benchmark interest rate. During the three months ended September 30, 2019, as a result of these swap contracts, we incurred additional interest expense of $1.6 million or 0.31% over the average LIBOR rates on $2 billion of borrowings.

Provision for income taxes. The provision for income taxes in the three months ended September 30, 2019 was $67.0 million, a decrease of $12.9 million or 16.2%, as compared to $79.9 million in the three months ended September 30, 2018. 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. The decrease in the provision for taxes for the three month period ending September 30, 2019 over the comparable period in 2018 was primarily due to a $22.7 million true-up in the third quarter of 2018 for our provisional transition tax liability originally recorded at the end of 2017 in connection with the Tax Cuts and Jobs Act of 2017. The provision for taxes was further reduced due to higher excess tax benefits on share based compensation in the three months ended September 30, 2019 as compared to the three months ended September 30, 2018.

Our effective tax rate for the three months ended September 30, 2019 was 22.9% compared to 33.6% for three months ended September 30, 2018. Excluding the impact of the transitional tax adjustment in 2018, our tax rate in the third quarter of 2018 would have been 23.4%.

We pay taxes in 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 different 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 to $225.8 million in the three months ended September 30, 2019, an increase of $68.1 million or 43.2%, from $157.7 million in the three months ended September 30, 2018.

Operating income and operating margin

Consolidated operating income. Operating income was $329.1 million in the three months ended September 30, 2019, an increase of $48.1 million or 17.1%, from $281.1 million in the comparable prior period. Our operating margin was 48.3% and 45.4% for the three months ended September 30, 2019 and 2018, respectively. These increases were driven primarily by organic growth and acquisitions completed in 2019. The increases were partially offset by a decrease to operating income of approximately $8 million due to the disposition of fuel portfolio during the fourth quarter of 2018, and the negative impact of the macroeconomic environment of approximately $4 million, driven by unfavorable movements in foreign exchange rates and unfavorable fuel prices, partially offset by higher fuel price spreads.

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 was $207.0 million in the three months ended September 30, 2019, an increase of $29.2 million or 16.4%, from $177.8 million in the comparable prior period. North America operating margin was 46.8% and 43.1% for the three months ended September 30, 2019 and 2018, respectively. These increases were due primarily to organic growth and acquisitions completed in 2019. The increases were partially offset by a decrease to North America operating income of approximately $8 million due to the disposition of fuel portfolio during the fourth quarter of 2018.

International segment operating income. International operating income was $122.2 million in the three months ended September 30, 2019, an increase of $18.9 million or 18.2%, from $103.3 million in the comparable prior period. International operating margin was 51.3% and 50.0% for the three months ended September 30, 2019 and 2018, respectively. These increases were due primarily to organic growth. These increases were partially offset by the negative impact of the macroeconomic environment of approximately $3 million, driven primarily by unfavorable movements in foreign exchange rates.

Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018

The following table sets forth selected consolidated statement of income data for the ~~three~~nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 (in ~~thousands)~~millions, except percentages)*.


(Unaudited)	Three Months Ended September 30, 2017			% of total revenue		Three Months Ended September 30, 2016			% of total revenue		Increase (decrease)			% Change		Nine Months Ended September 30, 2019			% of total revenue		Nine Months Ended September 30, 2018¹			% of total revenue		Increase (decrease)			% Change
Revenues, net:
North America	$	364,443		63.1	%	$	345,868		71.4	%	$	18,575		5.4	%	$	1,257.6		64.5	%	$	1,148.0		64.1	%	$	109.5		9.5	%
International	213,434			36.9	%	138,558			28.6	%	74,876			54.0	%	692.4			35.5	%	642.0			35.9	%	50.4			7.8	%
Total revenues, net	577,877			100.0	%	484,426			100.0	%	93,451			19.3	%	1,950.0			100.0	%	1,790.1			100.0	%	159.9			8.9	%
Consolidated operating expenses:
Merchant commissions	27,687			4.8	%	28,214			5.8	%	(527		)	(1.9	)%
Processing	111,283			19.3	%	96,233			19.9	%	15,050			15.6	%	384.6			19.7	%	356.1			19.9	%	28.5			8.0	%
Selling	45,060			7.8	%	34,180			7.1	%	10,880			31.8	%	152.9			7.8	%	135.9			7.6	%	17.0			12.5	%
General and administrative	92,043			15.9	%	77,904			16.1	%	14,139			18.1	%	297.6			15.3	%	284.9			15.9	%	12.8			4.5	%
Depreciation and amortization	69,156			12.0	%	57,084			11.8	%	12,072			21.1	%	205.7			10.5	%	207.4			11.6	%	(1.7		)	(0.8	)%
Other operating, net	11			—	%	(244		)	(0.1	)%	255			104.5	%	(1.5		)	(0.1	)%	(0.1		)	—	%	(1.3		)	NM
Operating income	232,637			40.3	%	191,055			39.4	%	41,582			21.8	%	910.6			46.7	%	806.0			45.0	%	104.7			13.0	%
Investment loss	47,766			8.3	%	2,744			0.6	%	45,022			1,640.7	%	15.7			0.8	%	7.1			0.4	%	8.5			119.1	%
Other (income) expense, net	(175,271		)	(30.3	)%	293			0.1	%	175,564			NM
Other expense, net																0.6			—	%	0.5			—	%	0.2			35.1	%
Interest expense, net	29,344			5.1	%	17,814			3.7	%	11,530			64.7	%	115.1			5.9	%	100.3			5.6	%	14.8			14.8	%
Loss on extinguishment of debt	3,296			0.6	%	—			—	%	3,296			—	%
Provision for income taxes	124,679			21.6	%	40,586			8.4	%	84,093			207.2	%	119.7			6.1	%	188.6			10.5	%	(68.9		)	(36.5	)%
Net income	$	202,823		35.1	%	$	129,618		26.8	%	$	73,205		56.5	%	$	659.6		33.8	%	$	509.5		28.5	%	$	150.1		29.5	%
Operating income for segments:
North America	$	138,748				$	135,760				$	2,988		2.2	%	$	563.6				$	495.1				$	68.5		13.8	%
International	93,889					55,295					38,594			69.8	%	347.1					310.9					36.2			11.6	%
Operating income	$	232,637				$	191,055				$	41,582		21.8	%	$	910.6				$	806.0				$	104.7		13.0	%
Operating margin for segments:
North America	38.1		%			39.3		%			(1.2		)%			44.8		%			43.1		%			1.7		%
International	44.0		%			39.9		%			4.1		%			50.1		%			48.4		%			1.7		%
Consolidated	40.3		%			39.4		%			0.8		%			46.7		%			45.0		%			1.7		%

NM = Not Meaningful

¹Reflects reclassifications from previously disclosed amounts to conform to current presentation.

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

Revenues

Our consolidated revenues increased from ~~$484.4~~$1,790.1 million in the ~~three~~nine months ended September 30, ~~2016~~2018 to ~~$577.9~~$1,950.0 million in the ~~three~~nine months ended September 30, ~~2017,~~2019, an increase of ~~$93.5~~$159.9 million, or ~~19.3%~~8.9%. The increase in our consolidated revenue was primarily due to:

~~The impact of acquisitions during 2016 and 2017, which contributed approximately $58 million in additional revenue.~~

Organic growth of approximately 8%12% on a constant fuel price, fuel spread margin, foreign currency and pro forma basis, driven by increases in both volume and revenue per transaction in certain of our payment programs.

The impact of acquisitions during 2019, which contributed approximately $15 million in additional revenue.

Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a ~~favorable~~negative impact on our consolidated revenue for the ~~three~~nine months ended September 30, ~~2017~~2019 over the comparable period in ~~2016~~2018 of approximately $4$40 million. ~~This was primarily~~Foreign exchange rates had an unfavorable impact on consolidated revenues of approximately $52 million due to ~~favorable changes~~unfavorable fluctuations in foreign exchange rates primarily in Brazil and the ~~United Kingdom in the three months ended September 30, 2017 compared to 2016.~~U.K. and lower fuel prices of $2 million, partially offset by favorable fuel spread margins of approximately $14 million.

~~These~~The increases were partially offset by ~~the impact~~a decrease to consolidated revenues of approximately $19 million due to the disposition of fuel portfolio during the ~~NexTraq business in July 2017~~fourth quarter of ~~approximately $10 million.~~

2018.

North America segment revenues

North America revenues increased from ~~$345.9~~$1,148.0 million in the ~~three~~nine months ended September 30, ~~2016~~2018 to ~~$364.4~~$1,257.6 million in the ~~three~~nine months ended September 30, ~~2017,~~2019, an increase of ~~$18.6~~$109.5 million, or ~~5.4%~~9.5%. The increase in our North America segment revenue was primarily due to:

~~The impact of our Cambridge acquisition during the third quarter of 2017, which contributed approximately $12 million in additional revenue.~~

Organic growth of approximately 5%10%, 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 impact of our acquisitions during 2019, which contributed approximately $13 million in additional revenue.

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 in ~~three~~the nine months ended September 30, ~~2017~~2019 over the comparable period in ~~2016~~2018 of approximately ~~$2 million,~~$6 million. This was primarily due to favorable fuel spread margins of approximately $14 million, partially offset by the unfavorable impact of foreign exchange rates in Canada of $4 million and lower fuel ~~spread margins.~~prices of approximately $4 million.

~~These~~The increases were partially offset by ~~the impact~~a decrease to North America revenues of approximately $19 million due to the disposition of fuel portfolio during the ~~NexTraq business in July 2017~~fourth quarter of ~~approximately $10 million.~~2018.

International segment revenues

International segment revenues increased from ~~$138.6~~$642.0 million in the ~~three~~nine months ended September 30, ~~2016~~2018 to ~~$213.4~~$692.4 million in the ~~three~~nine months ended September 30, ~~2017,~~2019, an increase of ~~$74.9~~$50.4 million, or ~~54.0%~~7.8%. The increase in our International segment revenue was primarily due to:

~~The impact of acquisitions during 2016 and 2017, which contributed approximately $~~46 ~~million in additional revenue.~~

Organic growth of approximately ~~12%~~14% on a constant macroeconomic and pro forma basis, driven by increases in both volume and revenue per transaction in certain of our payment programs.

The impact of an acquisition in 2019, which contributed approximately $2 million in additional revenue.

Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a ~~positive~~negative impact on our International segment revenue for the ~~three~~nine months ended September 30, ~~2017~~2019 over the comparable period in ~~2016~~2018 of approximately $6$46 million. ~~Changes~~Unfavorable foreign exchange rates negatively impacted consolidated revenues by approximately $48 million primarily due to unfavorable changes in foreign exchange rates mostly in Brazil and the U.K., partially offset by the favorable impact of higher fuel ~~price had favorable impacts~~prices on consolidated revenues of approximately ~~$4 million~~$2 million.

Revenues by geography and ~~$2 million, respectively.~~product category. Set forth below are further breakdowns of revenue by geography and product category for the nine months ended September 30, 2019 and 2018 (in millions).



	Nine Months Ended September 30,
Revenues, net by Geography*	2019				2018
(Unaudited)	Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net
United States	$	1,174	60	%	$	1,082	60	%
Brazil	316		16	%	296		17	%
United Kingdom	205		11	%	192		11	%
Other	256		13	%	220		12	%
Consolidated revenues, net	$	1,950	100	%	$	1,790	100	%

* Columns may not calculate due to rounding.



	Nine Months Ended September 30,
Revenues, net by Product Category*¹	2019				2018
(Unaudited)	Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net
Fuel	$	874	45	%	$	827	46	%
Corporate Payments	376		19	%	300		17	%
Tolls	264		14	%	246		14	%
Lodging	148		8	%	132		7	%
Gift	133		7	%	139		8	%
Other	156		8	%	147		8	%
Consolidated revenues, net	$	1,950	100	%	$	1,790	100	%

* Columns may not calculate due to rounding.

Consolidated operating expenses

~~Merchant commissions.~~ ~~Merchant commissions decreased~~Processing. Processing expenses increased from ~~$28.2~~$356.1 million in the ~~three~~nine months ended September 30, ~~2016~~2018 to ~~$27.7~~$384.6 million in the ~~three~~nine months ended September 30, ~~2017, a decrease of $0.5 million, or 1.9%. This decrease was primarily due to the fluctuation of the margin between the wholesale cost and retail price of fuel.~~

~~Processing.~~ ~~Processing expenses increased from $96.2 million in the three months ended September 30, 2016 to $111.3 million in the three months ended September 30, 2017,~~2019, an increase of ~~$15.1~~$28.5 million, or ~~15.6%~~8.0%. Increases in processing expenses were primarily due to organic growth in the business, incremental bad debt expense of approximately $11 million and expenses related to acquisitions completed in ~~2016 and 2017~~2019 of approximately ~~$14~~$7 million, ~~and~~partially offset by the favorable impact of fluctuations in foreign exchange rates ~~and incremental spend~~of approximately $10 million.

Selling. Selling expenses increased from $135.9 million in the nine months ended September 30, 2018 to $152.9 million in the nine months ended September 30, 2019, an increase of $17.0 million, or 12.5%. Increases in selling expenses are primarily due to ~~increases~~additional spending in ~~volume.~~certain lines of business, as well as expenses related to acquisitions completed in 2019 of approximately $5 million, which were partially offset by the favorable impact of fluctuations in foreign exchange rates of approximately $4 million.

General and administrative. General and administrative expenses increased from $284.9 million in the nine months ended September 30, 2018 to $297.6 million in the nine months ended September 30, 2019, an increase of $12.8 million, or 4.5%. The increase was primarily due to investments in information technology of approximately $11 million, acquisitions completed in 2019 of approximately $9 million and legal settlements of $4 million over the comparable prior period. These increases were partially offset by the favorable impact of ~~disposition of the NexTraq business~~fluctuations in foreign exchange rates of approximately $3$7 million and ~~lower bad debt~~a decrease in stock compensation expense of approximately $2$5 million.

~~Selling.~~ ~~Selling expenses increased~~

Depreciation and amortization. Depreciation and amortization decreased from ~~$34.2~~$207.4 million in the ~~three~~nine months ended September 30, ~~2016~~2018 to ~~$45.1~~$205.7 million in the ~~three~~nine months ended September 30, ~~2017, an increase~~2019, a decrease of ~~$10.9~~$1.7 million, or ~~31.8%~~0.8%. ~~Increases in spending were~~The decrease was primarily due to ~~ongoing incremental~~the favorable impact of foreign exchange rates of approximately $7 million, partially offset by expenses related to acquisitions completed in ~~2016 and 2017~~2019 of approximately $9$5 million.

Other operating, net. Other operating, net was $1.5 million additional spending in certain lines of business and the impact of foreign exchange rates. These increases were partially offset by the impact of disposition of the NexTraq business of approximately $1 million.

~~General and administrative.~~ ~~General and administrative expenses increased from $77.9 million~~ in the ~~three~~nine months ended September 30, ~~2016~~2019, compared to ~~$92.0~~other operating, net of $0.1 million in the ~~three~~nine months ended September 30, ~~2017,~~2018, an ~~increase~~immaterial change.

Investment loss. Investment loss of $14.1 million, or 18.1%. The increase was primarily due to ongoing expenses related to acquisitions completed in 2016 and 2017 of approximately $10 million, increased stock based compensation expense of approximately $7 million and the impact of foreign exchange rates. These increases were partially offset by the impact of disposition of the NexTraq business of approximately $1 million.

~~Depreciation and amortization.~~ ~~Depreciation and amortization increased from $57.1~~$15.7 million in the ~~three~~nine months ended September 30, ~~2016~~2019 relates to ~~$69.2~~an impairment charge to our telematics investment, as compared to an investment loss of $7.1 million in the ~~three~~nine months ended September 30, ~~2017, an increase of $12.1 million, or 21.1%. The increase was primarily due to amortization of intangible assets~~2018 related to acquisitions completed in 2016 and 2017 of approximately $13 million, incremental expense related to capitalized development of software and the impact of foreign exchange rates. These increases were partially offset by the impact of disposition of the NexTraq business of approximately $2 million.

~~Investment loss.~~ Investment loss was $47.8 million in the three months ended September 30, 2017, compared to $2.7 million in the three months ended September 30, 2016. We regularly evaluate the carrying value of our Masternauta non-cash impairment charge recorded at a cost method investment ~~and~~ during the third quarter of ~~2017,~~2018. During the first quarter of 2019, we determined that the fair value of our ~~44%~~ investment ~~in Masternaut had declined as a result of our loss of significant influence due to the amendment~~was below cost and recorded an impairment of the ~~Masternaut~~ investment ~~agreement, executed September 30, 2017. As a result, we determined that the carrying value~~ of ~~our~~$15.7 million based on observable price changes. The investment ~~exceeded its fair value, and concluded that this decline in value~~ was ~~other than temporary. We recorded a $44.6 million impairment loss~~sold in the ~~Masternaut investment that includes adjustment for $31.4~~second quarter at an amount approximating carrying value.

Other expense, net. Other expense, net was $0.6 million ~~of currency losses previously recognized in accumulated other comprehensive income,~~ in the ~~three~~nine months ended September 30, ~~2017, in the accompanying Unaudited Consolidated Statements of Income. There was also a non-recurring net recovery of purchase price of approximately $11 million during the second quarter of 2016.~~

~~Other (income) expense, net.~~ ~~Other income, net was $175.3 million in the three months ended September 30, 2017,~~2019, compared to other expense, net of ~~$0.3~~$0.5 million in the ~~three~~nine months ended September 30, ~~2016. The increase was due primarily to the pre-tax gain on the sale of our Nextraq business of $175 million in the third quarter of 2017.~~2018, an immaterial change.

Interest expense, net. Interest expense increased from ~~$17.8~~$100.3 million in the ~~three~~nine months ended September 30, ~~2016~~2018 to ~~$29.3~~$115.1 million in the ~~three~~nine months ended September 30, ~~2017,~~2019, an increase of ~~$11.5~~$14.8 million, or ~~64.7%~~14.8%. The increase in interest expense is primarily due to the impact of additional borrowings to repurchase our common stock and to finance ~~the~~ acquisitions ~~of STP and Travelcard~~ completed ~~during the third quarter of 2016 and Cambridge completed during the third quarter of 2017, and~~in 2019, as well as increases in LIBOR. The following table sets forth the average interest rates paid on borrowings under our Credit Facility, excluding the related unused ~~credit~~ facility ~~fees.~~fees and swaps.


	Three Months Ended September 30,				Nine Months Ended September 30,
(Unaudited)	2017		2016		2019		2018
Term loan A	2.98	%	1.99	%	3.89	%	3.43	%
Term loan B	3.32	%	3.75	%	4.41	%	3.87	%
Domestic Revolver A	2.99	%	2.08	%	3.97	%	3.42	%
Foreign Revolver A	2.00	%	1.77	%
Revolver B GBP Borrowings					2.22	%	2.06	%
Foreign swing line	1.97	%	1.73	%	2.17	%	2.09	%

The average unused ~~credit~~ facility fee for ~~Domestic Revolver A~~the Credit Facility was ~~0.35%~~0.30% and ~~0.30%~~0.31% in the ~~three month period~~nine months ending September 30, ~~2017~~2019 and ~~2016~~,2018, respectively.

~~Loss on extinguishment~~ On January 22, 2019, we entered into three interest rate swap contracts. The objective of ~~debt.~~ ~~Loss on early extinguishment~~these interest rate swap contracts is to reduce the variability of ~~debt of $3.3 million relates to our write-off of debt issuance costs~~cash flows in the previously unhedged interest payments associated with $2 billion of variable rate debt, tied to the ~~refinancing~~one month LIBOR benchmark interest rate. During the nine months ended September 30, 2019, as a result of ~~our existing credit facility during~~these swaps, we incurred additional interest expense of approximately $2.2 million or 0.16% over the ~~third quarter~~average LIBOR rates on $2 billion of ~~2017.~~borrowings.

Provision for income taxes. The provision for income taxes ~~increased~~decreased from ~~$40.6~~$188.6 million in the ~~three~~nine months ended September 30, ~~2016~~2018 to ~~$124.7~~$119.7 million in the ~~three~~nine months ended September 30, ~~2017, an increase~~2019, a decrease of ~~$84.1~~$68.9 million, or ~~207.2%~~36.5%. 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~~The second quarter of 2019 included an income tax ~~rate increased from 23.9% for three months ended September 30, 2016~~benefit of $65 million due to ~~38.1% for~~ the ~~three months ended September 30, 2017. The 2017 tax rate was impacted by the gain on sale~~final disposition of the NexTraq business of $175 million, all at the higher U.S. tax rate, and the Masternaut impairment charge in the quarter, which had no corresponding tax benefit. Our tax rate in the quarter was 29.4%, excluding the impact of the NexTraq sale, investment impairment and loss on extinguishment of debt. The 2016 tax rate was favorably impacted by a one-time nonrecurring net gain at our Masternaut investment, ~~that favorably impacted pre-tax earnings, but was not subject~~which will allow us to ~~income tax. The 2016 rate was also favorably impacted by higher excess tax benefits~~carryback the capital loss on ~~share-based compensation~~our investment in Masternaut and offset it against a previously recorded capital gain from the sale of Nextraq in the third quarter of ~~2016 versus~~2017.

Our effective tax rate was 15.4% for the ~~third quarter~~nine months ended September 30, 2019 as compared to 27.0% in the nine months ended September 30, 2018. Our effective tax rate for the nine months ended September 30, 2019 reflects the reversal of ~~2017.~~our valuation allowance in our telematics investment and the remeasurement of the related deferred tax asset due to the capital loss realized on the investment that was carried back to 2017 when the US federal tax rate was 35%. Our tax rate was also impacted by the impairment charge to our book investment in Masternaut in the first quarter. Excluding these discreet items, our tax rate for the nine months ended September 30, 2019 would have been 23.3%.

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. Also, the excess tax benefit on share based compensation is part~~

~~of the effective tax rate. As a result, the tax rate is impacted by the number of stock options exercised or restricted shares vested during the reporting period.~~

~~Net income.~~ For the reasons discussed above, our net income increased from $129.6 million in the three months ended September 30, 2016 to $202.8 million in the three months ended September 30, 2017, an increase of $73.2 million, or 56.5%.

~~Operating income and operating margin~~

~~Consolidated operating income.~~ Operating income increased from $191.1 million in the three months ended September 30, 2016 to $232.6 million in the three months ended September 30, 2017, an increase of $41.6 million, or 21.8%. Our operating margin was 39.4% and 40.3% for the three months ended September 30, 2016 and 2017, respectively. The increase in operating income was primarily due to acquisitions completed in 2016 and 2017 and organic growth, as well as the positive impact of the macroeconomic environment of approximately $4 million, driven primarily by favorable fuel prices and fluctuations in foreign exchange rates. These increases were partially offset by the negative impact of higher amortization and depreciation expense related to acquisitions of STP and Travelcard completed in the third quarter of 2016 and Cambridge completed in the third quarter of 2017, additional stock based compensation of approximately $7 million and the disposition of the NexTraq business in July 2017 of approximately $4 million.

~~North America segment operating income.~~ North America operating income increased from $135.8 million in the three months ended September 30, 2016 to $138.7 million in the three months ended September 30, 2017, an increase of $3.0 million, or 2.2%. North America operating margin was 39.3% and 38.1% for the three months ended September 30, 2016 and 2017, respectively. The increase in operating income was due primarily to organic growth and the positive impact of the macroeconomic environment of approximately $1 million, driven by favorable fuel prices. These increases were partially offset by additional stock based compensation of approximately $6 million, the negative impact of higher amortization and depreciation expense related to our acquisition of Cambridge in the third quarter of 2017 and the disposition of the NexTraq business in July 2017 of approximately $4 million.

~~International segment operating income.~~ International operating income increased from $55.3 million in the three months ended September 30, 2016 to $93.9 million in the three months ended September 30, 2017, an increase of $38.6 million, or 69.8%. International operating margin was 39.9% and 44.0% for the three months ended September 30, 2016 and 2017, respectively. The increase in operating income was due primarily to the impact of acquisitions completed in 2016 and organic growth, as well as the positive impact of the macroeconomic environment of approximately $3 million, driven primarily by favorable fluctuations in foreign exchange rates. The higher operating margin was driven by the positive impact of process improvements in our recently acquired STP business, offset by higher amortization and depreciation expense related to acquisitions of STP and Travelcard completed in the third quarter of 2016 and additional stock based compensation expense of approximately $1 million.

~~Nine months ended September 30, 2017 compared to the nine months ended September 30, 2016~~

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

(Unaudited) Nine Months Ended September 30, 2017
% of total
revenue
Nine Months Ended September 30, 2016
% of total
revenue

Increase
(decrease)
% Change
Revenues, net:
North America $ 1,037,386
63.3 % $ 950,542
72.2 % $ 86,844
9.1 %
International 602,161
36.7 % 366,051
27.8 % 236,110
64.5 %
Total revenues, net 1,639,547
100.0 % 1,316,593
100.0 % 322,954
24.5 %
Consolidated operating expenses:
Merchant commissions 82,690
5.0 % 78,755
6.0 % 3,935
5.0 %
Processing 316,429
19.3 % 256,738
19.5 % 59,691
23.2 %
Selling 122,854
7.5 % 92,680
7.0 % 30,174
32.6 %
General and administrative 275,046
16.8 % 209,084
15.9 % 65,962
31.5 %
Depreciation and amortization 198,731
12.1 % 141,848
10.8 % 56,883
40.1 %
Other operating, net 49
— % (690 ) (0.1 )% 739
107.1 %
Operating income 643,748
39.3 % 538,178
40.9 % 105,570
19.6 %
Investment loss (income) 52,497
3.2 % (2,247 ) (0.2 )% 54,744
(2,436.3 )%
Other (income) expense, net (173,626 ) (10.6 )% 1,056
0.1 % 174,682
NM
Interest expense, net 76,322
4.7 % 49,905
3.8 % 26,417
52.9 %
Loss on extinguishment of debt 3,296
0.2 % —
— % 3,296
— %
Provision for income taxes 227,756
13.9 % 132,503
10.1 % 95,253
71.9 %
Net income $ 457,503
27.9 % $ 356,961
27.1 % $ 100,542
28.2 %
Operating income for segments:
North America $ 394,646
$ 367,221
$ 27,425
7.5 %
International 249,102
170,957
78,145
45.7 %
Operating income $ 643,748
$ 538,178
$ 105,570
19.6 %
Operating margin for segments:
North America 38.0 % 38.6 % (0.6 )%
International 41.4 % 46.7 % (5.3 )%
Consolidated 39.3 % 40.9 % (1.6 )%

~~NM = Not Meaningful~~

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

~~Revenues~~

Our consolidated revenues increased from $1,316.6 million in the nine months ended September 30, 2016 to $1,639.5 million in the nine months ended September 30, 2017, an increase of $323.0 million, or 24.5%. The increase in our consolidated revenue was primarily due to:

~~The impact of acquisitions during 2016 and 2017, which contributed approximately $175 million in additional revenue.~~

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

Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a positive impact on our consolidated revenue for the nine months ended September 30, 2017 over the comparable period

in 2016 of approximately $17 million. We believe the favorable impact of higher fuel prices and fuel spread margins, primarily in the U.S., had a favorable impact on consolidated revenues of approximately $22 million. Conversely, changes in foreign exchange rates had an unfavorable impact on consolidated revenues of approximately $5 million due to unfavorable fluctuations in foreign exchange rates primarily in Brazil and the United Kingdom in the nine months ended September 30, 2017 compared to 2016.

~~These increases were partially offset by the impact of the disposition of the NexTraq business in July 2017 of approximately $10 million.~~

~~North America segment revenues~~

North America revenues increased from $950.5 million in the nine months ended September 30, 2016 to $1,037.4 million in the nine months ended September 30, 2017, an increase of $86.8 million, or 9.1%. The increase in our North America segment revenue was primarily due to:

~~The impact of our Cambridge acquisition during the third quarter of 2017, which contributed approximately $12 million in additional revenue.~~

~~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.~~

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 nine months ended September 30, 2017 over the comparable period in 2016 of approximately $19 million. This was primarily due to the favorable impact of changes in fuel prices and slightly higher fuel spread margins.

~~These increases were partially offset by the impact of the disposition of the NexTraq business in July 2017 of approximately $10 million.~~

~~International segment revenues~~

International segment revenues increased from $366.1 million in the nine months ended September 30, 2016 to $602.2 million in the nine months ended September 30, 2017, an increase of $236.1 million, or 64.5%. The increase in our International segment revenue was primarily due to:

~~The impact of acquisitions during 2016 and 2017, which contributed approximately $163 million in additional revenue.~~

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

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 months ended September 30, 2017 over the comparable period in 2016 of approximately $2 million. This was primarily due to unfavorable fluctuations in foreign exchange rates, partially offset by the impact of higher fuel prices.

~~Consolidated operating expenses~~

~~Merchant commissions.~~ Merchant commissions increased from $78.8 million in the nine months ended September 30, 2016 to $82.7 million in the nine months ended September 30, 2017, an an increase of $3.9 million, or 5.0%. This increase was primarily due to the fluctuation of the margin between the wholesale cost and retail price of fuel and the impact of higher volume in certain revenue streams where merchant commissions are paid.

~~Processing.~~ Processing expenses increased from $256.7 million in the nine months ended September 30, 2016 to $316.4 million in the nine months ended September 30, 2017, an increase of $59.7 million, or 23.2%. Increases in processing expenses were primarily due to expenses related to acquisitions completed in 2016 and 2017 of approximately $45 million, inclusive of incremental bad debt expense of $11 million, as well as the impact of changes in foreign exchange rates, partially offset by the impact of negotiated lower vendor processing costs. The increase in bad debt was primarily due to bad debt inherent in the acquired STP business. These increases were partially offset by the impact of disposition of the NexTraq business of approximately $3 million.

~~Selling.~~ Selling expenses increased from $92.7 million in the nine months ended September 30, 2016 to $122.9 million in the nine months ended September 30, 2017, an increase of $30.2 million, or 32.6%. Increases in spending were primarily due to ongoing expenses related to acquisitions completed in 2016 and 2017 of approximately $19 million and additional spending in certain lines of business. These increases were partially offset by the impact of disposition of the NexTraq business of approximately $1 million.

~~General and administrative.~~ General and administrative expenses increased from $209.1 million in the nine months ended September 30, 2016 to $275.0 million in the nine months ended September 30, 2017, an increase of $66.0 million, or 31.5%. The increase was primarily due to ongoing expenses related to acquisitions completed in 2016 and 2017 of approximately $28 million, increased stock based compensation expense of approximately $19 million and increases in other professional fees of approximately $7 million. These increases were partially offset by the impact of disposition of the NexTraq business of approximately $1 million.

~~Depreciation and amortization.~~ Depreciation and amortization increased from $141.8 million in the nine months ended September 30, 2016 to $198.7 million in the nine months ended September 30, 2017, an increase of $56.9 million, or 40.1%. The increase was primarily due to amortization of intangible assets related to acquisitions completed in 2016 and 2017 of approximately $39 million and incremental expense related to capitalized development of software. These increases were partially offset by the impact of disposition of the NexTraq business of approximately $2 million.

~~Investment loss (income).~~ Investment loss was $52.5 million in the nine months ended September 30, 2017, compared to investment income of $2.2 million in the nine months ended September 30, 2016. We regularly evaluate the carrying value of our Masternaut investment and during the third quarter of 2017, we determined that the fair value of our 44% investment in Masternaut had declined as a result of our loss of significant influence due to the amendment of the Masternaut investment agreement, executed September 30, 2017. As a result, we determined that the carrying value of our investment exceeded its fair value, and concluded that this decline in value was other than temporary. We recorded a $44.6 million impairment loss in the Masternaut investment that includes adjustment for $31.4 million of currency losses previously recognized in accumulated other comprehensive income, in the nine months ended September 30, 2017, in the accompanying Unaudited Consolidated Statements of Income.

~~Other (income) expense, net.~~ Other income, net was $173.6 million in the nine months ended September 30, 2017, compared to other expense, net of $1.1 million in the nine months ended September 30, 2016. The increase was due primarily to the pre-tax gain on the sale of our Nextraq business of $175 million in the third quarter of 2017.

~~Interest expense, net.~~ Interest expense increased from $49.9 million in the nine months ended September 30, 2016 to $76.3 million in the nine months ended September 30, 2017, an increase of $26.4 million, or 52.9%. The increase in interest expense is primarily due to the impact of additional borrowings to finance the acquisitions of STP and Travelcard completed during the third quarter of 2016 and Cambridge completed during the third quarter of 2017, and increases in LIBOR. The following table sets forth the average interest rates paid on borrowings under our Credit Facility, excluding the related unused credit facility fees.

Nine Months Ended September 30,
(Unaudited) 2017 2016
Term loan A 2.74 % 1.96 %
Term loan B 3.28 % 3.75 %
Domestic Revolver A 2.78 % 2.00 %
Foreign Revolver A 2.01 % 1.77 %
Foreign swing line 1.97 % 1.73 %

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

~~Loss on extinguishment of debt.~~ ~~Loss on extinguishment of debt of $3.3 million relates to our write-off of debt issuance costs associated with the refinancing of our existing credit facility during the third quarter of 2017.~~

~~Provision for income taxes.~~ The provision for income taxes increased from $132.5 million in the nine months ended September 30, 2016 to $227.8 million in the nine months ended September 30, 2017, an increase of $95.3 million, or 71.9%. 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 was 33.2% for the nine months ended September 30, 2017 as compared to 27.1% in the nine months ended September 30, 2016. The increase in the provision for income taxes was due primarily to the pretax gain on sale of the Nextraq business of $175 million at the higher U.S. tax rate, all at the higher U.S. tax rate, and the Masternaut impairment charge in the quarter, which had no corresponding tax benefit. The 2016 tax rate was favorably impacted by a one-time nonrecurring net gain at our Masternaut investment that favorably impacted pre-tax earnings, but was not subject to income tax. The 2016 rate was also favorably impacted by higher excess tax benefits on share-based compensation in 2016 versus 2017.

~~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. Also, the excess tax benefit on share based compensation is part of the effective tax rate. As a result, the tax rate is impacted by the number of stock options exercised or restricted shares vested during the reporting period.

Net income. For the reasons discussed above, our net income increased from ~~$357.0~~$509.5 million in the nine months ended September 30, ~~2016~~2018 to ~~$457.5~~$659.6 million in the nine months ended September 30, ~~2017,~~2019, an increase of ~~$100.5~~$150.1 million, or ~~28.2%~~29.5%.

Operating income and operating margin

Consolidated operating income. Operating income increased from ~~$538.2~~$806.0 million in the nine months ended September 30, ~~2016~~2018 to ~~$643.7~~$910.6 million in the nine months ended September 30, ~~2017,~~2019, an increase of ~~$105.6~~$104.7 million, or ~~19.6%~~13.0%. Our operating margin was ~~40.9%~~45.0% and ~~39.3%~~46.7% for the nine months ended September 30, ~~2016~~2018 and ~~2017,~~2019, respectively. The increase in operating income was driven primarily by organic growth. The increase was partially offset by a decrease to operating income of approximately $14 million due to ~~acquisitions completed in 2016 and 2017, organic growth, as well as~~ the ~~positive~~disposition of fuel portfolio during the fourth quarter of 2018, the negative impact of the macroeconomic environment of approximately ~~$14~~$13 million, driven primarily by ~~favorable fuel prices,~~unfavorable movements in foreign exchange rates of approximately $25 million partially offset by ~~the unfavorable impact~~favorable fuel price spreads of ~~fluctuations in foreign exchange rates.~~approximately $14 million. These increases were ~~partially~~also offset by ~~the negative impact of higher amortization and depreciation expense related to acquisitions completed in 2016 and 2017, additional~~increased bad debt expense of approximately $11 million ~~due to bad debt inherent~~and investments in ~~the acquired STP business, additional stock based compensation~~information technology of approximately ~~$19 million and the disposition of the NexTraq business in July 2017 of approximately $4~~$11 million.

North America segment operating income. North America operating income increased from ~~$367.2~~$495.1 million in the nine months ended September 30, ~~2016~~2018 to ~~$394.6~~$563.6 million in the nine months ended September 30, ~~2017,~~2019, an increase of ~~$27.4~~$68.5 million, or ~~7.5%~~13.8%. North America operating margin was ~~38.6%~~43.1% and ~~38.0%~~44.8% for the nine months ended September 30, ~~2016~~2018 and ~~2017,~~2019, respectively. The increase in operating income was due primarily to organic growth and the positive impact of the

macroeconomic environment of approximately ~~$18 million, driven by primarily by higher fuel prices. These~~$8 million. The increases were partially offset by ~~additional stock based compensation~~a decrease to operating income of approximately $14 million due to the disposition of fuel portfolio during the fourth quarter of 2018 and additional bad debt expense of approximately $4 million, the negative impact of higher amortization and depreciation expense related to our acquisition of Cambridge in the third quarter of 2017 and the disposition of the NexTraq business in July 2017 of approximately $4$11 million.

International segment operating income. International operating income increased from ~~$171.0~~$310.9 million in the nine months ended September 30, ~~2016~~2018 to ~~$249.1~~$347.1 million in the nine months ended September 30, ~~2017,~~2019, an increase of ~~$78.1~~$36.2 million, or ~~45.7%~~11.6%. International operating margin was ~~46.7%~~48.4% and ~~41.4%~~50.1% for the nine months ended September 30, ~~2016~~2018 and ~~2017,~~2019, respectively. The increase in operating income was due primarily to ~~the impact of acquisitions completed in 2016 and 2017,~~ organic growth. These increases were partially offset 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 $9 million, due to bad debt inherent in the acquired STP business, additional stock based compensation of approximately $5 million and the negative impact of the macroeconomic environment of approximately $4$21 million, driven primarily by ~~the~~ unfavorable ~~impact of fluctuations~~movements in foreign exchange rates.

Liquidity and capital resources

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

Sources of ~~liquidity~~

liquidity. At September 30, ~~2017,~~2019, our cash balances totaled ~~$1,018.3~~$1,465.9 million, with approximately ~~$183.5~~$407.1 million restricted. Restricted cash represents customer deposits in the Czech Republic and in our Comdata business in the U.S., as well as collateral received from customers for cross-currency transactions in our Cambridge business, which we are restricted from ~~using~~use other than to repay customer ~~deposits.~~deposits, as well as secure and settle cross-currency transactions.

At September 30, ~~2017,~~2019, cash and cash equivalents held in foreign subsidiaries where we have determined we are permanently reinvested is ~~$509.3~~$871.3 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~~We are currently evaluating undistributed foreign earnings for which we have not provided deferred taxes for foreign withholding tax, as these ~~funds~~earnings are ~~needed for our operations in the U.S. or we otherwise believe it~~considered to be indefinitely reinvested. The amount of these unrecorded deferred taxes is ~~in our best interests~~not expected 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.

material.

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 card products and generally pay merchants before collecting the 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 30, ~~2017,~~2019, we had no additional liquidity under our Securitization Facility. At September 30, ~~2017,~~2019, we had approximately ~~$612~~$1,285 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 ~~months~~month periods ended September 30, ~~2017~~2019 and ~~2016~~2018 (in millions).


	Nine Months Ended September 30,						Nine Months Ended September 30,
(Unaudited)	2017			2016			2019			2018
Net cash provided by operating activities	$	419.5		$	404.3		$	791.1		$	555.4
Net cash used in investing activities	(341.6		)	(1,371.5		)	(383.5		)	(71.3		)
Net cash provided by financing activities	250.1			976.4
Net cash used in financing activities							(260.5		)	(356.3		)



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

5445 Triangle Parkway	Peachtree Corners ~~Georgia~~	Georgia	30092
(Address of principal executive offices)			(Zip Code)



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



Class		Outstanding at ~~October 31, 2017~~November 1, 2019
Common Stock, $0.001 par value		~~89,560,788~~86,781,185



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	FLT	NYSE



		Page
PART I—FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS

	Consolidated Balance Sheets at September 30, ~~2017~~2019 (unaudited) and December 31, ~~2016~~2018	1

	Unaudited Consolidated Statements of Income for the Three and Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	2

	Unaudited Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	3

	Unaudited Consolidated Statements of ~~Cash Flows~~Stockholder's Equity for the Three and Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	4

	~~Notes to~~ Unaudited ~~Consolidated Financial~~ Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018	6

	Notes to Unaudited Consolidated Financial Statements	7

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2126

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4446

Item 4.	CONTROLS AND PROCEDURES	4446

PART II—OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS	45

~~Item 1A.~~	~~RISK FACTORS~~	45

~~Item 2.~~	~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~	47

Item 1A.	RISK FACTORS	48

Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	48

Item 3.	DEFAULTS UPON SENIOR SECURITIES	4749

Item 4.	MINE SAFETY DISCLOSURES	4749

Item 5.	OTHER INFORMATION	4749

Item 6.	EXHIBITS	4850

SIGNATURES		4951



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



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


	September 30, 2017			December 31, 2016			September 30, 2019¹			December 31, 2018
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	834,756		$	475,018		$	1,058,762		$	1,031,145
Restricted cash	183,515			168,752			407,115			333,748
Accounts and other receivables (less allowance for doubtful accounts of $47,779 and $32,506 at September 30, 2017 and December 31, 2016)	1,456,255			1,202,009
Accounts and other receivables (less allowance for doubtful accounts of $64,663 at September 30, 2019 and $59,963 at December 31, 2018)							1,703,998			1,425,815
Securitized accounts receivable—restricted for securitization investors	794,000			591,000			992,000			886,000
Prepaid expenses and other current assets	252,975			90,914			278,132			199,278
Total current assets	3,521,501			2,527,693			4,440,007			3,875,986
Property and equipment, net	168,065			142,504			185,522			186,201
Goodwill	4,644,559			4,195,150			4,707,383			4,542,074
Other intangibles, net	2,876,440			2,653,233			2,315,645			2,407,910
Investments	33,526			36,200			26,250			42,674
Other assets	86,203			71,952			239,387			147,632
Total assets	$	11,330,294		$	9,626,732		$	11,914,194		$	11,202,477
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,435,585		$	1,151,432		$	1,375,929		$	1,117,649
Accrued expenses	285,841			238,812			290,957			261,594
Customer deposits	731,501			530,787			957,667			926,685
Securitization facility	794,000			591,000			992,000			886,000
Current portion of notes payable and lines of credit	808,507			745,506			173,214			1,184,616
Other current liabilities	117,464			38,781			189,170			118,669
Total current liabilities	4,172,898			3,296,318			3,978,937			4,495,213
Notes payable and other obligations, less current portion	2,933,976			2,521,727			3,307,480			2,748,431
Deferred income taxes	742,498			668,580			457,174			491,946
Other noncurrent liabilities	50,504			56,069			270,293			126,707
Total noncurrent liabilities	3,726,978			3,246,376			4,034,947			3,367,084
Commitments and contingencies (Note 12)
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, $0.001 par value; 475,000,000 shares authorized; 121,837,990 shares issued and 89,558,913 shares outstanding at September 30, 2017; and 121,259,960 shares issued and 91,836,938 shares outstanding at December 31, 2016	122			121
Common stock, $0.001 par value; 475,000,000 shares authorized; 124,174,639 shares issued and 86,770,906 shares outstanding at September 30, 2019; and 123,035,859 shares issued and 85,845,344 shares outstanding at December 31, 2018							123			123
Additional paid-in capital	2,165,326			2,074,094			2,503,590			2,306,843
Retained earnings	2,676,224			2,218,721			4,477,219			3,817,656
Accumulated other comprehensive loss	(466,367		)	(666,403		)	(1,114,678		)	(913,858		)
Less treasury stock 32,279,077 shares at September 30, 2017 and 29,423,022 shares at December 31, 2016	(944,887		)	(542,495		)
Less treasury stock, 37,403,733 shares at September 30, 2019 and 37,190,515 shares at December 31, 2018							(1,965,944		)	(1,870,584		)
Total stockholders’ equity	3,430,418			3,084,038			3,900,310			3,340,180
Total liabilities and stockholders’ equity	$	11,330,294		$	9,626,732		$	11,914,194		$	11,202,477


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2019			2018¹			2019			2018¹
Revenues, net	$	577,877		$	484,426		$	1,639,547		$	1,316,593		$	681,048		$	619,586		$	1,949,967		$	1,790,070
Expenses:
Merchant commissions	27,687			28,214			82,690			78,755
Processing	111,283			96,233			316,429			256,738			135,016			128,400			384,588			356,086
Selling	45,060			34,180			122,854			92,680			51,790			44,806			152,907			135,926
General and administrative	92,043			77,904			275,046			209,084			98,050			98,058			297,618			284,858
Depreciation and amortization	69,156			57,084			198,731			141,848			67,347			67,267			205,700			207,379
Other operating, net	11			(244		)	49			(690		)	(296		)	(35		)	(1,480		)	(140		)
Operating income	232,637			191,055			643,748			538,178			329,141			281,090			910,634			805,961
Investment loss (income)	47,766			2,744			52,497			(2,247		)
Investment loss													—			7,147			15,660			7,147
Other (income) expense, net	(175,271		)	293			(173,626		)	1,056			(120		)	303			628			465
Interest expense, net	29,344			17,814			76,322			49,905			36,504			36,072			115,088			100,287
Loss on extinguishment of debt	3,296			—			3,296			—
Total other (income) expense	(94,865		)	20,851			(41,511		)	48,714
Total other expense													36,384			43,522			131,376			107,899
Income before income taxes	327,502			170,204			685,259			489,464			292,757			237,568			779,258			698,062
Provision for income taxes	124,679			40,586			227,756			132,503			66,952			79,874			119,695			188,579
Net income	$	202,823		$	129,618		$	457,503		$	356,961		$	225,805		$	157,694		$	659,563		$	509,483
Basic earnings per share	$	2.23		$	1.40		$	4.99		$	3.85		$	2.61		$	1.78		$	7.64		$	5.72
Diluted earnings per share	$	2.18		$	1.36		$	4.87		$	3.75		$	2.49		$	1.71		$	7.33		$	5.50
Weighted average shares outstanding:
Basic shares	90,751			92,631			91,619			92,604			86,662			88,456			86,332			89,126
Diluted shares	93,001			95,307			93,923			95,204			90,522			92,081			89,976			92,671



	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balance at December 31, 2018	$	123	$	2,306,843	$	3,817,656	$	(913,858	)	$	(1,870,584	)	$	3,340,180
Net income	—		—		172,107		—			—			172,107
Other comprehensive loss, net of tax	—		—		—		(20,334		)	—			(20,334		)
Acquisition of common stock	—		33,000		—		—			(36,322		)	(3,322		)
Share-based compensation	—		12,541		—		—			—			12,541
Issuance of common stock	—		29,795		—		—			—			29,795
Balance at March 31, 2019	123		2,382,179		3,989,763		(934,192		)	(1,906,906		)	3,530,967
Net income	—		—		261,651		—			—			261,651
Other comprehensive income, net of tax	—		—		—		5,995			—			5,995
Acquisition of common stock	—		—		—		—			(702		)	(702		)
Share-based compensation	—		18,306		—		—			—			18,306
Issuance of common stock	—		27,155		—		—			—			27,155
Balance at June 30, 2019	123		2,427,640		4,251,414		(928,197		)	(1,907,608		)	3,843,372
Net income	—		—		225,805		—			—			225,805
Other comprehensive loss, net of tax	—		—		—		(186,481		)	—			(186,481		)
Acquisition of common stock	—		—		—		—			(58,336		)	(58,336		)
Share-based compensation	—		15,273		—		—			—			15,273
Issuance of common stock	—		60,677		—		—			—			60,677
Balance at September 30, 2019	$	123	$	2,503,590	$	4,477,219	$	(1,114,678	)	$	(1,965,944	)	$	3,900,310



Revenues, net by Product*	Three Months Ended September 30,						Nine Months Ended September 30,
	2019	%		2018	%		2019	%		2018	%
Fuel ¹	296	44	%	283	46	%	874	45	%	827	46	%
Corporate Payments	138	20	%	105	17	%	376	19	%	300	17	%
Tolls ¹	89	13	%	76	12	%	264	14	%	246	14	%
Lodging	56	8	%	48	8	%	148	8	%	132	7	%
Gift	48	7	%	57	9	%	133	7	%	139	8	%
Other¹	53	8	%	50	8	%	156	8	%	147	8	%
Consolidated Revenues, net	681	100	%	620	100	%	1,950	100	%	1,790	100	%



	September 30, 2019							December 31, 2018
	Gross		Offset on the Balance Sheet			Net		Gross		Offset on the Balance Sheet			Net
Assets
Accounts Receivable	$	608.4	$	(567.5	)	$	40.9	$	815.7	$	(745.2	)	$	70.5
Liabilities
Accounts Payable	$	596.2	$	(567.5	)	$	28.7	$	760.8	$	(745.2	)	$	15.6



	Nine Months Ended September 30, 2019
Cash paid for operating lease liabilities	$	14,556
Right-of-use assets obtained in exchange for new operating lease obligations ¹	$	94,534
Weighted-average remaining lease term (years)	7.69
Weighted-average discount rate	4.80		%
¹Includes $55.9 million for operating leases existing on January 1, 2019



2020	$	18,404
2021	17,687
2022	13,971
2023	12,866
2024	11,927
Thereafter	40,645
Total lease payments	115,500
Less imputed interest	(20,556		)
Present value of lease liabilities	$	94,944



	September 30, 2019			December 31, 2018
Gross domestic accounts receivable	$	849,902		$	668,154
Gross domestic securitized accounts receivable	992,000			886,000
Gross foreign receivables	918,759			817,624
Total gross receivables	2,760,661			2,371,778
Less allowance for doubtful accounts	(64,663		)	(59,963		)
Net accounts and securitized accounts receivable	$	2,695,998		$	2,311,815



	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, 2018	7,616		$	117.58	5,174	$	98.39			$	518,954
Granted	431		244.35					$	57.82
Exercised	(1,031	)	115.58							176,468
Forfeited	(168	)	170.15
Outstanding at September 30, 2019	6,848		$	124.56	4,787	$	101.81			$	1,110,870
Expected to vest as of September 30, 2019	2,061		$	177.42



	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, 2016	6,146		$	91.20	3,429	$	55.00			$	309,238
Granted	2,764		144.45					$	32.20
Exercised	(388	)	52.10							39,789
Forfeited	(265	)	142.93
Outstanding at September 30, 2017	8,257		$	109.20	3,956	$	71.26			$	376,264
Expected to vest as of September 30, 2017	8,257		$	109.20



	2019			2018
Allowance for doubtful accounts beginning of period	$	59,963		$	46,031
Provision for bad debts	54,735			43,520
Write-offs	(50,035		)	(37,529		)
Allowance for doubtful accounts end of period	$	64,663		$	52,022



	Fair Value		Level 1		Level 2		Level 3
September 30, 2019
Assets:
Repurchase agreements	$	738,355	$	—	$	738,355	$	—
Money market	55,973		—		55,973		—
Certificates of deposit	21,304		—		21,304		—
Foreign exchange derivative contracts	50,914		—		50,914		—
Total assets	$	866,546	$	—	$	866,546	$	—
Cash collateral for foreign exchange derivative contracts	$	7,145	$	—	$	—	$	—
Liabilities:
Interest rate swaps	$	69,519	$	—	$	69,519
Foreign exchange derivative contracts	50,895		—		50,895		—
Total liabilities	$	120,414	$	—	$	120,414	$	—
Cash collateral obligation for foreign exchange derivative contracts	$	13,517	$	—	$	—	$	—

December 31, 2018
Assets:
Repurchase agreements	$	581,293	$	—	$	581,293	$	—
Money market	50,644		—		50,644		—
Certificates of deposit	22,412		—		22,412		—
Foreign exchange derivative contracts	68,814		21		68,793		—
Total assets	$	723,163	$	21	$	723,142	$	—
Cash collateral for foreign exchange derivative contracts	$	9,644	$	—	$	—	$	—
Liabilities:
Foreign exchange derivative contracts	$	72,125	$	—	$	72,125	$	—
Total liabilities	$	72,125	$	—	$	72,125	$	—
Cash collateral obligation for foreign exchange derivative contracts	$	73,140	$	—	$	—	$	—



	September 30,
	2019		2018
Risk-free interest rate	2.40	%	2.57	%
Dividend yield	—		—
Expected volatility	26.41	%	26.93	%
Expected life (in years)	3.7		3.8



	Shares		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2018	174		$	190.73
Granted	199		247.68
Vested	(120	)	202.59
Canceled or forfeited	(43	)	220.58
Outstanding at September 30, 2019	210		$	242.46



Trade and other receivables	$	1,513
Prepaid expenses and other current assets	396
Property, plant and equipment	1,030
Other long term assets	5,612
Goodwill	168,990
Intangibles	44,750
Liabilities	(4,415		)
Other noncurrent liabilities	(6,130		)
Deferred tax liabilities	(4,178		)
Aggregate purchase price	$	207,568



Prepaid expenses and other	79,725
Property and equipment	7,106
Other long term assets	10,025
Goodwill	436,138
Customer relationships and other identifiable intangible assets	358,168
Liabilities assumed	(187,664		)
Deferred tax liabilities	(119,419		)
Aggregate purchase price	$	584,079



	Useful Lives (in Years)	Value
Trade Name and Trademarks	Indefinite	$	8,700
Proprietary Technology	6	15,600
Referral Partners	10	810
Supplier Network	10	2,640
Customer Relationships	20	17,000
		$	44,750



Trade and other receivables	$	10,214
Other short and long term assets	563
Goodwill	19,099
Customer relationships and other identifiable intangible assets	8,735
Liabilities assumed	(19,423		)
Deferred tax liabilities	(2,376		)
Aggregate purchase price	$	16,812



Trade and other receivables	$	8,175
Prepaid expenses and other	783
Property and equipment	206
Goodwill	9,209
Other intangible assets	46,034
Liabilities assumed	(11,078		)
Deferred tax liabilities	(9,211		)
Aggregate purchase prices	$	44,118



	Useful Lives (in Years)	Value
Tradename and trademarks	15	$	1,923
Proprietary technology	5	938
Customer relationships	20	5,874
		$	8,735



Trade and other receivables	$	243,157
Prepaid expenses and other	6,998
Deferred tax assets	20,644
Property and equipment	44,226
Other long term assets	14,280
Goodwill	663,040
Customer relationships and other identifiable intangible assets	548,682
Liabilities assumed	(315,082		)
Aggregate purchase price	$	1,225,945



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



	December 31, 2018		Acquisitions		Acquisition Accounting Adjustments		Foreign Currency			September 30, 2019
Segment
North America	$	3,087,875	$	215,743	$	2,914	$	2,022		$	3,308,554
International	1,454,199		19,531		—		(74,901		)	1,398,829
	$	4,542,074	$	235,274	$	2,914	$	(72,879	)	$	4,707,383



	December 31, 2016		Acquisitions		Dispositions			Acquisition Accounting Adjustments		Foreign Currency		September 30, 2017
Segment
North America	$	2,640,409	$	436,138	$	(92,046	)	$	—	$	707	$	2,985,208
International	1,554,741		9,209		—			3,751		91,650		1,659,351
	$	4,195,150	$	445,347	$	(92,046	)	$	3,751	$	92,357	$	4,644,559



		September 30, 2019							December 31, 2018
	Weighted- Avg Useful Lives (Years)	Gross Carrying Amounts		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amounts		Accumulated Amortization			Net Carrying Amount
Customer and vendor relationships	17.2	$	2,647,997	$	(901,437	)	$	1,746,560	$	2,625,270	$	(776,383	)	$	1,848,887
Trade names and trademarks—indefinite lived	N/A	483,210		—			483,210		479,555		—			479,555
Trade names and trademarks—other	13.4	5,330		(2,760		)	2,570		2,957		(2,501		)	456
Software	5.8	230,853		(175,033		)	55,820		212,733		(152,416		)	60,317
Non-compete agreements	3.9	63,755		(36,270		)	27,485		47,009		(28,314		)	18,695
Total other intangibles		$	3,431,145	$	(1,115,500	)	$	2,315,645	$	3,367,524	$	(959,614	)	$	2,407,910


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



	2019					2018
Computed “expected” tax expense	$	61,479		21.0	%	$	49,889		21.0	%
Changes resulting from:
Foreign income tax differential	(2,904		)	(1.0	)%	2,359			1.0	%
Excess tax benefit related to stock-based compensation	(10,059		)	(3.4	)%	(7,562		)	(3.2	)%
State taxes net of federal benefits	3,324			1.1	%	3,119			1.3	%
Foreign-sourced nontaxable income	(1		)	—	%	(5,620		)	(2.4	)%
Foreign withholding	5,150			1.8	%	4,578			1.9	%
GILTI, net of foreign tax credits	2,486			0.9	%	5,576			2.4	%
Tax reform - federal rate reduction	—					22,731			9.6	%
Other	7,477			2.6	%	4,804			2.0	%
Provision for income taxes	$	66,952		22.9	%	$	79,874		33.6	%



	2017					2016
Computed tax expense at the U.S. federal tax rate	$	114,626		35.0	%	$	59,571		35.0	%
Changes resulting from:
Foreign income tax differential	(9,247		)	(2.8	)%	(4,265		)	(2.5	)%
Excess tax benefits related to stock-based compensation	(4,360		)	(1.3	)%	(8,247		)	(4.9	)%
State taxes net of federal benefits	5,926			1.8	%	1,678			1.0	%
Foreign-sourced nontaxable income	1,558			0.5	%	(6,691		)	(3.9	)%
Valuation allowance on investment loss	16,718			5.1	%	960			0.6	%
Other	(542		)	(0.2	)%	(2,420		)	(1.4	)%
Provision for income taxes	$	124,679		38.1	%	$	40,586		23.9	%



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019¹		2018		2019¹		2018
Revenues, net:
North America	$	442,704	$	412,816	$	1,257,544	$	1,148,034
International	238,344		206,770		692,423		642,036
	$	681,048	$	619,586	$	1,949,967	$	1,790,070
Operating income:
North America	$	206,965	$	177,769	$	563,574	$	495,095
International	122,176		103,321		347,060		310,866
	$	329,141	$	281,090	$	910,634	$	805,961
Depreciation and amortization:
North America	$	39,309	$	39,049	$	119,476	$	116,041
International	28,038		28,218		86,224		91,338
	$	67,347	$	67,267	$	205,700	$	207,379
Capital expenditures:
North America	$	10,340	$	12,604	$	30,023	$	32,700
International	6,366		9,094		18,658		23,612
	$	16,706	$	21,698	$	48,681	$	56,312


•	Forward contracts, which are commitments to buy or sell at a future date a currency at a contract price and will be settled in cash.

Unrecognized
Compensation
Cost

Weighted Average
Period of Expense
Recognition
(in Years)

Stock options

Restricted stock