Table of Contents


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 __________________________________________________________
FORM 10-Q
 __________________________________________________________
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172019
OR
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-35004
 __________________________________________________________
FleetCor Technologies, Inc.Inc.
(Exact name of registrant as specified in its charter)
 __________________________________________________________
Delaware 72-1074903
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
   
5445 Triangle ParkwayPeachtree Corners GeorgiaGeorgia30092
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (770) (770449-0479
 __________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one:)
Large accelerated filerýAccelerated filer¨
Non-accelerated filer
¨  (Do not check if a smaller reporting company)
Smaller reporting company¨
Emerging growth company
¨
  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨


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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class Outstanding at October 31, 2017November 1, 2019
Common Stock, $0.001 par value 89,560,78886,781,185
 

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockFLTNYSE


FLEETCOR TECHNOLOGIES, INC. AND SUBSIDIARIES
FORM 10-Q
For the Three and Nine Month PeriodsMonths Ended September 30, 20172019
INDEX
 
  Page
PART I—FINANCIAL INFORMATION
   
Item 1. 
   
 
   
 
   
 
   
 
   
 
   
Item 2.
   
Item 3.
   
Item 4.
   
PART II—OTHER INFORMATION 
   
Item 1.
Item 1A.
Item 2.
   
Item 1A.
Item 2.
Item 3.
   
Item 4.
   
Item 5.
   
Item 6.
   


i

Table of Contents


PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
FleetCorFLEETCOR Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Share and Par Value Amounts)
 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
See accompanying notes to unaudited consolidated financial statements.
See accompanying notes to unaudited consolidated financial statements.
1 Reflects the impact of the Company's adoption of ASU 2016-02 "Leases", on January 1, 2019, using a modified retrospective transition method. Under this method, financial results reported in periods prior to 2019 are unchanged. Refer to footnote 2.

FleetCorFLEETCOR Technologies, Inc. and Subsidiaries
Unaudited Consolidated Statements of Income
(In Thousands, Except Per Share Amounts)
 
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 Three Months Ended
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
See accompanying notes to unaudited consolidated financial statements.
1Reflects reclassifications from previously disclosed amounts to conform to current presentation.






FleetCorFLEETCOR Technologies, Inc. and Subsidiaries
Unaudited Consolidated Statements of Comprehensive Income (Loss)
(In Thousands)
 
  Three Months Ended
September 30,
 Nine Months Ended
September 30,
  2017 2016 2017 2016
Net income $202,823
 $129,618
 $457,503
 $356,961
Other comprehensive (loss) income:      
Foreign currency translation gains (losses), net of tax 112,301
 (52,409) 168,655
 (41,339)
Reclassification of foreign currency translation loss to investment, net of tax 31,381
 
 31,381
 
Total other comprehensive income (loss) 143,682

(52,409)
200,036

(41,339)
Total comprehensive income $346,505

$77,209

$657,539

$315,622
  Three Months Ended
September 30,
 Nine Months Ended
September 30,
  2019 2018 2019 2018
Net income $225,805
 $157,694
 $659,563
 $509,483
Other comprehensive income (loss):      
Foreign currency translation (losses), net of tax (180,317) (74,058) (148,282) (392,889)
Net change in derivative contracts, net of tax (6,164) 
 (52,538) 
Total other comprehensive (loss) (186,481)
(74,058)
(200,820)
(392,889)
Total comprehensive income $39,324

$83,636

$458,743

$116,594
See accompanying notes to unaudited consolidated financial statements.



FleetCorFLEETCOR Technologies, Inc. and Subsidiaries
Unaudited Consolidated Statements of Stockholders’ Equity
(In Thousands)
  
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


  
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Treasury
Stock
 Total
Balance at December 31, 2017 $122
 $2,214,224
 $2,958,921
 $(551,857) $(944,888) $3,676,522
Net income 
 
 174,937
 
 
 174,937
Cumulative effect of change in accounting principle 
 
 47,252
 
 
 47,252
Other comprehensive income from currency, net of tax of $0 
 
 
 43,254
 
 43,254
Acquisition of common stock 
 
 
 
 (88,292) (88,292)
Share-based compensation 
 14,403
 
 
 

14,403
Issuance of common stock 1
 19,975
 
 
 
 19,976
Balance at March 31, 2018 123
 2,248,602
 3,181,110
 (508,603) (1,033,180) 3,888,052
Net income 
 
 176,852
 
 
 176,852
Other comprehensive loss from currency exchange, net of tax of $0 
 
 
 (362,085) 
 (362,085)
Acquisition of common stock 
 
 
 
 (292,359) (292,359)
Share-based compensation 
 19,102
 
 
 
 19,102
Issuance of common stock 
 9,523
 
 
 
 9,523
Balance at June 30, 2018 123
 2,277,227
 3,357,962

(870,688)
(1,325,539)
3,439,085
Net income 
 
 157,694
 
 
 157,694
Other comprehensive loss from currency exchange, net of tax of $0 
 
 
 (74,058) 
 (74,058)
Acquisition of common stock 
 
 
 
 
 
Share-based compensation 
 20,702
 
 
 
 20,702
Issuance of common stock 
 18,824
 
 
 
 18,824
Balance at September 30, 2018 $123
 $2,316,753
 $3,515,656
 $(944,746) $(1,325,539) $3,562,247

See accompanying notes to unaudited consolidated financial statements.


FLEETCOR Technologies, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
(In Thousands)
 Nine Months Ended
September 30,
 Nine Months Ended
September 30,
 2017 2016 2019¹ 2018
Operating activities        
Net income $457,503
 $356,961
 $659,563
 $509,483
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation 35,096
 25,706
 46,393
 38,174
Stock-based compensation 68,897
 50,025
 46,120
 54,207
Provision for losses on accounts receivable 35,949
 24,512
 54,735
 43,520
Amortization of deferred financing costs and discounts 5,411
 5,568
 3,741
 4,035
Amortization of intangible assets 158,897
 112,455
Amortization of premium on receivables 4,738
 3,687
Loss on extinguishment of debt 3,296
 
Amortization of intangible assets and premium on receivables 159,307
 169,204
Deferred income taxes (38,092) (23,566) 11,142
 (6,334)
Investment loss (income) 52,497
 (2,247)
Gain on disposition of business (174,984) 
Investment loss 15,660
 7,147
Other non-cash operating income (49) (690) (1,778) (140)
Changes in operating assets and liabilities (net of acquisitions and dispositions):    
Restricted cash (12,105) (28,744)
Changes in operating assets and liabilities (net of acquisitions/dispositions):    
Accounts and other receivables (440,011) (527,255) (472,378) (640,859)
Prepaid expenses and other current assets (86,648) (1,291) (77,836) (19,618)
Other assets (15,378) (9,115) (26,578) (19,922)
Accounts payable, accrued expenses and customer deposits 364,473
 418,280
 373,044
 416,483
Net cash provided by operating activities 419,490

404,286
 791,135

555,380
Investing activities        
Acquisitions, net of cash acquired (602,298) (1,331,079) (334,860) (3,799)
Purchases of property and equipment (49,459) (41,877) (48,681) (56,312)
Proceeds from disposal of a business 316,501
 
Other (6,327) 1,411
 
 (11,192)
Net cash used in investing activities (341,583)
(1,371,545) (383,541)
(71,303)
Financing activities        
Proceeds from issuance of common stock 20,192
 18,620
 117,627
 48,322
Repurchase of common stock (402,392) (35,492) (59,362) (380,651)
Borrowings on securitization facility, net 203,000
 42,000
 106,000
 120,000
Deferred financing costs paid and debt discount (11,230) (2,272) (2,421) (166)
Proceeds from issuance of notes payable 780,656
 600,000
 700,000
 
Principal payments on notes payable (388,656) (85,125) (97,313) (103,500)
Borrowings from revolver – A Facility 845,000
 1,105,107
Payments on revolver – A Facility (804,808) (670,940)
Borrowings from revolver 965,709
 834,019
Payments on revolver (1,992,296) (897,861)
Borrowings on swing line of credit, net 7,800
 5,188
 1,775
 23,735
Other 537
 (673) (189) (230)
Net cash used in financing activities 250,099

976,413
 (260,470)
(356,332)
Effect of foreign currency exchange rates on cash 31,732
 (50,871) (46,140) (70,065)
Net increase (decrease) in cash and cash equivalents 359,738
 (41,717)
Cash and cash equivalents, beginning of period 475,018
 447,152
Cash and cash equivalents, end of period $834,756

$405,435
Net increase in cash and cash equivalents and restricted cash 100,984
 57,680
Cash and cash equivalents and restricted cash, beginning of period 1,364,893
 1,130,870
Cash and cash equivalents and restricted cash, end of period $1,465,877

$1,188,550
Supplemental cash flow information        
Cash paid for interest $79,144
 $48,525
 $136,850
 $113,785
Cash paid for income taxes $257,349
 $79,599
 $148,727
 $162,563

1 Reflects the impact of the Company's adoption of ASU 2016-02 "Leases", on January 1, 2019, using the modified retrospective transition method. Under this method, financial results reported in periods prior to 2019 are unchanged. Refer to footnote 2.
See accompanying notes to unaudited consolidated financial statements.


FleetCorFLEETCOR Technologies, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
September 30, 20172019
1. Summary of Significant Accounting Policies
Basis of Presentation
Throughout this report,Current Report on Form 10-Q, the terms “our,” “we,” “us,” and the “Company” refers to FleetCorFLEETCOR Technologies, Inc. and its subsidiaries. The Company prepared the accompanying unaudited interim consolidated financial statements in accordance with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”). The unaudited interim consolidated financial statements reflect all adjustments considered necessary for fair presentation. These adjustments consist of normal recurring accruals and estimates that impact the carrying value of assets and liabilities. Actual results may differ from these estimates. Operating results for the three and nine month periods ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.
The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2018.
Foreign Currency Translation
Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at the period-end rates of exchange in effect at period-end.exchange. The related translation adjustments are made directly to accumulated other comprehensive income.loss. Income and expenses are translated at the average monthly rates of exchange in effect during the period. Gains and losses from foreign currency transactions of these subsidiaries are included in net income.
The Company recognized the following foreign exchange gainslosses on long-term intra-entity transactions, net of $0.6 milliontax, and foreign exchange gains/losses within the Unaudited Consolidated Statements of $0.7 millionComprehensive Income (Loss) as follows:
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2019 2018 2019 2018
Long-term intra-entity (loss)(48.4) (35.1) (81.7) (191.7)
Foreign Exchange gain (loss)0.1
 (0.2) 0.3
 0.2

Reclassification
The Company reclassified certain amounts on the Unaudited Consolidated Statements of Income from general and administrative to other operating, net in order to conform to current presentation.
Derivatives
The Company uses derivatives to minimize its exposures related to changes in interest rates and facilitate cross-currency
corporate payments by writing derivatives to customers.

The Company is exposed to the risk of increasing interest rates because its borrowings are subject to variable interest rates. In order to mitigate this risk, the Company utilizes derivative instruments. Interest rate swap contracts designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Derivatives designated as cash flow hedges hedge a portion of the Company's variable rate debt.
Changes in the three months ended September 30, 2017fair value of derivatives that are designated and 2016, respectively, whichqualify as cash flow hedges are recorded withinin other (income)assets or other noncurrent liabilities and offset against accumulated other comprehensive income/loss, net of tax. Cash flow hedges hedge a portion of the Company's variable rate debt. Derivative fair value changes that are recorded in accumulated other comprehensive income/loss are reclassified to earnings in the same period or periods that the hedged item affects earnings, to the extent the derivative is effective in offsetting the change in cash flows attributable to the hedged risk. The portions of the change in fair value that are either considered ineffective or are excluded from the measure of effectiveness are recognized immediately in interest expense, net in the Unaudited Consolidated Statements of Income. The Company recognized foreign exchange losses of $0.2 million and $1.5 million in
In the nine month periods ended September 30, 2017 and 2016, respectively.
Derivatives

With its acquisition of Cambridge Global Payments ("Cambridge") in August 2017,Company's cross-border payments business, the Company uses derivatives to facilitate cross-currency corporate payments by writing derivatives to customers, which are not designated as hedging instruments. The majority of this business' revenue is from exchanges of currency at spot rates, which enableenables customers to make cross-currency payments. In addition, this businessthe Company also writes foreign currency forward and option contracts for its customers to facilitate future payments. The Company also uses derivatives to facilitate cross-currency

corporate payments by writing derivatives to customers, which are not designated as hedging instruments. The duration of these derivative contracts at inception is generally less than one year. The Company aggregates its foreign exchange exposures arising from customer contracts, including forwards, options and spot exchanges of currency, and economically hedges (economic hedge) the resulting net currency risks by entering into offsetting contractsderivatives with established financial institution counterparties. The changes in fair value related to these contractsderivatives are recorded in revenues, net in the Unaudited Consolidated Statements of Income.
The Company recognizes all cross-border payments derivatives in "prepaid expenses and other current assets" and "other current liabilities" in the accompanying Unaudited Consolidated Balance Sheets at their fair value. All cash flows associated with derivatives are included in cash flows from operating activities in the Unaudited Consolidated Statements of Cash Flows. Refer to footnote 14.

Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less. Restricted cash represents customer deposits repayable on demand.

Revenue
The Company provides payment solutions to our business, merchant, consumer and payment network customers. Our payment solutions are primarily focused on specific commercial spend categories, including fuel, lodging, tolls, and general corporate payments, as well as gift card solutions (stored value cards). The Company provides products that help businesses of all sizes control, simplify and secure payment of various domestic and cross-border payables using specialized payment products. The Company also provides other payment solutions for fleet maintenance, employee benefits and long haul transportation-related services. Revenues from contracts with customers, within the scope of ASC 606, represent approximately 80% of total consolidated revenues, net, for the three and nine months ended September 30, 2019. The Company accounts for remaining revenues comprised of late fees and finance charges, in jurisdictions where permitted under local regulations, primarily in the U.S. and Canada in accordance with ASC 310, "Receivables". Such fees are recognized net of a provision for estimated uncollectible amounts, at the time the fees and finance charges are assessed and services are provided. The Company also writes foreign currency forward and options contracts for its customers to facilitate future payments in foreign currencies, and recognizes revenue in accordance with authoritative fair value and derivatives accountings (ASC 815, "Derivatives").
Disaggregation of Revenues
The Company provides its services to customers across different payment solutions and geographies. Revenue by product (in millions) for the three and nine months ended September 30 was as follows:
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 Payments138
 20% 105
 17% 376
 19% 300
 17%
Tolls 1
89
 13% 76
 12% 264
 14% 246
 14%
Lodging56
 8% 48
 8% 148
 8% 132
 7%
Gift48
 7% 57
 9% 133
 7% 139
 8%
Other1
53
 8% 50
 8% 156
 8% 147
 8%
Consolidated Revenues, net681
 100% 620
 100% 1,950
 100% 1,790
 100%
1 Reflects 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.

Revenue by geography (in millions) for the three and nine months ended September 30 was as follows:
Revenues, net by Geography*Three Months Ended September 30, Nine Months Ended September 30,
 2019 % 2018 % 2019 % 2018 %
United States414
 61% 391
 63% 1,174
 60% 1,082
 60%
Brazil106
 16% 92
 15% 316
 16% 296
 17%
United Kingdom68
 10% 63
 10% 205
 10% 192
 11%
Other93
 14% 73
 12% 256
 13% 220
 12%
Consolidated Revenues, net681
 100% 620
 100% 1,950
 100% 1,790
 100%
*Columns may not calculate due to rounding.
Contract Liabilities
Deferred revenue contract liabilities for customers subject to ASC 606 were $70.3 million and $30.6 million as of September 30, 2019 and December 31, 2018, respectively. We expect to recognize substantially all of these amounts in revenues within approximately 12 months.  Revenue recognized in the three and nine months ended September 30, 2019 that was included in the deferred revenue contract liability as of December 31, 2018 was approximately $4.6 million and $29.6 million, respectively.
Spot Trade Offsetting
The Company uses spot trades to facilitate cross-currency corporate payments in its Cambridge business. Timing in the receipt of cash from the customer results in intermediary balances in the receivable from the customer and the payment to the customer's counterparty. In accordance with ASC Subtopic 210-20, "Offsetting," the Company applies offsetting to spot trade assets and liabilities associated with contracts that include master netting agreements, as a right of setoff exists, which the Company believes to be enforceable. As such, the Company has netted the Company's exposure with these customer's counterparties, with the receivables from the customer. The Company recognizes all spot trade assets, net in accounts receivable and all spot trade liabilities, net in accounts payable, each net at the customer level, in its Consolidated Balance Sheets at their fair value. The following table presents the Company’s spot trade assets and liabilities at their fair value at September 30, 2019 and December 31, 2018, (in millions).
 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


Adoption of New Accounting Standards
Revenue Recognition
In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)." The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP and permits the use of either the retrospective or modified retrospective transition method. The update requires significant additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU 2014-09, as amended by ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," is effective for years beginning after December 15, 2017, including interim periods, with early adoption permitted for years beginning after December 15, 2016. Since the issuance of ASU 2014-09, the FASB has issued additional interpretive guidance, including new accounting standards updates, that clarifies certain points of the standard and modifies certain requirements.

The Company has performed a review of the requirements of the new revenue standard and is monitoring the activity of the FASB and the transition resource group as it relates to specific interpretive guidance. The Company established an implementation team to assess the effects of the new revenue standard in a multi-phase approach. In the first phase, the Company is analyzing customer contracts for its most significant contract categories, applied the five-step model of the new standard to each contract category and comparing the results to our current accounting practices. The second phase, which includes quantifying the potential effects identified during the first phase, assessing additional contract categories and principal versus agent considerations, revising accounting policies and considering the effects on related disclosures and/or internal control over financial reporting is ongoing as of the end of the third quarter.

The new standard could change the amount and timing of revenue and expenses to be recognized under certain of our arrangement types. In addition, it could also increase the administrative burden on our operations to account for customer contracts and provide the more expansive required disclosures. More judgment and estimates may be required within the process of applying the requirements of the new standard than are required under existing GAAP, such as identifying performance obligations in contracts, estimating the amount of variable consideration to include in transaction price, allocating transaction price to each separate performance obligation and estimating expected customer lives. The Company has not completed its assessment or quantified the effect the new guidance will have on its consolidated financial statements, related disclosures and/or its internal control over financial reporting. This assessment will occur over the remainder of the calendar year and will include evaluating the application of the principal vs. agent cost to obtain a contract guidance. However, the Company's preliminary view is that the expected amount and timing of revenue to be recognized under ASU 2014-09 for its most significant contract categories, fuel card payments, corporate payments, toll payments, lodging payments and gift cards, will be similar to the amount and timing of revenue recognized under our current accounting practices. The Company also may be required to capitalize additional costs to obtain contracts with customers, and, in some cases, may be required to amortize these costs over a contractual time period. Finally, the Company expects disclosures about its revenues and related customer acquisition costs will be more extensive.

The Company plans to adopt ASU 2014-09, as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard, on January 1, 2018. The Company will apply the modified retrospective transition method, which would result in an adjustment to retained earnings for the cumulative effect, if any, of applying the standard to contracts that are not completed at the date of initial application. Under this method, the Company would not restate the prior financial statements presented, therefore the new standard requires the Company to provide additional disclosures of the amount by which each financial statement line item is affected in the current reporting period during 2018, as compared to the guidance that was in effect before the change, and an explanation of the reasons for significant changes, if any.
Accounting for Leases
In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842), which requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. This ASU also requires disclosures to provide additional information about the amounts recorded in the financial statements. This ASU is effective forEffective January 1, 2019, the Company for annual periods beginning after December 15, 2018 and interim periods therein. Early adoption is permitted. The new standard must be adopted Topic 842 using a modified retrospective transition and requires application of the new guidance for leases that exist or are entered into after the beginning of the earliest comparative period presented. The Company is currently evaluating the impact of ASU 2016-02 on our consolidated financial statements; however, we expect to recognize right of use assets and liabilities for our operating leasesapproach, as discussed further in the consolidated balance sheet upon adoption.
Accounting for Breakage
In March 2016, the FASB issued ASU 2016-04, “Liabilities-Extinguishments of Liabilities: Recognition of Breakage for Certain Prepaid Stored-Value Products”, which requires entities that sell prepaid stored value products redeemable for goods, services or cash at third-party merchants to derecognize liabilities related to those products for breakage. This ASU is effective for the Company for reporting periods beginning after December 15, 2017. Early adoption is permitted. The ASU must be adopted using either a modified retrospective approach with a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption or a full retrospective approach. The Company’s adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.
Cash Flow Classification
In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments", which amends the guidance in ASC 230, Statement of Cash Flows. This amended guidance reduces the diversity in practice that has resulted from the lack of consistent principles related to the classification of certain cash receipts and payments in the statement of cash flows. This ASU is effective for the Company for reporting periods beginning after December 15, 2017. Early adoption is permitted. Entities must apply the guidance retrospectively to all periods presented but may apply it prospectively from the earliest date practicable if retrospective application would be impracticable. The Company’s adoption of this ASU is not expected to have a material impact on the results of operations or financial condition.

In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash", which amends the guidance in ASC 230, Statement of Cash Flows, on the classification and presentation of restricted cash in the statement of cash flows. This ASU is effective for the Company for reporting periods beginning after December 15, 2017. Early adoption is permitted. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. The Company is evaluating what impact if any the adoption of this ASU will have on the results of operations, financial condition, or cash flows.
Intangibles - Goodwill and Other Impairment
In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of the goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on Step 1). The standard has tiered effective dates, starting in 2020 for calendar-year public business entities that meet the definition of an SEC filer. Early adoption is permitted for interim and annual goodwill impairment testing dates after January 1, 2017. The Company’s adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows, unless a goodwill impairment is identified.
Definition of a Business
In January 2017, the FASB issued ASU 2017-01, "Clarifying the Definition of a Business", which amends the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs. The guidance is effective for the Company for reporting periods beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The Company’s adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows, however it could result in accounting for acquisitions as asset acquisitions versus business combinations upon adoption.
Accounting for Modifications to Stock-Based Compensation
In May 2017, the FASB issued ASU 2017-09, "Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting", which amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. The guidance is effective for the Company for reporting periods beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The Company's adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.Footnote 2.
Accounting for Derivative Financial Instruments
In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities", which amends the hedge accounting recognition and presentation requirements in ASC 815. The FASB issued accounting guidance to better align hedge accounting with a company’s risk management activities, simplify the application of hedge accounting and improve the disclosures of hedging arrangements. The guidance is effective for the Company for reporting periods beginning after December 15, 2018, and interim periods within those years. The Company adopted this guidance on January 1, 2019, which did not have a material impact on the Company's results of operations, financial condition, or cash flows. The guidance did simplify the Company's accounting for interest rate swap hedges, allowing more time for the initial hedge effectiveness documentation and a qualitative hedge effectiveness assessment at each quarter end.
In October 2018, the FASB issued ASU 2018-16, "Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate, Overnight Index Swap Rate as a Benchmark Interest Rate for Hedge Accounting Purposes", which amends the

hedge accounting to add overnight index swap rates based on the secured overnight financing rate as a fifth U.S. benchmark interest rate. The Company adopted this guidance on January 1, 2019, which did not have a material impact on the Company's results of operations, financial condition, or cash flows.
Comprehensive Income Classification
In February 2018, the FASB issued ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income", that gives entities the option to reclassify to retained earnings tax effects related to items that have been stranded in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act (the "Tax Act"). An entity that elects to reclassify these amounts must reclassify stranded tax effects related to the Tax Act’s change in U.S. federal tax rate for all items accounted for in other comprehensive income. These entities can also elect to reclassify other stranded effects that relate to the Tax Act but do not directly relate to the change in the federal rate. The Company adopted this guidance on January 1, 2019 and elected to not reclassify any items to retained earnings.
Non-Employee Share-Based Payments
In June 2018, the FASB issued ASU 2018-07, "Compensation—Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting", that supersedes ASC 505-50 and expands the scope of ASC 718 to include all share-based payment arrangements related to the acquisition of goods and services from both non-employees and employees. Under the new guidance, the existing employee guidance will apply to non-employee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of non-employee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for non-employee awards. The Company adopted this guidance on January 1, 2019, which had no impact on the Company's results of operations, financial condition, or cash flows.

Pending Adoption of Recently Issued Accounting Standards
Cloud Computing Arrangements
On August 29, 2018, the FASB issued ASU 2018-15, "Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract", that provides guidance on implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract. The ASU, which was released in response to a consensus reached by the EITF at its June 2018 meeting, aligns the accounting for such costs with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in such a CCA. The guidance is effective for the Company for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted.permitted, including in interim periods. The guidance should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is updating the accounting policies and internal controls that will be impacted by the new guidance.  The Company's adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.
Fair Value Measurement
On August 28, 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement", which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC 820. The guidance is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The guidance on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other guidance should be applied retrospectively to all periods presented upon their effective date. The Company is permitted to early adopt any removed or modified disclosures upon issuance of this guidance and delay adoption of the additional disclosures until their effective date. The Company's adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.

Credit Losses on Financial Instruments
In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which changes how companies measure and recognize credit impairment for many financial assets. The new expected credit loss model will require companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are in the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The ASU is effective for the Company on January 1, 2020. Early adoption is permitted for periods beginning on or after January 1, 2019. The Company is analyzing our credit policy and updating accounting policies and internal controls that will be impacted by the new guidance. The Company's adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.
In April 2019, the FASB issued ASU 2019-04, "Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments", which clarifies certain aspects of accounting for credit losses, hedging activities, and financial instruments. For clarifications around credit losses, the effective date will be the same as the effective date in ASU 2016-13. For entities that have adopted ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities", ASU 2019-04 is effective the first annual reporting period beginning after the date of issuance of ASU 2019-04 and may be early adopted. The amendments in ASU 2019-04 related to ASU 2016-01 are effective for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted in any interim period after issuance of ASU 2019-04 for those entities that have already adopted ASU 2016-01. The Company's adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.
2. Leases
Effective January 1, 2019, the Company adopted Topic 842 using a modified retrospective method. Under this transition method, the Company has not restated comparative periods, and prior comparative periods will continue to be reported in conformity with ASC 840.  On January 1, 2019, based on the present value of the lease payments for the remaining lease term of the Company's existing leases, the Company recognized right-of-use (“ROU”) assets of $55.9 million and lease liabilities for operating leases of $65.5 million. At September 30, 2019, other assets includes a ROU asset of $81.2 million, other current liabilities includes short term operating lease liabilities of $15.4 million, and other non-current liabilities includes long term lease liabilities of $79.6 million. Finance leases are immaterial.
The Company primarily leases office space, data centers, vehicles, and equipment. Some of our leases contain variable lease payments, typically payments based on an index. The Company’s leases have remaining lease terms of one year to thirty years, some of which include options to extend from one to five years or more. The exercise of lease renewal options is typically at the Company's sole discretion; therefore, the majority of renewals to extend the lease terms are not reasonably certain to exercise and are not included in ROU assets and lease liabilities. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at lease commencement, for the purposes of transition, the rate in effect at January 1, 2019. Additional payments based on the change in an index or rate are recorded as a period expense when incurred. Lease modifications result in remeasurement of the lease liability as of the modification date.
For contracts entered into on or after the effective date or at the inception of a contract, the Company assessed whether the contract is, or contains, a lease. The assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether the Company has the right to direct the use of the asset. The Company elected the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs for all leases. Therefore, leases entered into prior to January 1, 2019, are accounted for under the prior accounting standard and were not reassessed. The Company has also elected not to recognize ROU assets and lease liabilities for short-term leases that have a term of twelve months or less. The effect of short-term leases would not be material to the ROU assets and lease liabilities.
Under ASC 842, a Company discounts future lease obligations by the rate implicit in the contract, unless the rate cannot be readily determined. As most of our leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. In determining the borrowing rate, the Company considered the applicable lease terms, the Company's cost of borrowing, and for leases denominated in a foreign currency, the collateralized borrowing rate that the Company would obtain to borrow in the same currency in which the lease is denominated.

Total lease costs for the three and nine months ended September 30, 2019 were $5.5 million and $15.0 million, respectively.

The supplementary cash and non-cash disclosures for the nine months ended September 30, 2019 are as follows (in thousands):
 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 rate4.80%
 1 Includes $55.9 million for operating leases existing on January 1, 2019

Maturities of lease liabilities as of September 30, 2019 were as follows (in thousands):
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

3. Accounts Receivable
The Company’s accounts receivable and securitized accounts receivable include the following at September 30, 2019 and December 31, 2018 (in thousands):
  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

The Company maintains a $950 million$1.2 billion revolving trade accounts receivable Securitization Facility.securitization facility (the "Securitization Facility"). Accounts receivable collateralized within our Securitization Facility relate to our U.S. trade receivables resulting from charge card activity. Pursuant to the terms of the Securitization Facility, the Company transfers certain of its domestic receivables, on a revolving basis, to FleetCorFLEETCOR Funding LLC (Funding)"Funding" a wholly-owned bankruptcy remote subsidiary. In turn, Funding sells,transfers, without recourse, on a revolving basis, up to $950 million$1.2 billion of undivided ownership interests in this pool of accounts receivable to a multi-seller, asset-backed commercial paper conduit (Conduit)"Conduit". Funding maintains a subordinated interest, in the form of over-collateralization, in a portion of the receivables sold to the Conduit. Purchases by the Conduit are financed with the sale of highly-rated commercial paper.
The Company utilizes proceeds from the sale of its accounts receivabletransferred assets as an alternative to other forms of financing to reduce its overall borrowing costs. The Company has agreed to continue servicing the sold receivables for the financial institution at market rates, which approximates the Company’s cost of servicing. The Company retains a residual interest in the accounts

receivable sold as a form of credit enhancement. The residual interest’s fair value approximates carrying value due to its short-term nature. Funding determines the level of funding achieved by the sale of trade accounts receivable, subject to a maximum amount.
The Company’s consolidated balance sheetsUnaudited Consolidated Balance Sheets and statementsStatements of incomeIncome reflect the activity related to securitized accounts receivable and the corresponding securitized debt, including interest income, fees generated from late payments, provision for losses on accounts receivable and interest expense. The cash flows from borrowings and repayments, associated with the securitized debt, are presented as cash flows from financing activities.
The Company’s accounts receivable and securitized accounts receivable include the following at September 30, 2017 and December 31, 2016 (in thousands):
  September 30, 2017 December 31, 2016
Gross domestic accounts receivable $651,328
 $529,885
Gross domestic securitized accounts receivable 794,000
 591,000
Gross foreign receivables 852,706
 704,630
Total gross receivables 2,298,034

1,825,515
Less allowance for doubtful accounts (47,779) (32,506)
Net accounts and securitized accounts receivable $2,250,255

$1,793,009

A rollforward of the Company’s allowance for doubtful accounts related to accounts receivable for the nine months ended September 30 is as follows (in thousands):
  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
  2017 2016
Allowance for doubtful accounts beginning of period $32,506
 $21,903
Provision for bad debts 35,949
 24,512
Write-offs (20,676) (16,343)
Allowance for doubtful accounts end of period $47,779
 $30,072

3.4. Fair Value Measurements
Fair value is a market-based measurement that reflects assumptions that market participants would use in pricing an asset or liability. GAAP discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions.
As the basis for evaluating such inputs, a three-tier value hierarchy prioritizes the inputs used in measuring fair value as follows:
 
Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.
Level 2: Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The following table presents the Company’s financial assets and liabilities which are measured at fair values on a recurring basis as ofat September 30, 20172019 and December 31, 2016,2018, (in thousands).
  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
 $
 $
 $

  Fair Value Level 1 Level 2 Level 3
September 30, 2017        
Assets:        
Repurchase agreements $363,335
 $
 $363,335
 $
Money market 50,341
 
 50,341
 
Certificates of deposit 9,370
 
 9,370
 
       Foreign exchange contracts 111,235
 28
 111,207
 
Total assets $534,281

$28

$534,253

$
Cash collateral for foreign exchange contracts $33,911
 $
 $
 $
         
Liabilities:        
      Foreign exchange contracts contracts $106,175
 $353
 $105,822
 
Total liabilities $106,175
 $353
 $105,822
  
Cash collateral obligation for foreign exchange contracts $20,272
 $
 $
 $
         
December 31, 2016        
Assets:        
Repurchase agreements $232,131
 $
 $232,131
 $
Money market 50,179
 
 50,179
 
Certificates of deposit 48
 
 48
 
Total cash equivalents $282,358

$

$282,358

$


The Company has highly-liquid investments classified as cash equivalents, with original maturities of 90 days or less, included in our Unaudited Consolidated Balance Sheets. The Company utilizes Level 2 fair value determinations derived from directly or indirectly observable (market based) information to determine the fair value of these highly liquid investments. The Company has certain cash and cash equivalents that are invested on an overnight basis in repurchase agreements, money markets and certificates of deposit. The value of overnight repurchase agreements is determined based upon the quoted market prices for the treasury securities associated with the repurchase agreements. The value of money market instruments is the financial institutions' month-end statement, as these instruments are not tradeable and must be settled directly by us with the respective financial institution. Certificates of deposit are valued at cost, plus interest accrued. Given the short-term nature of these instruments, the carrying value approximates fair value. Foreign exchange derivative contracts are carried at fair value, with changes in fair value recognized in the Unaudited Consolidated Statements of Income. The fair value of the Company's derivatives is derived with reference to a valuation from a derivatives dealer operating in an active market, which the Company accepts asapproximates the fair value of these instruments. The fair value represents what would be received and and/or paid by the Company if the contracts were terminated as of the reporting date. Cash collateral received for foreign exchange derivatives is recorded within customer deposits in ourthe Company's Unaudited Consolidated Balance Sheets at September 30, 2017.Sheet. Cash collateral paid for foreign exchange derivatives is recorded within restricted cash and cash equivalents in ourthe Company's Unaudited Consolidated Balance SheetsSheet. The carrying value of interest rate swap contracts is at September 30, 2017.fair value, which is determined based on current and forward interest rates as of the balance sheet date and is classified within Level 2.
The level within the fair value hierarchy and the measurement technique are reviewed quarterly. Transfers between levels are deemed to have occurred at the end of the quarter. There were no transfers between fair value levels during the periods presented for 20172019 and 2016.2018.

The Company’s assets that are measured at fair value on a nonrecurring basis andor are evaluated with periodic testing for impairment include property, plant and equipment, investments, goodwill and other intangible assets. Estimates of the fair value of assets acquired and liabilities assumed in business combinations are generally developed using key inputs such as management’s projections of cash flows on a held-and-used basis (if applicable), discounted as appropriate, management’s projections of cash flows upon disposition and discount rates. Accordingly, these fair value measurements are in Level 3 of the fair value hierarchy. See footnote 13
For derivatives accounted for discussionas hedging instruments, the Company formally designates and documents, at inception, the financial instrument as a hedge of Masternaut's other than temporary declinea specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction. The Company formally assesses, both at the inception and at least quarterly thereafter, whether the financial instruments used in hedging transactions are effective at offsetting changes in cash flows of the related underlying exposures. Any ineffective portion of a financial instrument's change in fair value is immediately recognized into earnings. The Company determines the fair values of its derivatives based on quoted market prices or pricing models using current market rates. 
The amounts exchanged are calculated by reference to the notional amounts and by other terms of the derivatives, such as interest rates, foreign currency exchange rates, commodity rates or other financial indices. The Company's derivatives are over-the-counter instruments with liquid markets.
The Company regularly evaluates the carrying value of its investments and during the thirdfirst quarter of 2017.2019, determined that the fair value of its telematics investment was below cost and recorded an impairment of the investment of $15.7 million based on observable price changes. Since initial date of investments, the Company has recorded cumulative impairment losses of $136.3 million. The Company sold our remaining investment in the second quarter of 2019.
The fair value of the Company’s cash, accounts receivable, securitized accounts receivable and related facility, prepaid expenses and other current assets, accounts payable, accrued expenses, customer deposits and short-term borrowings that are not recorded at fair value approximate their respective carrying values due to the short-term maturities of the instruments. The carrying value of the Company’s debt obligations approximates fair value as the interest rates on the debt are variable market based interest rates that

reset on a quarterly basis. These are each Level 2 fair value measurements, except for cash, which is a Level 1 fair value measurement.
4.5. Stockholders' Equity
On February 4, 2016, the
The Company's Board of Directors has approved a stock repurchase programprogram. as updated from time to time, (the "Program"), which was most recently updated on October 22, 2019, with an authorized increase in the size of the Program by $1 billion, under which the Company may purchase up to an aggregate of $500 million$3.1 billion of its common stock overthrough the following 18 month period. On July 27, 2017,period ending February 1, 2023. Since the Company's Board of Directors authorized an increase in the sizebeginning of the Program, by9,238,760 shares have been repurchased for an additional $250 million and an extensionaggregate purchase price of the Program by an additional 18 months. On November 1, 2017,$1.6 billion, leaving the Company announced that its Board of Directors had authorized an increase in the size of the Program by an additional $350 million, resulting in total aggregate repurchases authorizedup to $1.5 billion available under the Program of $1.1 billion. With the increase and giving effect to the Company's $590.1 million of previousfor future repurchases the Company may repurchase up to $510 million in shares of its common stock at any time prior to February 1, 2019.stock.
Any stock repurchases under the Program may be made at times and in such amounts as deemed appropriate. The timing and amount of stock repurchases, if any, will depend on a variety of factors including the stock price, market conditions, corporate and regulatory requirements, and any additional constraints related to material inside information the Company may possess. Any repurchases have been and are expected to be funded by a combination of available cash flow from the business, working capital and debt.

On August 3, 2017,December 14, 2018, as part of the Program, the Company entered an Accelerated Share Repurchaseaccelerated stock repurchase agreement ("2018 ASR Agreement") with a third-party financial institution to repurchase $250$220 million of its common stock. Pursuant to the 2018 ASR Agreement, the Company delivered $250$220 million in cash and received 1,491,6471,057,035 shares based on a stock price of $142.46$176.91 on August 7, 2017.December 14, 2018. The 2018 ASR Agreement was completed on September 7, 2017,January 29, 2019, at which time the Company received 263,012117,751 additional shares based on a final weighted average per share purchase price during the repurchase period of $142.48.$187.27.

The Company accounted for the ASR Agreement as two2 separate transactions: (i) as shares of reacquired common stock for the shares delivered to usthe Company upon effectiveness of theeach ASR Agreementagreement and (ii) as a forward contract indexed to the Company's common stock for the undelivered shares. The initial delivery of shares was included in treasury stock at cost and results in an immediate reduction of the outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share. The forward contracts indexed to ourthe Company's own common stock met the criteria for equity classification, and these amounts were initially recorded in additional paid-in capital and then reclassified to treasury stock upon completion of the ASR agreement.capital.
Since the beginning of the Program, 4,114,104 shares for an aggregate purchase price of $590.1 million have been repurchased. There were 2,854,959 shares totaling $402.4 million repurchased under the Program during the nine months ended September 30, 2017.
5.6. Stock-Based Compensation
The Company has Stock Incentive Plans (the Plans)"Plans") pursuant to which the Company’s Board of Directors may grant stock options or restricted stock to employees.
The table below summarizes the expense recognized related to share-based payments recognized forin the three and nine month periodsmonths ended September 30 (in thousands):
  Three Months Ended
September 30,
 Nine Months Ended
September 30,
  2019 2018 2019 2018
Stock options $7,038
 $11,154
 $26,901
 $33,205
Restricted stock 8,235
 9,548
 19,219
 21,002
Stock-based compensation $15,273

$20,702

$46,120

$54,207
  Three Months Ended
September 30,
 Nine Months Ended
September 30,
  2017 2016 2017 2016
Stock options $16,212
 $8,304
 $42,254
 $25,942
Restricted stock 8,443
 9,101
 26,643
 24,083
Stock-based compensation $24,655

$17,405

$68,897

$50,025

The tax benefits recorded on stock based compensation were $36.1$36.8 million and $28.4$31.2 million for the nine month periodsmonths ended September 30, 20172019 and 2016,2018, respectively.
The following table summarizes the Company’s total unrecognized compensation cost related to stock-based compensation as of September 30, 20172019 (cost in thousands):

  
Unrecognized
Compensation
Cost
 
Weighted Average
Period of Expense
Recognition
(in Years)
Stock options $48,518
 1.35
Restricted stock 27,192
 1.31
Total $75,710
  

  
Unrecognized
Compensation
Cost
 
Weighted Average
Period of Expense
Recognition
(in Years)
Stock options $96,594
 1.52
Restricted stock 12,425
 0.43
Total $109,019
  


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


The following summarizes the changes in the number of shares of common stock under option for the nine month periodmonths ended September 30, 2017 (shares2019 (shares/options and aggregate intrinsic value in thousands):
  Shares 
Weighted
Average
Exercise
Price
 
Options
Exercisable
at End of
Period
 
Weighted
Average
Exercise
Price of
Exercisable
Options
 
Weighted
Average Fair
Value of
Options
Granted 
During the Period
 
Aggregate
Intrinsic
Value
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
        

The aggregate intrinsic value of stock options exercisable at September 30, 20172019 was $330.4$885.5 million. The weighted average remaining contractual term of options exercisable at September 30, 20172019 was 5.14.8 years.

The fair value of stock option awards granted was estimated using the Black-Scholes option pricing model during the nine months ended September 30, 2017 and 2016, with the following weighted-average assumptions for grants or modifications during the period:nine months ended September 30, 2019 and 2018:
  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
  September 30,
  2017 2016
Risk-free interest rate 1.65% 1.09%
Dividend yield 
 
Expected volatility 28.02% 27.37%
Expected life (in years) 3.4
 3.4

Restricted Stock
Awards of restricted stock and restricted stock units are independent of stock option grants and are subject to forfeiture if employment terminates prior to vesting. The vesting of shares granted is generally based on the passage of time, performance or performance,market conditions, or a combination of these. Shares vesting based on the passage of time have vesting provisions of one to threefour years.
The following table summarizes the changes in the number of shares of restricted stock and restricted stock units for the nine months ended September 30, 20172019 (shares in thousands):

  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
  Shares 
Weighted
Average
Grant Date
Fair Value
Outstanding at December 31, 2016 379
 $140.39
Granted 204
 149.95
Vested (204) 136.85
Cancelled or forfeited (48) 153.24
Outstanding at September 30, 2017 331
 $149.24

6.7. Acquisitions
20172019 Acquisitions

Cambridge Global Payments

NvoicePay
On August 9, 2017,April 1, 2019, the Company acquired Cambridge,completed the acquisition of NvoicePay, a leading business to business (B2B) international payments provider of full accounts payable automation for businesses. 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 the Company's corporate payments footprint.product. The Company financed the acquisition using a combination of existingavailable cash and borrowings under its existing credit facility. The results from CambridgeNvoicePay are reported in itsthe North America segmentsegment. Along with the Company's acquisition of NvoicePay, the Company signed noncompete agreements with certain parties with an estimated fair value of $10.7 million. Acquisition accounting for business inNvoicePay is preliminary as the United StatesCompany is still completing the valuation for goodwill, intangible assets, income taxes, noncompete agreements, and Canada and within its International segment for business in all other countries outsideevaluation of the United States and Canada, since acquisition. acquired contingencies.

The following table summarizes the preliminary acquisition accounting for CambridgeNvoicePay (in thousands):
Trade and other receivables$1,513
Prepaid expenses and other current assets396
Property, plant and equipment1,030
Other long term assets5,612
Goodwill168,990
Intangibles44,750
Liabilities(4,415)
Other noncurrent liabilities(6,130)
Deferred tax liabilities(4,178)
Aggregate purchase price$207,568

Prepaid expenses and other79,725
Property and equipment7,106
Other long term assets10,025
Goodwill436,138
Customer relationships and other identifiable intangible assets358,168
Liabilities assumed(187,664)
Deferred tax liabilities(119,419)
Aggregate purchase price$584,079
  


The estimated fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):
 Useful Lives (in Years)Value
Trade Name and TrademarksIndefinite$8,700
Proprietary Technology615,600
Referral Partners10810
Supplier Network102,640
Customer Relationships2017,000
  $44,750

 Useful Lives (in Years)Value
Customer relationships and other identifiable intangible assets10$358,168
  $358,168

Acquisition accounting for Cambridge is preliminary as the Company is still completing the valuation for goodwill, intangible assets, income taxes, certain acquired contingencies, derivatives and the working capital adjustment period remains open. Goodwill recorded is comprised primarily of expected synergies from combining the operations of the Company and Cambridge, as well as assembled workforce. The allocation of the goodwill to the reporting units is not yet complete.


Other

On September 26, 2017,April 1, 2019, the Company acquired a fuelsmall maintenance software platform based in the U.K. On July 8, 2019, the Company made another small acquisition in the payroll card provider space in Russia.the U.S. The aggregate purchase price of these acquisitions was approximately $104 million, net of cash. The accounting for this acquisitionthese acquisitions is preliminary as the Company is still completing the valuation of goodwill, intangible assets, income taxes and evaluation of acquired contingencies.
2018 Acquisitions
On December 27, 2018, the Company completed an acquisition of an online gift card solution provider with an aggregate purchase price of $16.8 million, net of cash acquired of $11.0 million and made deferred payments of $3.9 million related to acquisitions occurring in prior years. The accounting for this acquisition is preliminary as the Company is still completing the evaluation of acquired intangible assets, contingencies and net working capital adjustments. The following table summarizes the condensed preliminary acquisition accounting for the Russian acquisition (in thousands):


Trade and other receivables$10,214
Other short and long term assets563
Goodwill19,099
Customer relationships and other identifiable intangible assets8,735
Liabilities assumed(19,423)
Deferred tax liabilities(2,376)
Aggregate purchase price$16,812

Trade and other receivables$8,175
Prepaid expenses and other783
Property and equipment206
Goodwill9,209
Other intangible assets46,034
Liabilities assumed(11,078)
Deferred tax liabilities(9,211)
Aggregate purchase prices$44,118

The estimated fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):
 Useful Lives (in Years)Value
Tradename and trademarks15$1,923
Proprietary technology5938
Customer relationships205,874
  $8,735

 Useful Lives (in Years)Value
Customer relationships and other identifiable intangible assets8$46,034
  $46,034

Subsequently, on October 13, 2017, the Company completed the acquisition of Creative Lodging Solutions ("CLS"), a small lodging tuck-in business.

2016 Acquisitions

STP
On August 31, 2016, the Company acquired all of the outstanding stock of Serviços e Tecnologia de Pagamentos S.A. (“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 the Company's presence in the toll market in Brazil. The Company financed the acquisition using a combination of existing cash and borrowings under its existing credit facility. Results from the acquired business have been reported in the Company's international segment since the date of acquisition. The following table summarizes the acquisition accounting for STP (in thousands):
Trade and other receivables$243,157
Prepaid expenses and other6,998
Deferred tax assets20,644
Property and equipment44,226
Other long term assets14,280
Goodwill663,040
Customer relationships and other identifiable intangible assets548,682
Liabilities assumed(315,082)
Aggregate purchase price$1,225,945
  
The estimated fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):
 Useful Lives (in Years)Value
Customer relationships8.5-20$348,414
Trade names and trademarks - indefiniteN/A154,851
Technology645,417
  $548,682

In connection with the STP acquisition, the Company recorded contingent liabilities aggregating $15.1 million, recorded within other noncurrent liabilities and accrued expenses in the consolidated balance sheet at the date of acquisition. A portion of these acquired liabilities have been indemnified by the respective sellers. As a result, an indemnification asset of $15.1 million was

recorded within prepaid and other current assets and other long term assets in the consolidated balance sheet. Along with the Company's acquisition, of STP, the Company signed noncompete agreements with certain parties with an estimated fair value of $23.2$0.4 million.
During 2018, the Company made investments in other businesses of $4.2 million and payments on a seller note for a prior acquisition of $1.6 million. The Company financed the acquisitions using a combination of available cash and borrowings under its existing credit facility.

Goodwill recognized is comprised primarily of expected synergies from combining the operations of the Company and STP, as well as assembled workforce. The goodwill and definite lived intangibles acquired with this business will be deductible for tax purposes.

Other

During 2016, the Company acquired additional fuel card portfolios in the U.S. and the United Kingdom, additional Shell fuel card markets in Europe and Travelcard in the Netherlands totaling $76.7 million, net of cash acquired of $11.1 million. The following table summarizes the acquisition accounting for these acquisitions (in thousands):
Trade and other receivables$27,810
Prepaid expenses and other5,097
Property and equipment992
Goodwill28,540
Other intangible assets61,823
Deferred tax asset146
Liabilities assumed(42,550)
Deferred tax liabilities(5,123)
Aggregate purchase prices$76,735
The estimated fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):
 Useful Lives (in Years)Value
Customer relationships and other identifiable intangible assets10-18$61,823
  $61,823
7.8. Goodwill and Other Intangible Assets
A summary of changes in the Company’s goodwill by reportable business segment is as follows (in thousands):
  December 31, 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

Goodwill related to our acquisition of Cambridge is recorded in the Company's North America segment at September 30, 2017, as the acquisition accounting is preliminary. The Company is continuing to evaluate the reporting units and segments allocation related to its acquisition of Cambridge. As of September 30, 20172019 and December 31, 2016,2018, other intangible assets consisted of the following (in thousands):
    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

    September 30, 2017 December 31, 2016
  
Weighted-
Avg
Useful
Lives
(Years)
 
Gross
Carrying
Amounts
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amounts
 
Accumulated
Amortization
 
Net
Carrying
Amount
Customer and vendor relationships 15.9 $2,845,048
 $(565,374) $2,279,674
 $2,449,389
 $(458,118) $1,991,271
Trade names and trademarks—indefinite lived N/A 476,648
 
 476,648
 510,952
 
 510,952
Trade names and trademarks—other 14.6 2,805
 (2,130) 675
 2,746
 (2,021) 725
Software 6.0 203,643
 (106,786) 96,857
 211,331
 (85,167) 126,164
Non-compete agreements 4.9 38,628
 (16,042) 22,586
 35,191
 (11,070) 24,121
Total other intangibles   $3,566,772

$(690,332)
$2,876,440

$3,209,609

$(556,376)
$2,653,233

Changes in foreign exchange rates resulted in a $53.8$35.7 million increasedecrease to the carrying values of other intangible assets in the nine months ended September 30, 2017.2019. Amortization expense related to intangible assets for the nine months ended September 30, 20172019 and 20162018 was $158.9$155.9 million and $112.5$165.0 million, respectively. As part of the Company's plan to exit the telematics business, on July 27, 2017, the Company sold NexTraq, a U.S. fleet telematics business, to Michelin Group, resulting in a $41.8 million reduction in the net carrying values of other intangible assets.


8.9. Debt
The Company’s debt instruments consist primarily of term notes, revolving lines of credit and a Securitization Facility as follows (in thousands):
 September 30, 2017 December 31, 2016 September 30, 2019 December 31, 2018
Term notes payable—domestic(a), net of discounts $3,027,472
 $2,639,279
Revolving line of credit A Facility—domestic(a) 595,000
 465,000
Revolving line of credit A Facility—foreign(a) 38,047
 123,412
Revolving line of credit A Facility—swing line(a) 40,193
 26,608
Term Loan A note payable (a), net of discounts $3,120,455
 $2,515,519
Term Loan B note payable (a), net of discounts 341,706
 344,180
Revolving line of credit A Facility(a) 
 655,000
Revolving line of credit B Facility(a) 
 345,446
Revolving line of credit C Facility(a) 
 35,000
Other debt(c) 41,771
 12,934
 18,533
 37,902
Total notes payable and other obligations 3,742,483

3,267,233
 3,480,694

3,933,047
Securitization Facility(b) 794,000
 591,000
 992,000
 886,000
Total notes payable, credit agreements and Securitization Facility $4,536,483

$3,858,233
 $4,472,694

$4,819,047
Current portion $1,602,507
 $1,336,506
 $1,165,214
 $2,070,616
Long-term portion 2,933,976
 2,521,727
 3,307,480
 2,748,431
Total notes payable, credit agreements and Securitization Facility $4,536,483

$3,858,233
 $4,472,694

$4,819,047
 ______________________
(a)The Company has a Credit Agreement which has been amended multiple times andthat provides for senior secured credit facilities consisting (collectively, the "Credit Facility") of a revolving A credit facility in the amount of $1.285 billion, a term loan A facility in the amount of $2.69 billion and a term loan B facility in the amount of $350.0 million as of September 30, 2017. The revolving credit facility consists of (a) a revolving A credit facility in the amount of $800 million, with sublimits for letters of credit and swing line loans, (b) a revolving B facility in the amount of $450 million for swing line loans and multi-currency borrowings and, (c) a revolving C facility in the amount of $35 million for multi-currency borrowings in Australian Dollars or New Zealand Dollars. On January 20, 2017, the Company entered into the second amendment to the Credit Agreement, which established a new term B loan. On August 2, 2017, the Company entered into the third amendment to the Credit Agreement, which increased the total facility by $708.7 million and extended the terms of the credit facilities. The term A and revolver maturity dates are August 2, 2022 and the term B maturity date is August 2,2024. The term A and revolver pricing remains the same and the term B pricing was reduced by 25 basis points to LIBOR plus 200 basis points. In addition, the Company pays a quarterly commitment fee at a rate per annum ranging from 0.20% to 0.40% of the daily unused portion of the credit facility. The Company has unamortized debt discounts of $6.4 million related to the term A facility, $0.7 million related to the term B facility and deferred financings costs of

$5.43.225 billion and a term loan B facility in the amount of $350 million as of September 30, 2019. The revolving credit facility consists of (a) a revolving A credit facility in the amount of $800 million, with sublimits for letters of credit and swing line loans, (b) a revolving B facility in the amount of $450 million with borrowings in U.S. Dollars, Euros, British Pounds, Japanese Yen or other currency as agreed in advance, and a sublimit for swing line loans, and (c) a revolving C facility in the amount of $35 million forborrowings in U.S. Dollars, Australian Dollars or New Zealand Dollars. The Credit Agreement also includes an accordion feature for borrowing an additional $750 million in term loan A, term loan B, revolver A or revolver B debt and an unlimited amount when the leverage ratio on a pro-forma basis is less than 3.00 to 1.00. Proceeds from the credit facilities may be used for working capital purposes, acquisitions, and other general corporate purposes. On August 2, 2019, the Company entered into the sixth amendment to the Credit Agreement, which included an incremental term loan A in the amount of $700 million and changes to the consolidated leverage ratio definition and negative covenant related to indebtedness. The maturity date for the term loan A and revolving credit facilities is December 19, 2023. The maturity date for the term loan B is August 2, 2024.
Interest on amounts outstanding under the Credit Agreement (other than the term loan B) accrues based on the British Bankers Association LIBOR Rate (the "Eurocurrency Rate"), plus a margin based on a leverage ratio, or our option, the Base Rate (defined as the rate equal to the highest of (a) the Federal Funds Rate plus 0.50%, (b) the prime rate announced by Bank of America, N.A., or (c) the Eurocurrency Rate plus 1.00%) plus a margin based on a leverage ratio. Interest on the term loan B facility accrues based on the Eurocurrency Rate plus 2.00% for Eurocurrency Loans or the Base Rate plus 1.00% for Base Rate Loans. In addition, the Company pays a quarterly commitment fee at a rate per annum ranging from 0.25% to 0.35% of the daily unused portion of the Credit Facility.
At September 30, 2019, the interest rate on the term loan A was 3.54% and the interest rate on the term loan B was 4.04%. The unused credit facility fee was 0.30% for all revolving facilities at September 30, 2017. In August 2017, the Company expensed $3.3 million and capitalized $10.6 million of debt issuance costs associated with the refinancing of its Credit Facility.2019.
(b)The Company is party to a $950 million receivables purchase agreement (Securitization Facility)$1.2 billion Securitization Facility that was amended on February 8, 2019 and restated on December 1, 2015.April 22, 2019. There is a program fee equal to one month LIBOR andplus 0.90% or the Commercial Paper Rate of 1.27% plus 0.90% and 0.85%0.80%. The program fee was 2.06% plus 0.90%0.88% as of September 30, 20172019 and 2.52% plus 0.89% as of December 31, 2016, respectively.2018. The unused facility fee is payable at a rate of 0.40% per annum as of September 30, 20172019 and December 31, 2016.2018.
(c)Other debt includes the long-term portion of contingent consideration and deferred payments associated with certain of our businesses.business acquisitions.
The Company was in compliance with all financial and non-financial covenants at September 30, 2017.2019. The Company has entered into interest rate swap cash flow contracts with U.S. dollar notional amounts in order to reduce the variability of cash flows in the previously unhedged interest payments associated with $2.0 billion of variable rate debt. Refer to Footnote 14 for further details.


9.10. Income Taxes
The Company's tax provision or benefit from income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter the Company updates its estimate of the annual effective tax rate, and if its estimated tax rate changes, the Company makes a cumulative adjustment. The Company's quarterly tax provision and quarterly estimate of its annual effective tax rate, are subject to variation due to several factors, including variability in accurately predicting the Company's pre-tax and taxable income and loss and the mix of jurisdictions to which they relate. Additionally, the Company's effective tax rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of discrete items and non-deductible expenses on the Company's effective tax rate is greater when its pre-tax income is lower.

The provision for income taxes differs from amounts computed by applying the U.S. federal tax rate of 35%21% for 2019 and 2018 to income before income taxes for the three months ended September 30, 20172019 and 20162018 due to the following (in thousands):
  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 %
Provision for income taxes

The Company provides 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 as compared to the three months ending September 30, 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 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.
The Company pays 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 the Company's earnings fluctuate between taxing jurisdictions, our effective tax rate fluctuates.
10.11. Earnings Per Share
The Company reports basic and diluted earnings per share. Basic earnings per share is computed by dividing net income attributable to shareholders of the Company by the weighted average number of common shares outstanding during the reported period. Diluted earnings per share reflect the potential dilution related to equity-based incentives using the treasury stock method. The calculation and reconciliation of basic and diluted earnings per share for the three and nine months ended September 30, 2019 and 2018 is as follows (in thousands, except per share data) follows::
  Three Months Ended
September 30,
 Nine Months Ended
September 30,
  2019 2018 2019 2018
Net income $225,805
 $157,694
 $659,563
 $509,483
Denominator for basic earnings per share 86,662
 88,456
 86,332
 89,126
Dilutive securities 3,860
 3,625
 3,644
 3,545
Denominator for diluted earnings per share 90,522

92,081

89,976
 92,671
Basic earnings per share $2.61
 $1.78
 $7.64
 $5.72
Diluted earnings per share $2.49
 $1.71
 $7.33
 $5.50
  Three Months Ended
September 30,
 Nine Months Ended
September 30,
  2017 2016 2017 2016
Net income $202,823
 $129,618
 $457,503
 $356,961
Denominator for basic earnings per share 90,751
 92,631
 91,619
 92,604
Dilutive securities 2,250
 2,676
 2,304
 2,600
Denominator for diluted earnings per share 93,001

95,307

93,923
 95,204
Basic earnings per share $2.23
 $1.40
 $4.99
 $3.85
Diluted earnings per share $2.18
 $1.36
 $4.87
 $3.75
Diluted earnings per share for the three month periodsmonths ended September 30, 20172019 and 2018 excludes the effect of 3.5 million27 thousand and 56 thousand shares of common stock that may be issued upon the exercise of employee stock options because such effect would be antidilutive.anti-dilutive, respectively. Diluted earnings per share also excludes the effect of 0.30.2 million shares of performance based restricted stock for which the performance criteria have not yet been achieved for both the three month periods ended September 30, 20172019 and 2016,2018, respectively.

11.12. Segments
The Company reports information about its operating segments in accordance with the authoritative guidance related to segments. The Company’s reportable segments represent components of the business for which separate financial information is evaluated regularly by the chief operating decision maker in determining how to allocate resources and in assessing performance. The Company operates in two2 reportable segments, North America and International. The Company began reporting its results from Cambridge acquired in the third quarter of 2017 in its North America segment for Cambridge's business in the United States and Canada and within its International segment for Cambridge's business in all other countries outside of the United States and Canada. The Company is continuing to evaluate the allocation of Cambridge results to its reporting units and segments. The results of operations from the fuel card business acquired in Russia are included within our International segment, from the date of acquisition. There were no0 inter-segment sales.


The Company’s segment results are as follows for the three and nine month periods ended September 30, 2019 and 2018 (in thousands):
  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

  Three Months Ended
September 30,
 Nine Months Ended
September 30,
  2017 2016 2017 2016
Revenues, net:        
North America $364,443
 $345,868
 $1,037,386
 $950,542
International 213,434
 138,558
 602,161
 366,051
  $577,877

$484,426

$1,639,547

$1,316,593
Operating income:        
North America $138,748
 $135,760
 $394,646
 $367,221
International 93,889
 55,295
 249,102
 170,957
  $232,637

$191,055

$643,748

$538,178
Depreciation and amortization:        
North America $37,600
 $32,739
 $104,161
 $96,351
International 31,556
 24,345
 94,570
 45,497
  $69,156

$57,084

$198,731

$141,848
Capital expenditures:        
North America $9,167
 $11,980
 $30,901
 $28,501
International 7,692
 5,140
 18,558
 13,376
  $16,859

$17,120

$49,459

$41,877
1 The results from Nvoicepay acquired in the second quarter and SOLE acquired in the third quarter of 2019 are reported in our North America segment.  The results from R2C acquired in the second quarter of 2019 are reported in our International segment. 
12.13. Commitments and Contingencies

In the ordinary course of business, the Company is involved in various pending or threatened legal actions, arbitration proceedings, claims, subpoenas, and matters relating to compliance with laws and regulations (collectively, legal proceedings)"legal proceedings").  Based on our current knowledge, management presently does not believe that the liabilities arising from these legal proceedings will have a material adverse effect on our consolidated financial condition, results of operations or cash flows. However, it is possible that the ultimate resolution of these legal proceedings could have a material adverse effect on our results of operations and financial condition for any particular period.
Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, and are in the stages of the proceedings where key factual and legal issues have not been resolved. For these reasons, we are currently unable to predict the ultimate timing or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from the matters described above.
Shareholder Class Action and Derivative Lawsuits
On June 14, 2017, a shareholder filed a class action complaint in the United States District Court for the Northern District of Georgia against the Company and certain of its officers and directors on behalf of all persons who purchased or otherwise acquired the Company’s stock between February 5, 2016 and May 2, 2017. On October 13, 2017, the shareholder filed an amended complaint asserting claims on behalf of a putative class of all persons who purchased or otherwise acquired the Company's common stock between February 4, 2016 and May 3, 2017. The complaint alleges that the defendants made false or misleading statements regarding fee charges and the reasons for its earnings and growth in certain press releases and other public statements in violation of the federal securities laws. PlaintiffOn July 17, 2019, the court granted plaintiff's motion for class certification. The complaint seeks class certification, unspecified monetary damages, costs, and attorneys’ fees. On October 3, 2019, the parties

executed a term sheet to settle the case for a payment of $50 million for the benefit of the class. The full settlement amount is covered by the Company’s insurance policies. On November 7, 2019, the lead plaintiff filed a motion for preliminary approval of the settlement. The Company disputes the allegations in the complaint and intends to vigorously defend against the claims.settlement is without any admission of the allegations in the complaint.
On July 10, 2017, a shareholder derivative complaint was filed against the Company and certain of the Company’s directors and officers in the United States District Court for the Northern District of Georgia seeking recovery on behalf of the Company. The derivative complaint alleges that the defendants issued a false and misleading proxy statement in violation of the federal securities laws; that defendants breached their fiduciary duties by causing or permitting the Company to make allegedly false

and misleading public statements concerning the Company’s fee charges, and financial and business prospects; and that certain defendants breached their fiduciary duties through allegedly improper sales of stock. The complaint seeks unspecified monetary damages on behalf of the Company, corporate governance reforms, disgorgement of profits, benefits and compensation by the defendants, restitution, costs, and attorneys’ and experts’ fees. On August 18, 2017,September 20, 2018, the court entered an order deferring the case pending a ruling on motions for summary judgment in the defendants' motion to dismissshareholder class action, notice a settlement has been reached in the putative shareholder class action, or until otherwise agreed to by the parties. On January 9, 2019, a similar shareholder derivative complaint was filed in the Superior Court of Gwinnett County, Georgia, which is stayed pending a ruling on motions for summary judgment in the shareholder class action, notice a settlement has been reached in the shareholder class action, or until otherwise agreed by the parties.  Both derivative actions remain stayed at this time. The defendants dispute the allegations in the complaintderivative complaints and intend to vigorously defend against the claims.
Estimating anOn February 1, 2019, Schultz Transfer Systems, Inc. filed a complaint against Fleetcor Technologies Operating Company, LLC (“Fleetcor LLC”) in the United States District Court for the Northern District of Georgia.  The complaint alleges that it is a Fleetcor LLC customer and member of the Fuelman program, and that Fleetcor LLC overcharged the plaintiff for fees and fuel through the Fuelman program.  Based on these allegations, the complaint asserts claims for breach of contract, breach of the covenant of good faith and fair dealing, fraud, fraudulent concealment, money had and received, and unjust enrichment.  The complaint seeks to represent a class defined as all persons, including corporate entities, who were enrolled in the Fuelman program between June 2016 and the present.  On April 1, 2019, the Company filed a motion to compel arbitration and to dismiss the case, which was granted without prejudice on July 8, 2019. On September 20, 2019, the case was settled with the individual plaintiff for $10,000.
FTC Investigation
In October 2017, the Federal Trade Commission (“FTC”) issued a Notice of Civil Investigative Demand to the Company for the production of documentation and a request for responses to written interrogatories. After discussions with the Company, the FTC proposed in October 2019 to resolve potential claims relating to the Company’s advertising and marketing practices. To date, the FTC has not offered a specific proposal as to the amount orof potential redress. The Company believes that the FTC’s potential claims, which relate principally to its North American Fuel Card business’s practices, are without merit. At this time, the Company believes the possible range of possible losses resulting from litigation proceedings is inherently difficult and requires an extensive degreeoutcomes includes the filing by the Commission of judgment, particularly wherea contested civil complaint, further discussions leading to a settlement, or the closure of these matters involve indeterminate claims for monetary damages, and are in the stages of the proceedings where key factual and legal issues have not been resolved. For these reasons, the Company is currently unable to predict the ultimate timing or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from the matters described above.

without further action.
13. Asset Dispositions

Telematics Businesses
As part of the Company's plan to exit the telematics business, on July 27, 2017, the Company sold NexTraq, a U.S. fleet telematics business, to Michelin Group for $316 million. The Company recorded a pre-tax gain on the disposal of NexTraq of $175.0 million during the third quarter of 2017, which is net of transaction closing costs. The Company recorded tax on 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 historically been included in the Company's North America segment.

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

The Company regularly evaluates the carrying value of its investment and during the third quarter of 2017, the Company determined that the fair value of its 44% investment in Masternaut had declined as a result of the Company's loss of significant influence due to the amendment of the Masternaut investment agreement, executed September 30, 2017. As a result, the Company determined that the carrying value of its investment exceeded its fair value, and concluded that this decline in value was other than temporary. The Company 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.



14. Derivative Financial Instruments and Hedging Activities
As a result of the Cambridge acquisition, theForeign Currency Derivatives
The Company writes derivatives, primarily foreign currency forward contracts, and option contracts, and swaps, mostly with small and medium size enterprises that are customers and derives a currency spread from this activity, which was acquired during the third quarter of 2017.activity. Derivative transactions include:
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.
Option contracts, which gives the purchaser, the right, but not the obligation to buy or sell within a specified time a currency at a contracted price that may be settled in cash.
Swap contracts, which are commitments to settlement in cash at a future date or dates, usually on an overnight basis.
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.
Option contracts, which gives the purchaser the right, but not the obligation, to buy or sell within a specified time a currency at a contracted price that may be settled in cash.
Swap contracts, which are commitments to settlement in cash at a future date or dates, usually on an overnight basis.
The primary credit risk inherent in derivative agreements represents the possibility that a loss may occur from the nonperformance of a counterparty to the agreements. The Company performs a review of the credit risk of these counterparties at the inception of the contract and on an ongoing basis. The Company also monitors the concentration of its contracts with any individual counterparty against limits at the individual counterparty level. The Company anticipates that the counterparties will be able to fully satisfy their obligations under the agreements, but takes action when doubt arises about the counterparties' ability to perform. These actions may include requiring customers to post or increase collateral, and for all counterparties, the possible termination of the related contracts. The Company does not designate any of its foreign exchange derivatives as hedging instruments in accordance with ASC 815.

The aggregate equivalent United StatesU.S. dollar notional amount of foreign exchange derivative customer contracts held by the Company as of September 30, 20172019 and December 31, 2018 (in millions) is presented in the table below.
 Notional
 September 30, 2019 December 31, 2018
Foreign exchange contracts:   
  Swaps$260.6
 $929.5
  Futures, forwards and spot3,761.8
 3,249.9
  Written options4,354.5
 3,688.8
  Purchased options3,485.9
 2,867.2
Total$11,862.8
 $10,735.4


Notional amounts do not reflect the netting of offsetting trades, although these offsetting positions may result in minimal overall market risk. Aggregate derivative notional amounts can fluctuate from period to period in the normal course of business based on market conditions, levels of customer activity and other factors.
 Net Notional
Foreign exchange contracts: 
  Swaps$272.8
  Futures, forwards and spot3,174.1
  Written options1,338.6
  Purchased options1,765.0
Total$6,550.5

The majority of customer foreign exchange contracts are written in major currencies such as the U.S. Dollar, Canadian Dollar, British Pound, Euro and Australian Dollar.


The following table summarizes the fair value of foreign currency derivatives reported in the Unaudited Consolidated Balance SheetSheets as of September 30, 20172019 and December 31, 2018 (in millions):
September 30, 2019 December 31, 2018
Derivative Assets Derivative LiabilitiesFair Value, Gross Fair Value, Net Fair Value, Gross Fair Value, Net
Fair Value Fair ValueDerivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities
Derivatives - undesignated:                  
Over the counter$111.2
 $105.8
Exchange traded
 0.4
Foreign exchange contracts111.2
 106.2
99.9
 99.9
 50.9
 50.9
 109.5
 112.9
 68.8
 72.1
Cash collateral(33.9) (20.3)7.1
 13.5
 7.1
 13.5
 9.6
 73.1
 9.6
 73.1
Total net derivative assets and liabilities$77.3
 $85.9
Total net of cash collateral$92.8
 $86.4
 $43.8
 $37.4
 $99.9
 $39.8
 $59.2
 $(1.0)
The fair values of derivative assets and liabilities associated with contracts, thatwhich include netting languageterms that the Company believes to be enforceable have been netted to presentrecorded net within the Company's net exposure with these counterparties.Unaudited Consolidated Balance Sheets. The Company recognizes all derivative assets, net in prepaid expense and other current assets and all derivative liabilities, net in other current liabilities, both netafter netting at the customer level, as right of offset exists, in its Unaudited Consolidated Balance Sheets at their fair value. The gain or loss on the change in fair value of derivative contracts is recognized immediately within other (income) expense,revenues, net in the Unaudited Consolidated Statements of Income. AtThe Company receives cash from customers as collateral for trade exposures, which is recorded within cash and cash equivalents and customer deposits in the Unaudited Consolidated Balance Sheet. The customer has the right to recall their collateral in the event exposures move in their favor, they unwind all outstanding trades or they cease to do business with the Company. The Company does not offset fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral.

Cash Flow Hedges
On January 22, 2019, the Company entered into 3 interest rate swap cash flow contracts (the "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. As of September 30, 2017, $150.7 million2019, the Company had the following outstanding interest rate derivatives that qualify as hedging instruments and are designated as cash flow hedges of interest rate risk (in millions):
  Notional Amount as of September 30, 2019Fixed RatesMaturity Date
Interest Rate Derivative: 
  
Interest Rate Swap $1,000
2.56%1/31/2022
Interest Rate Swap 500
2.56%1/31/2023
Interest Rate Swap 500
2.55%12/19/2023


For each of these swap contracts, the Company will pay a fixed monthly rate and receive one month LIBOR.

The table below presents the fair value of the Company’s interest rate swap contracts, as well as their classification on the Unaudited Consolidated Balance Sheets, as of September 30, 2019 (in millions). See footnote 4 for additional information on the fair value of the Company’s swap contracts.
  As of September 30, 2019
  Balance Sheet Location Fair Value
Derivatives designated as cash flow hedges:    
      Swap contracts Other liabilities $69.5


The table below displays the effect of the Company’s derivative assets and $70.9 million derivative liabilities were recordedfinancial instruments in the Unaudited Consolidated Balance Sheet.Statement of Income and other comprehensive loss for the nine months ended September 30, 2019 (in millions):

  2019
Interest Rate Swaps:  
Amount of loss recognized in other comprehensive income on derivatives, net of tax of $17.0 million                                                                                                     $52.5
Amount of loss reclassified from accumulated other comprehensive income into interest expense                                                                                                 2.2


The estimated net amount of the existing losses expected to be reclassified into earnings within the next 12 months is approximately $18.4 million at September 30, 2019.
15. Subsequent Events

Acquisition
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.



Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited consolidated financial statements and related notes appearing elsewhere in this report. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. See “Special Cautionary Notice Regarding Forward-Looking Statements”. All foreign currency amounts that have been converted into U.S. dollars in this discussion are based on the exchange rate as reported by OANDA for the applicable periods.
This management’s discussion and analysis should also be read in conjunction with the management’s discussion and analysis and consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016.2018.
General Business
FleetcorFLEETCOR is a leading global providerbusiness payments company that simplifies the way businesses manage and pay their expenses. The FLEETCOR portfolio of commercial payment solutions.brands helps companies automate, secure, digitize and control payments to, or on behalf of, their employees and suppliers. FLEETCOR serves businesses, partners and merchants in North America, Latin America, Europe, and Asia Pacific.
FLEETCOR has two reportable segments, North America and International. We primarily go to marketreport these two segments as they align with our fuelsenior executive organizational structure, reflect how we organize and manage our employees around the world, manage operating performance, contemplate the differing regulatory environments in North America versus other geographies, and help us isolate the impact of foreign exchange fluctuations on our financial results.
Our payment solutions provide our customers with a payment method designed to be superior to and more robust and effective than what they use currently, whether they use a competitor’s product or another alternative method such as cash or check. Our solutions are comprised of payment products, networks and associated services.
FLEETCOR is a global payments company primarily focused on business to business payments. We simplify the way businesses manage and pay for expenses and operate in five categories: Fuel, Lodging, Tolls, Corporate Payments and Gift. Our products are focused on delivering a better, more efficient way to pay, through specialized products, systems, and payment and merchant networks. While the actual payment mechanisms vary from category to category, they are structured to afford control and reporting to the end user. The methods of payment generally function like a charge card, payments product solutions, corporate paymentsprepaid card, one-time use virtual card, and electronic RFID, etc. Each category is unique in its focus, customer base and target markets, but they also share a number of characteristics. Customers are primarily business to business, have recurring revenue models, specialized networks which create barriers to entry, have high Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") margins, and have similar selling systems, which can be leveraged in each business. Additionally, we provide other payment products toll products, lodging cardsincluding fleet maintenance, employee benefits and gift cards.long haul transportation-related services. Our products are used in 5382 countries around the world, with our primary geographies inbeing the U.S., Brazil and the U.K.,United Kingdom, which combined accounted for approximately 92%88% of our revenue in 2016.  Our core products are primarily sold2018.
FLEETCOR uses both proprietary and third-party networks to businesses, retailers, major oil companiesdeliver our payment solutions. FLEETCOR owns and marketers and government entities. Our payment programs enable our customers to better manage and control their commercial payments, card programs, and employee spending and provide card-accepting merchantsoperates proprietary networks with a high volume customer base that can increase theirwell-established brands throughout the world, bringing incremental sales and customer loyalty. We also provide a suite of fleet relatedloyalty to affiliated merchants. Third-party networks are used to broaden payment product acceptance and workforce payment solution products, including mobile telematics services, fleet maintenance management and employee benefit and transportation related payments.use. In 2016,2018, we processed approximately 2.22.9 billion transactions on our proprietarywithin these networks, and third-party networks (which includesof which approximately 1.31.4 billion transactionswere related to our SVSGift product acquiredline.
FLEETCOR capitalizes on its products’ specialization with Comdata).sales and marketing efforts by deploying product-dedicated sales forces to target specific customer segments. We believe thatmarket our sizeproducts directly through multiple sales channels, including field sales, telesales and scale, geographic reach, advanced technology and our expansive suite of products, services, brands and proprietary networks contribute to our leading industry position.
We provide our payment products and services in a variety of combinations to create customized payment solutions for our customers and partners. We collectively refer to our suite of product offerings as workforce productivity enhancement products for commercial businesses. We sell a range of customized fleet and lodging payment programs directlydigital marketing, and indirectly tothrough our customers through partners, such as major oil companies, leasing companies and petroleum marketers. We refer to thesewhich include major oil companies, leasing companies, petroleum marketers, value-added resellers (VARs)("VARs") and other referral partners with whom we have strategic relationships as our “partners.” We provide our customers with various card products that typically function like a charge card to purchase fuel, lodging, food, toll, transportation and related products and services at participating locations. While we refer to companies with whom we have strategic relationships as "partners", our legal relationships with these companies are contractual, and do not constitute legal partnerships.partners.
We supportbelieve that our products with specialized issuing, processingsize and information services that enable usscale, product breadth and specialization, geographic reach, proprietary networks, robust distribution capabilities and advanced technology contribute to manage card accounts, facilitate the routing, authorization, clearing and settlement of transactions, and provide value-added functionality and data, including customizable card-level controls and productivity analysis tools. In order to deliver our payment programs and services and process transactions, we own and operate proprietary “closed-loop” networks through which we electronically connect to merchants and capture, analyze and report customized information in North America and internationally. We also use third-party networks to deliver our payment programs and services in order to broaden our card acceptance and use. To support our payment products, we also provide a range of services, such as issuing and processing, as well as specialized information services that provide our customers with value-added functionality and data. Our customers can use this data to track important business productivity metrics, combat fraud and employee misuse, streamline expense administration and lower overall workforce and fleet operating costs. Depending on our customers’ and partners’ needs, we provide these services in a variety of outsourced solutions ranging from a comprehensive “end-to-end” solution (encompassing issuing, processing and network services) to limited back office processing services.industry leading position.
Executive Overview
We operate in two segments, which we refer to as our North America and International segments. Our revenue is generally reported net of the wholesale cost for underlying products and services.services purchased through our payment products. In this report,Quarterly Report on Form 10-Q, we refer to this net revenue as “revenue.”"revenue". See “Results of Operations” for additional segment information. We report our results from Cambridge acquired in 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 of the United States and Canada. We are continuing to evaluate the

allocation of Cambridge results to our reporting units and segments. As part of our plan to exit the telematics business, on July 27, 2017, we sold NexTraq, a U.S. fleet telematics business, which has historically been included in our North America segment.
Revenues, net, by Segment. For the three and nine months ended September 30, 20172019 and 2016,2018, our North America and International segments generated the following revenue (in millions):
 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 2018 2019 2018
(Unaudited) Revenues, net % of
total
revenues, net
 Revenues, net % of
total
revenues, net
 Revenues, net % of
total
revenues, net
 Revenues, net % of
total
revenues, net
 Revenues, net % of
total
revenues, net
 Revenues, net % of
total
revenues, net
 Revenues, net % of
total
revenues, net
 Revenues, net % of
total
revenues, net
North America $364.4
 63.1% $345.9
 71.4% $1,037.4
 63.3% $950.5
 72.2% $442.7
 65.0% $412.8
 66.6% $1,257.6
 64.5% $1,148.0
 64.1%
International 213.4
 36.9% 138.6
 28.6% 602.2
 36.7% 366.1
 27.8% 238.3
 35.0% 206.8
 33.4% 692.4
 35.5% 642.1
 35.9%
 $577.9
 100.0% $484.4
 100.0% $1,639.5
 100.0% $1,316.6
 100.0% $681.0
 100.0% $619.6
 100.0% $1,950.0
 100.0% $1,790.1
 100.0%


Revenues, net, Net Income and Net Income Per Diluted Share. Set forth below are revenues, net, net income and net income per diluted share for the three and nine months ended September 30, 20172019 and 20162018 (in thousands,millions, except per share amounts).
 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,
(Unaudited) 2017 2016 2017 2016 2019 2018 2019 2018
Revenues, net $577,877
 $484,426
 $1,639,547
 $1,316,593
 $681.0
 $619.6
 $1,950.0
 $1,790.1
Net income $202,823
 $129,618
 $457,503
 $356,961
 $225.8
 $157.7
 $659.6
 $509.5
Net income per diluted share $2.18
 $1.36
 $4.87
 $3.75
 $2.49
 $1.71
 $7.33
 $5.50


Adjusted Revenues, Adjusted Net Income and Adjusted Net Income Per Diluted Share. Set forth below are adjusted revenues, adjusted net income and adjusted net income per diluted share for the three and nine months ended September 30, 20172019 and 20162018 (in thousands,millions, except per share amounts).
 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,
(Unaudited) 2017 2016 2017 2016 2019 2018 2019 2018
Adjusted revenues $550,190
 $456,212
 $1,556,857
 $1,237,838
Adjusted net income $202,769
 $183,310
 $574,795
 $478,959
 $280.6
 $246.6
 $775.7
 $717.9
Adjusted net income per diluted share $2.18
 $1.92
 $6.12
 $5.03
 $3.10
 $2.68
 $8.62
 $7.75
We useAdjusted net income and adjusted revenues asnet income per diluted share are supplemental non-GAAP financial measures of operating performance. See the heading entitled “Management’s Use of Non-GAAP Financial Measures” for more information and a basis to evaluate our revenues, netreconciliation of the commissions that are paidnon-GAAP financial measure to merchants that participatethe most directly comparable financial measure calculated in certain of our card programs. The commissions paid to merchants can vary when market spreads fluctuate in much the same way as revenues are impacted when market spreads fluctuate. Thus, we believe this is an effective way to evaluate our revenue performance on a consistent basis.accordance with GAAP. We use adjusted net income and adjusted net income per diluted share to eliminate the effect of items that we do not consider indicative of our core operating performance on a consistent basis. Adjusted revenues, adjusted net income and adjusted net income per diluted share are supplemental non-GAAP financial measures of operating performance. See the heading entitled “Management’s Use of Non-GAAP Financial Measures.”
Sources of Revenue
Transactions.In both of our segments, we derive revenue from transactions. As illustrated in the diagram below, aA transaction is defined as a purchase by a customer. Our customers include holderscustomer utilizing one of our cardpayment products and those of our partners, for whom we manage card programs, members of our proprietary networks who are provided access to our products and services and commercial businesses to whom we provide workforce payment productivity solutions. Revenue from transactions is derived from our merchant and network relationships, as well as our customers and partners. Through our merchant and network relationships we primarily offer fuel cards, corporate cards, virtual cards, purchasing cards, T&E cards, gift cards, stored value payroll cards, vehicle maintenance, food, fuel, toll and transportation cards and vouchers and lodging services to our customers.
at a participating merchant. The following diagram illustrates a typical transaction flow, for our fuel card, vehicle maintenance, lodging and food, toll and transportation card and voucher products. This illustrationwhich is representative of many, but not applicable to all, of our businesses.

Illustrative Transaction Flowtranflowexamplea03.jpg

mdacharta04.jpg


The revenue we derive from transactions is generated from both customers and merchants. Customers may include commercial businesses (obtained through direct and indirect channels), as well as partners for whom we manage payment programs. Merchants, who may also be customers under relevant accounting guidance, may include those merchants affiliated with our proprietary networks or those participating in the third-party networks we utilize.
From our customers and partners, we derivegenerate revenue fromthrough a variety of program fees, including transaction fees, card fees, network fees and charges, which cancharges. These fees may be charged as fixed fees, costamounts, costs plus a mark-up, or based on a percentage discount from retail prices.of the transaction purchase amounts, or a combination thereof. Our programs include other fees and charges associated with late payments and based on customer credit risk.
From our merchantmerchants and network relationships,third-party networks, we derivegenerate revenue mostly from the difference between the priceamount charged to a customer for a transaction and the priceamount paid to the merchant or network for the samea given transaction, as well as network fees and charges in certain businesses. As illustrated in the table below, the priceThe amount paid to a merchant or network may be calculated as (i) the merchant’s wholesale product cost of the product plus a markup; (ii) the transaction purchase priceamount less a percentage discount; or (iii) the transaction purchase priceamount less a fixed fee per unit.
For a transaction involving the purchase of fuel where the amount paid to the merchant is calculated under the cost plus markup model, we refer to the difference between the amount charged to the customer and the amount paid to the merchant as revenue tied to fuel-price spreads. In all other cases, we refer to the difference between the amount charged to the customer and the amount paid to the merchant for a given transaction as interchange revenue.
In our lodging product, we define a transaction as a hotel room night purchased by a customer. A customer may have multiple room nights per booking. In our tolls product, the relevant measure of volume is average monthly tags active during the period. In our corporate payments product, an additional measure of volume is spend, which represents the dollar amount of payments processed on behalf of customers through our various networks.

The following table presents an illustrative revenue model for transactions with the merchant, which is primarily applicable to fuel basedand revenue per key performance metric by product transactions, but may also be applied to our vehicle maintenance, lodging and food, fuel, toll and transportation card and voucher products, substituting transactions for gallons. This representative model may not include all of our businesses.
Illustrative Revenue Model for Fuel Purchases
(unit of one gallon)
    Merchant Payment Methods
Retail Price $3.00
 i) Cost Plus Mark-up: ii) Percentage Discount: iii) Fixed Fee:
Wholesale Cost (2.86) Wholesale Cost $2.86
 Retail Price $3.00
 Retail Price $3.00
    Mark-up 0.05
 Discount (3%) (0.09) Fixed Fee (0.09)
FleetCor Revenue $0.14
            
Merchant Commission $(0.05) Price Paid to Merchant $2.91
 Price Paid to Merchant $2.91
 Price Paid to Merchant $2.91
Price Paid to Merchant $2.91
            
Revenues by geography, product and source. Set forth below are further breakdowns of revenue by geography, product and source for the three and nine months ended September 30, 20172019 and 20162018 (in millions).*
  Three Months Ended September 30, Nine Months Ended September 30,
Revenue by Geography* 2017
2016 2017 2016
(Unaudited) Revenues, net 
% of
total
revenues, net
 Revenues, net 
% of
total
revenues, net
 Revenues, net % of
total
revenues, net
 Revenues, net % of
total
revenues, net
United States $358
 62% $346
 71% $1,031
 63% $951
 72%
United Kingdom 61
 11% 56
 12% 174
 11% 175
 13%
Brazil 101
 17% 43
 9% 287
 17% 78
 6%
Other 58
 10% 40
 8% 148
 9% 113
 9%
Consolidated revenues, net $578
 100% $484
 100% $1,640
 100% $1,317
 100%
*Columns may not calculate due to impact of rounding.

Subsequent to 2016, as we continued to refine the level of detail behind the product category splits, we reclassified certain amounts into "Other" that we believe are more representative of that category.   This reclassification has been applied to the 2016 and 2017 comparable data disclosed in the "Revenue by Product Category" table below.
  Three Months Ended September 30, 
Nine Months Ended September 30,8
Revenue by Product Category* 2017 2016 2017 2016
(Unaudited) 
Revenues,
net
 % of total revenues, net 
Revenues,
net
 
% of total
revenues, net
 
Revenues,
net
 
% of
total
revenues, net
 Revenues,
net
 % of total
revenues, net
Fuel cards $276
 48% $259
 53% $815
 50% $741
 56%
Corporate Payments 72
 12% 46
 10% 169
 10% 132
 10%
Tolls 83
 14% 26
 5% 236
 14% 30
 2%
Lodging 33
 6% 28
 6% 86
 5% 74
 6%
Gift 55
 9% 58
 12% 144
 9% 138
 10%
Other 59
 10% 67
 14% 189
 12% 201
 15%
Consolidated revenues, net $578
 100% $484
 100% $1,640
 100% $1,317
 100%
*Columns may not calculate due to impact of rounding.
 Three Months Ended September 30, 
Nine Months Ended September 30,8
Major Sources of Revenue*2017 2016 2017 2016
(Unaudited)
Revenues,
net
 
% of total
revenues, net
 
Revenues,
net
 
% of total
revenues, net
 
Revenues,
net
 
% of total
revenues, net
 
Revenues,
net
 
% of total
revenues, net
Customer               
   Processing and program revenue1
$288
 50% $218
 45% $781
 48% $563
 43%
Late fees and finance charges2
34
 6% 31
 6% 105
 6% 86
 7%
Miscellaneous fees3
32
 5% 34
 7% 97
 6% 93
 7%
 354
 61% 283
 58% 983
 60% 742
 56%
Merchant

 

 

 

 

 

 

 

Discount revenue (fuel)4
77
 13% 68
 14% 223
 14% 194
 15%
Discount revenue (nonfuel)5
45
 8% 40
 8% 130
 8% 116
 9%
Tied to fuel-price spreads6
53
 9% 53
 11% 165
 10% 145
 11%
Program revenue7
49
 8% 41
 8% 139
 8% 119
 9%
 224
 39% 202
 42% 657
 40% 574
 44%
Consolidated revenues, net$578
 100% $484
 100% $1,640
 100% $1,317
 100%
  As Reported 
Pro Forma and Macro Adjusted3
  Three Months Ended September 30, Three Months Ended September 30,
(Unaudited) 2019 2018 Change % Change 2019 2018 Change % Change
FUEL                
'- Revenues, net1
 $295.6
 $283.2
 $12.4
 4 % 299.7
 $272.3
 $27.4
 10 %
'- Transactions1
 129.4
 129.8
 (0.4)  % 129.4
 126.1
 3.3
 3 %
'- Revenues, net per transaction
 $2.28
 $2.18
 $0.10
 5 % $2.32
 $2.16
 $0.16
 7 %
CORPORATE PAYMENTS                
'- Revenues, net
 $138.5
 $105.5
 $33.0
 31 % $139.4
 $112.0
 $27.4
 24 %
'- Transactions
 14.4
 13.1
 1.3
 10 % 14.4
 13.3
 1.1
 9 %
'- Revenues, net per transaction
 $9.62
 $8.05
 $1.57
 20 % $9.68
 $8.44
 $1.24
 15 %
'- Spend volume4
 $18,417
 $13,817
 $4,601
 33 % $18,574
 $13,817
 $4,757
 34 %
'- Revenue, net per spend $
 0.75% 0.76% (0.01)% (2)% 0.75% 0.81% (0.06)% (7)%
TOLLS                
'- Revenues, net1
 $88.7
 $76.4
 $12.3
 16 % $89.3
 $76.4
 $12.9
 17 %
'- Tags (average monthly)5
 5.1
 4.7
 0.4
 8 % 5.1
 4.7
 0.4
 8 %
'- Revenues, net per tag
 $17.43
 $16.14
 $1.28
 8 % $17.54
 $16.14
 $1.40
 9 %
LODGING                
'- Revenues, net
 $56.4
 $48.0
 $8.4
 17 % $56.4
 $48.0
 $8.4
 17 %
'- Room nights
 4.4
 4.5
 (0.1) (2)% 4.4
 4.5
 (0.1) (2)%
'- Revenues, net per room night
 $12.74
 $10.64
 $2.11
 20 % $12.74
 $10.64
 $2.11
 20 %
GIFT                
'- Revenues, net
 $48.5
 $56.7
 $(8.2) (14)% $48.5
 $57.8
 $(9.4) (16)%
'- Transactions
 277.8
 277.6
 0.3
  % 277.8
 277.9
 (0.1)  %
'- Revenues, net per transaction
 $0.17
 $0.20
 $(0.03) (15)% $0.17
 $0.21
 $(0.03) (16)%
OTHER2
                
'- Revenues, net1
 $53.4
 $49.8
 $3.6
 7 % $54.6
 $50.9
 $3.7
 7 %
'- Transactions1
 12.4
 12.4
 
  % 12.4
 12.4
 
  %
'- Revenues, net per transaction
 $4.29
 $4.00
 $0.30
 7 % $4.39
 $4.09
 $0.30
 7 %
FLEETCOR CONSOLIDATED REVENUES                
'- Revenues, net
 $681.0
 $619.6
 $61.5
 10 % $687.8
 $617.5
 $70.3
 11 %
1IncludesReflects certain reclassifications of revenue from customers based on accounts, cards, devices, transactions, load amounts and/or purchase amounts, etc. for participation in our various fleet2018 between product categories as the Company realigned its Brazil business into product lines, resulting in refinement of revenue classified as fuel versus tolls and workforce related programs; as well as, revenue from partners (e.g., major retailers, leasing companies, oil companies, petroleum marketers, etc.) for processing and network management services. Primarily represents revenue from North American trucking, lodging, prepaid benefits, telematics, gifts cards and toll related businesses.the eCash/OnRoad product being fuel versus other.
2Fees for late payment and interest charges for carrying a balance charged to a customer.
3Non-standard fees charged to customers based on customer behavior or optional participation, primarily including high credit risk surcharges, over credit limit charges, minimum processing fees, printing and mailing fees, environmental fees, etc.
4Interchange revenue directly influenced by the absolute price of fuel and other interchange related to fuel products.
5Interchange revenue related to nonfuel products.
6Revenue derived from the difference between the price charged to a fleet customer for a transaction and the price paid to the merchant for the same transaction.
7Revenue derived primarily from the sale of equipment, software and related maintenance to merchants.
8Amounts shown for the nine months ended September 30, 2017 and 2016 reflect immaterial corrections in estimated allocation of revenue by product and sources of revenue from previously disclosed amounts for the prior period.
*We may not be able to precisely calculate revenue by source, as certain estimates were made in these allocations. Columns may not calculate due to impact of rounding. This table reflects how management views the sources of revenue and may not be consistent with prior disclosure.


Revenue per transaction. Set forth below is revenue per transaction information for the three and nine months ended September 30, 2017 and 2016:
  Three Months Ended September 30, Nine Months Ended September 30,
(Unaudited) 2017 2016 2017 2016
Transactions (in millions)        
North America 398.4
 370.1
 1,301.1
 1,214.3
International 280.7
 127.4
 823.0
 233.3
Total transactions 679.1

497.5

2,124.1

1,447.6
Revenue per transaction 
 
    
North America $0.91
 $0.93
 $0.80
 $0.78
International 0.76
 1.09
 0.73
 1.57
Consolidated revenue per transaction 0.85
 0.97
 0.77
 0.91
For the three months ended September 30, 2017, total transactions increased from 497.5 million to 679.1 million, an increase of 181.6 million transactions, or 37%. For the nine months ended September 30, 2017, total transactions increased from 1,447.6 million to 2,124.1 million, an increase of 676.4 million transactions, or 47%. North American segment transactions increased approximately 8% and 7% in the three and nine months ended September 30, 2017 as compared to 2016, respectively, due primarily to growth in our SVS and fuel card businesses. Transaction volumes in our international segment increased by 120% and 253% in the three and nine months ended September 30, 2017 as compared to 2016, respectively, primarily due to the acquisition of STP and Travelcard during the third quarter of 2016.

Set forth below is further breakdown of revenue and revenue per transaction, by product category for the three months ended September 30, 2017 and 2016 (in millions except revenues, net per transaction)*:
  As Reported 
Pro Forma and Macro Adjusted2
  Three Months Ended September 30, Three Months Ended September 30,
(Unaudited) 2017 2016 Change 
Change
 
20173
 
20164
 Change 
Change
FUEL CARDS                
‑Transactions5
 119.6
 112.5
 7.1
 6 % 119.6
 113.6
 6.0
 5 %
‑Revenues, net per transaction $2.31
 $2.30
 $0.01
  % $2.29
 $2.28
 $0.01
  %
‑ Revenues, net $276.2
 $258.8
 $17.4
 7 % $274.0
 $259.5
 $14.5
 6 %
CORPORATE PAYMENTS 

 

 

 

 

 

 

 

‑Transactions 10.9
 10.0
 0.9
 9 % 10.9
 10.2
 0.7
 7 %
‑Revenues, net per transaction $6.63
 $4.61
 $2.02
 44 % $6.58
 $5.99
 $0.58
 10 %
‑ Revenues, net $72.2
 $46.1
 $26.1
 57 % $71.7
 $61.3
 $10.4
 17 %
TOLLS 

 

 

 

 

 

 

 

‑Transactions 231.0
 81.1
 149.8
 185 % 231.0
 225.0
 5.9
 3 %
‑Revenues, net per transaction $0.36
 $0.32
 $0.04
 13 % $0.35
 $0.30
 $0.05
 16 %
‑ Revenues, net $82.9
 $25.8
 $57.1
 221 % $80.8
 $67.8
 $13.0
 19 %
LODGING 

 

 

 

 

 

 

 

‑Transactions 4.1
 3.5
 0.6
 17 % 4.1
 3.5
 0.6
 17 %
‑Revenues, net per transaction $8.14
 $8.04
 $0.10
 1 % $8.14
 $8.04
 $0.10
 1 %
‑ Revenues, net $33.2
 $28.1
 $5.2
 18 % $33.2
 $28.1
 $5.2
 18 %
GIFT 

 

 

 

 

 

 

 

‑Transactions 294.1
 269.5
 24.6
 9 % 294.1
 269.5
 24.6
 9 %
‑Revenues, net per transaction $0.19
 $0.22
 $(0.03) (14)% $0.19
 $0.22
 $(0.03) (14)%
‑ Revenues, net $54.8
 $58.3
 $(3.5) (6)% $54.8
 $58.3
 $(3.5) (6)%
OTHER1
 

 

 

 

 

 

 

 

‑Transactions5
 19.4
 20.8
 (1.4) (7)% 19.4
 20.4
 (1.0) (5)%
‑Revenues, net per transaction $3.01
 $3.24
 $(0.22) (7)% $2.99
 $2.80
 $0.20
 7 %
‑ Revenues, net $58.5
 $67.4
 $(8.8) (13)% $58.1
 $57.1
 $1.0
 2 %
FLEETCOR CONSOLIDATED REVENUES 

 

 

 

 

 

 

 

‑Transactions5
 679.1
 497.5
 181.6
 37 % 679.1
 642.2
 36.8
 6 %
‑Revenues, net per transaction $0.85
 $0.97
 $(0.12) (13)% $0.84
 $0.83
 $0.01
 2 %
‑ Revenues, net $577.9
 $484.4
 $93.5
 19 % $572.6
 $532.1
 $40.6
 8 %
*Columns may not calculate due to impact of rounding.
1Other includes telematics, maintenance, food, and transportation related businesses.
23 Pro forma and macro adjusted revenue is a non-GAAP financial measure defined as revenues, net adjusted for the impact of the macroeconomic environment and acquisitions and dispositions and other one-time items. We use pro forma and macro adjusted revenue as a basis to evaluate our organic growth. See the heading entitled “Management’s"Management’s Use of Non-GAAP Financial Measures”Measures" for a reconciliation of pro formapro-forma and macro adjustedMacro Adjusted revenue by product and metrics, non-GAAP measures, to the GAAP equivalent.comparable financial measure calculated in accordance with GAAP.
342017 is adjusted to remove the impact of changesCorporate payments spend in the macroeconomic environment to be consistent with the same periodfourth quarter of prior year, using constant fuel prices, fuel price spreads and foreign exchange rates.2018 was $14,750.6 million.
452016 is pro forma to include acquisitions and exclude dispositions consistent with 2017 ownership.Toll tags in the fourth quarter of 2018 was 4.8 million.
52016 and YTD 2017 transactions reflect immaterial corrections from previously disclosed amounts for the prior period.
* Columns may not calculate due to rounding.

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

Sources of Expenses
We incur expenses in the following categories:
 
Merchant commissions—In certain of our card programs, we incur merchant commissions expense when we reimburse merchants with whom we have direct, contractual relationships for specific transactions where a customer purchases products or services from the merchant. In the card programs where it is paid, merchant commissions equal the difference between the price paid by us to the merchant and the merchant’s wholesale cost of the underlying products or services.
Processing—Our processing expense consists of expenses related to processing transactions, servicing our customers and merchants, bad debt expense and cost of goods sold related to our hardware sales in certain businesses.
Selling—Our selling expenses consist primarily of wages, benefits, sales commissions (other than merchant commissions) and related expenses for our sales, marketing and account management personnel and activities.
General and administrative—Our general and administrative expenses include compensation and related expenses (including stock-based compensation) for our executives, finance and accounting, information technology, human resources, legal and other administrative personnel. Also included are facilities expenses, third-party professional services fees, travel and entertainment expenses, and other corporate-level expenses.
Depreciation and amortization—Our depreciation expenses include depreciation of property and equipment, consisting of computer hardware and software (including proprietary software development amortization expense), card-reading equipment, furniture, fixtures, vehicles and buildings and leasehold improvements related to office space. Our amortization expenses include amortization of intangible assets related to customer and vendor relationships, trade names and trademarks, software and non-compete agreements. We are amortizing intangible assets related to business acquisitions and certain private label contracts associated with the purchase of accounts receivable.
Other operating, net—Our other operating, net includes other operating expenses and income items unusual to the period and presented separately.
Investment loss (income)—Our investment results relate to our minority interest in Masternaut, a provider of telematics solutions to commercial fleets in Europe, which we historically accounted for using the equity method. 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.
Other expense (income), net—Our other expense (income), net includes foreign currency transaction gains or losses, proceeds/costs from the sale of assets and other miscellaneous operating costs and revenue.
Interest expense, net—Our interest expense, net includes interest income on our cash balances and interest expense on our outstanding debt and on our Securitization Facility. We have historically invested our cash primarily in short-term money market funds.
Loss on extinguishment of debt—Loss on extinguishment of debt relates to our write-off of debt issuance costs associated with the refinancing of our existing credit facility.
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, 20172019 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 fuelsmall 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 acquisitionU.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 investmentsdeferred payments of $7.9$3.9 million related to our investmentacquisitions occurring in Masternaut. We also receivedprior years. During 2018, we made investments in other businesses of $4.2 million and payments on a $9.2 million returnseller note for a prior acquisition of our investment in Masternaut.$1.6 million.


We report our results from Cambridge acquired inAsset 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 outsidesale 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 businessChevron 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 thirdfourth quarter of 2017, which is net of transaction closing costs. We recorded tax on2018. 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 hasChevron 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, 20172019 compared to the three months ended September 30, 20162018
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 threenine months ended September 30, 20172019 and 20162018 (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 threenine months ended September 30, 20162018 to $577.9$1,950.0 million in the threenine 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 favorablenegative impact on our consolidated revenue for the threenine months ended September 30, 20172019 over the comparable period in 20162018 of approximately $4$40 million. This was primarilyForeign exchange rates had an unfavorable impact on consolidated revenues of approximately $52 million due to favorable changesunfavorable 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.

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

2018.
North America segment revenues
North America revenues increased from $345.9$1,148.0 million in the threenine months ended September 30, 20162018 to $364.4$1,257.6 million in the threenine 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 negativepositive impact on our North America segment revenue in threethe nine months ended September 30, 20172019 over the comparable period in 20162018 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.

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


International segment revenues
International segment revenues increased from $138.6$642.0 million in the threenine months ended September 30, 20162018 to $213.4$692.4 million in the threenine 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 positivenegative impact on our International segment revenue for the threenine months ended September 30, 20172019 over the comparable period in 20162018 of approximately $6$46 million. ChangesUnfavorable 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 impactsprices 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%
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
Merchant commissions. Merchant commissions decreasedProcessing. Processing expenses increased from $28.2$356.1 million in the threenine months ended September 30, 20162018 to $27.7$384.6 million in the threenine 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 20172019 of approximately $14$7 million, andpartially offset by the favorable impact of fluctuations in foreign exchange rates and incremental spendof 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 increasesadditional 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 businessfluctuations in foreign exchange rates of approximately $3$7 million and lower bad debta 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 threenine months ended September 30, 20162018 to $45.1$205.7 million in the threenine months ended September 30, 2017, an increase2019, a decrease of $10.9$1.7 million, or 31.8%0.8%. Increases in spending wereThe decrease was primarily due to ongoing incrementalthe favorable impact of foreign exchange rates of approximately $7 million, partially offset by expenses related to acquisitions completed in 2016 and 20172019 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 threenine months ended September 30, 20162019, compared to $92.0other operating, net of $0.1 million in the threenine months ended September 30, 2017,2018, an increaseimmaterial 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 threenine months ended September 30, 20162019 relates to $69.2an impairment charge to our telematics investment, as compared to an investment loss of $7.1 million in the threenine months ended September 30, 2017, an increase of $12.1 million, or 21.1%. The increase was primarily due to amortization of intangible assets2018 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 amendmentwas 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 losssold in the Masternaut investment that includes adjustment for $31.4second 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 threenine 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 threenine 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 threenine months ended September 30, 20162018 to $29.3$115.1 million in the threenine 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, andin 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 Athe Credit Facility was 0.35%0.30% and 0.30%0.31% in the three month periodnine months ending September 30, 20172019 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 extinguishmentthese interest rate swap contracts is to reduce the variability of debt of $3.3 million relates to our write-off of debt issuance costscash flows in the previously unhedged interest payments associated with $2 billion of variable rate debt, tied to the refinancingone month LIBOR benchmark interest rate. During the nine months ended September 30, 2019, as a result of our existing credit facility duringthese swaps, we incurred additional interest expense of approximately $2.2 million or 0.16% over the third quarteraverage LIBOR rates on $2 billion of 2017.borrowings.
Provision for income taxes. The provision for income taxes increaseddecreased from $40.6$188.6 million in the threenine months ended September 30, 20162018 to $124.7$119.7 million in the threenine months ended September 30, 2017, an increase2019, 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 effectiveThe second quarter of 2019 included an income tax rate increased from 23.9% for three months ended September 30, 2016benefit 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 salefinal 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 subjectwhich will allow us to income tax. The 2016 rate was also favorably impacted by higher excess tax benefitscarryback the capital loss on share-based compensationour investment in Masternaut and offset it against a previously recorded capital gain from the sale of Nextraq in the third quarter of 2016 versus2017.
Our effective tax rate was 15.4% for the third quarternine 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.
For the purpose of segment operating results, we calculate segment operating income by subtracting segment operating expenses from segment revenue. Segment operating margin is calculated by dividing segment operating income by segment revenue.

North America segment operating income. North America operating income increased from $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, 20162018 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, 20162018 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, 20162018 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 positivedisposition 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 impactfavorable fuel price spreads of fluctuations in foreign exchange rates.approximately $14 million. These increases were partiallyalso offset by the negative impact of higher amortization and depreciation expense related to acquisitions completed in 2016 and 2017, additionalincreased bad debt expense of approximately $11 million due to bad debt inherentand investments in the acquired STP business, additional stock based compensationinformation technology of approximately $19 million and the disposition of the NexTraq business in July 2017 of approximately $4$11 million.
For the purpose of segment operating results, we calculate segment operating income by subtracting segment operating expenses from segment revenue. Segment operating margin is calculated by dividing segment operating income by segment revenue.


North America segment operating income. North America operating income increased from $367.2$495.1 million in the nine months ended September 30, 20162018 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, 20162018 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 compensationa 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, 20162018 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, 20162018 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 fluctuationsmovements 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 usinguse 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 timeWe are currently evaluating undistributed foreign earnings for which we have not provided deferred taxes for foreign withholding tax, as these fundsearnings are needed for our operations in the U.S. or we otherwise believe itconsidered to be indefinitely reinvested. The amount of these unrecorded deferred taxes is in our best interestsnot 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 monthsmonth periods ended September 30, 20172019 and 20162018 (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)
Operating activities. Net cash provided by operating activities increased from $404.3was $791.1 million in the nine months ended September 30, 2016 to $419.52019, an increase from $555.4 million in the nine months ended September 30, 2017. Includedcomparable prior period. The increase in operating cash flows from operating activities werewas primarily due to higher net income and favorable non-cash adjustments of $151.7 million in the nine months ended September 30, 2017. Non-cash adjustments were driven primarily by higher depreciation and amortization and an impairment charge in our Masternaut investment, partially offset by the gain on the sale of our Nextraq business in the third quarter of 2017. Also included in cash flows from operating activities were unfavorable working capital adjustments of $189.7 million. Working capital adjustments are primarily due to the timing of cash receipts and payments duringin the nine months ended September 30, 20172019 over the comparable period in 2016.2018.

Investing activities. Net cash used in investing activities decreased from $1,371.5was $383.5 million in the nine months ended September 30, 20162019 compared to $341.6$71.3 million in the nine months ended September 30, 2017.2018. The decreaseincrease was primarily due to the reductionincrease in cash outlaypaid for acquisitions and the proceeds received from the sale of our Nextraq business during the third quarter of 2017.completed in 2019.
Financing activities. Net cash provided byused in financing activities decreased from $976.4was $260.5 million in the nine months ended September 30, 20162019, compared to $250.1$356.3 million in the nine months ended September 30, 2017.2018. The decrease indecreased use of cash provided by financing activities is primarily due to an increase in debt repaymentsincremental borrowings of $437.4 million on our credit facilityincremental Term A Loan in the nine months ended September 30, 2017amount of $700 million, as compared to 2016, increased spending to repurchasewell as fewer repurchases of our common stock of $367 million and a decrease in borrowings of $76.8 million on our credit facility, partially offset by an increase in borrowings of $161 million on our Securitization Facility.
Capital spending summary
Our capital expenditures increased from $41.9$321 million in the nine months ended September 30, 2016 to $49.52019 over the comparable period in 2018. These reductions in cash usage were partially offset by net payments made on our revolving debt of $963 million during the nine months ended September 30, 2019.
Capital spending summary
Our capital expenditures were $48.7 million in the nine months ended September 30, 2017, an increase2019, a decrease of $7.6 million or 18.1%. This increase is primarily due to increased spending on strategic projects, including continued investment13.6%, from $56.3 million in our operating systems, as well as incremental spending related to acquisitions in 2016 and 2017.

the comparable prior period.
Credit Facility
FleetCorFLEETCOR Technologies Operating Company, LLC, and certain of our domestic and foreign owned subsidiaries, as designated co-borrowers (the “Borrowers”), hasare parties to a $4.33$4.86 billion Credit Agreement (the "Credit Agreement"), with Bank of America, N.A., as administrative agent, swing line lender and local currency issuer, and a syndicate of financial institutions (the “Lenders”), which has been amended multiple times. The Credit Agreement provides for senior secured credit facilities (collectively, the "Credit Facility") consisting of a revolving A credit facility in the amount of $1.285 billion, a term loan A facility in the amount of $2.69$3.225 billion and a term loan B facility in the amount of $350.0 million as of September 30, 2017.2019. The revolving credit facility consists of (a) a revolving A credit facility in the amount of $800 million with sublimits for letters of credit and swing line loans, (b) a revolving B facility in the amount of $450 million for borrowings in U.S. Dollars, Euros, British Pounds, Japanese Yen or other currency as agreed in advance, and a sublimit for swing line loans, and multi-currency borrowings and (c) a revolving C facility in the amount of $35 million for multi-currency borrowings in U.S. Dollars, Australian Dollars or New Zealand Dollars. On January 20, 2017, we entered into the second amendment to the Credit Agreement, which established a new term B loan. On August 2, 2017, we entered into the third amendment to the Credit Agreement, which increased the total facility by $708.7 million and extended the terms of the credit facilities. The term A and revolver maturity dates are August 2, 2022 and the term B maturity date is August 2,2024. The term A and revolver pricing remains the same and the term B pricing was reduced by 25 basis points to LIBOR plus 200 basis points. In addition, we pay a quarterly commitment fee at a rate per annum ranging from 0.20% to 0.40% of the daily unused portion of the credit facility.
The Credit Agreement also containsincludes an accordion feature for borrowing an additional $750 million in term loan A, term loan B, revolver A or revolver AB debt and term B.an unlimited amount when the leverage ratio on a proforma basis is less than 3.00 to 1.00. Proceeds from the Credit Facility may be used for working capital purposes, acquisitions, and other general corporate purposes. On August 2, 2019, we entered into the sixth amendment to the Credit Agreement, which included an incremental term A loan in the amount of $700 million and changes to the consolidated leverage ratio definition and negative covenant related to indebtedness. The term loan A and revolver maturity dates are December 19, 2023, and the term loan B maturity date is August 2, 2024.
Interest on amounts outstanding under the Credit Agreement (other than the term loan B) accrues based on the British Bankers Association LIBOR Rate (the "Eurocurrency Rate"), plus a margin based on a leverage ratio, or our option, the Base Rate (defined as the rate equal to the highest of (a) the Federal Funds Rate plus 0.50%, (b) the prime rate announced by Bank of America, N.A., or (c) the Eurocurrency Rate plus 1.00%) plus a margin based on a leverage ratio. Interest on the term loan B loan facility accrues based on the Eurocurrency Rate plus 2.00% for Eurocurrency Loans or at the Base Rate plus 1.00% for Base Rate Loans. In addition, we pay a quarterly commitment fee at a rate per annum ranging from 0.25% to 0.35% of the daily unused portion of the credit facility.
At September 30, 2019, the interest rate on the term loan A was 3.54%, and the interest rate on the term loan B was 4.04%. The unused credit facility fee was 0.30% for all revolving facilities at September 30, 2019.
The term loans are payable in quarterly installments and are due on the last business day of each March, June, September, and December with the final principal payment due on the respective maturity date. Borrowings on the revolving line of credit are repayable at our option of one, two, three or ninesix months after borrowing, depending on the term of the borrowing on the facility. Borrowings on the foreign swing line of credit are due no later than tentwenty business days after such loan is made.
The Credit Facility contains representations, warranties and events of default, as well as certain affirmative and negative covenants, customary for financings of this nature. These covenants include limitations on the ability to pay dividends and make other restricted payments under certain circumstances and compliance with certain financial ratios. As of September 30, 2017,2019, we were in compliance with each of the covenants under the Credit Facility.
Our Credit Agreement contains a number of negative covenants restricting, among other things, limitations on liens (with exceptions for our Securitization Facility) and investments, incurrence or guarantees of indebtedness, mergers, acquisitions, dissolutions, liquidations and consolidations, dispositions, dividends and other restricted payments and prepayments of other indebtedness. In particular, we are not permitted to make any restricted payments (which includes any dividend or other distribution) except that we may declare and make dividend payments or other distributions to our stockholders so long as (i) on a pro forma basis both before and after the distribution the consolidated leverage ratio is not greater than 3.25:1.00 and we are in compliance with the financial covenants and (ii) no default or event of default shall exist or result therefrom. The Credit Agreement also contains customary events of default. The Credit Agreement includes financial covenants where the Company

is required to maintain a consolidated leverage ratio of less than or equal to 4.00 to 1.00 as of the end of any fiscal quarter provided that in connection with any Material Acquisition the leverage ratio may be increased to 4.25 to 1.00 for the quarter in which the Material Acquisition is consummated and the next three fiscal quarters; and a consolidated interest coverage ratio of no less than 4.00 to 1.00.
The obligations of the Borrowers under the Credit Agreement are secured by substantially all of the assets of FLEETCOR and its domestic subsidiaries, pursuant to a security agreement and includes a pledge of (i) 100% of the issued and outstanding equity interests owned by us of each Domestic Subsidiary and (ii) 66% of the voting shares of the first-tier foreign subsidiaries, but excluding real property, personal property located outside of the U.S., accounts receivables and related assets subject to the Securitization Facility and certain investments required under money transmitter laws to be held free and clear of liens.
At September 30, 2017,2019, we had $2,690$3.1 billion in borrowings outstanding on the term loan A, net of discounts and $341.7 million in borrowings outstanding on the term A loan excludingB, net of discounts. We have unamortized debt issuance costs of $7.1 million related to the related debt discount, $350 millionrevolver as of September 30, 2019 recorded within other assets in borrowings outstanding on Term B loan, excluding the related debt discount, $595 million in borrowings outstanding on the domestic revolving A facility, $38 million in borrowings outstanding on the foreign revolving A facility and $40.2 million in borrowings outstanding on the swing line revolving A facility.unaudited consolidated balance sheet. We have unamortized debt discounts of $6.4 millionand debt issuance costs related to the term A facilityloans of $8.4 million and $0.7$2.8 million related to the term B facility at September 30, 2017.2019, respectively.
During the nine months ended September 30, 2017,2019, we made principal payments of $388.7$97.3 million on the term loans, $715.0$1,177 million on the domestic revolving A facility, $89.8$780.3 million on the foreign revolving AB facility, $35 million on the revolving C facility and $52.7$101.5 million on the swing line revolving A facility.facilities.
Cash Flow Hedges
On January 22, 2019, we 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. These swap contracts qualify as hedging instruments and have been designated as cash flow hedges. For each of these swap contracts, we will pay a fixed monthly rate and receive one month LIBOR. We reclassified approximately $2.2 million of losses from accumulated other comprehensive income into interest expense during the nine months ended September 30, 2019 as a result of these hedging instruments.
Securitization Facility
We are a party to a receivables purchase agreement among FleetCor Funding LLC, as seller, PNC Bank, National Association as administrator, and various purchaser agents, conduit purchasers and related committed purchasers parties thereto, which was amended and restated for the fifth time as of November 14, 2014. We refer to this arrangement as the Securitization Facility. There have been several amendments to the Securitization Facility.Facility, with the latest on April 22, 2019. The current purchase limit under the Securitization Facility is $950 million and the Securitization Facility expires on November 14, 2017. The Securitization Facility2020 and contains certain customary financial covenants.
There is a program fee equal to one month LIBOR plus 0.90% or the Commercial Paper Rate of 1.27% plus 0.90%0.80%. The program fee was 2.06% plus 0.88% and 0.85%2.52% plus 0.90%0.89% as of September 30, 20172019 and December 31, 2016,2018, respectively. The unused facility fee is payable at a rate of 0.40% per annum as of September 30, 20172019 and December 31, 2016,2018, respectively. We have unamortized debt issuance costs of $0.9 million related to the Securitization Facility as of September 30, 2019 recorded within other assets in the unaudited consolidated balance sheet.
The Securitization Facility provides for certain termination events, which includes nonpayment, upon the occurrence of which the administrator may declare the facility termination date to have occurred, may exercise certain enforcement rights with respect to the receivables, and may appoint a successor servicer, among other things.
We were in compliance with the financial covenant requirements related to our Securitization Facility as of September 30, 2017.2019.
Stock Repurchase Program

On February 4, 2016, ourThe Company's Board of Directors has approved a stock repurchase program, as updated from time to time, (the "Program") under, which we may purchase up towas most recently updated on October 22, 2019, with an aggregate of $500 million of our common stock over the following 18 month period. On July 27, 2017, our Board of Directors authorized an increase in the size of the Program by $1 billion, under which the Company may purchase up to an additional $250 million and an extensionaggregate of $3.1 billion of its common stock through the period ending February 1, 2023. Since the beginning of the Program, by9,238,760 shares have been repurchased for an additional 18 months. On November 1, 2017, we announced that our Boardaggregate purchase price of Directors had authorized an increase in$1.6 billion, leaving the size of the Program by an additional $350 million, resulting in total aggregate repurchases authorizedCompany up to $1.5 billion available under the Program of $1.1 billion. With the increase and giving effect to our $590 million of previousfor future repurchases we may repurchase up to $510 million in shares of ourits common stock at any time prior to February 1, 2019.stock.

Any stock repurchases under the Program may be made at times and in such amounts as deemed appropriate. The timing and amount of stock repurchases, if any, will depend on a variety of factors including the stock price, market conditions, corporate and regulatory requirements, and any additional constraints related to material inside information the Company may possess. Any repurchases have been and are expected to be funded by a combination of available cash flow from the business, working capital and debt. .
On August 3, 2017, as part of the Program, we entered an Accelerated Share Repurchase agreement ("ASR Agreement") with a third-party financial institution to repurchase $250 million of its common stock. Pursuant to the ASR Agreement, we delivered $250 million in cash and received 1,491,647 shares based on a stock price of $142.46 on August 7, 2017. The ASR Agreement completed on September 7, 2017, at which time we received 263,012 additional shares based on a final weighted average per share purchase price during the repurchase period of $142.48.
We accounted for the ASR Agreement as two separate transactions: (i) as shares of reacquired common stock for the shares delivered to us upon effectiveness of the ASR Agreement and (ii) as a forward contract indexed to our common stock for the undelivered shares. The initial delivery of shares was included in treasury stock at cost and results in an immediate reduction of the outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share. The forward contracts indexed to our own common stock met the criteria for equity classification, were initially recorded in additional paid-in capital and then reclassified to treasury stock upon completion of the ASR agreement.
Since the beginning of the Program, 4,114,104 shares for an aggregate purchase price of $590 million have been repurchased. There were 2,854,959 shares totaling $402.4 million repurchased under the Program during the nine months ended September 30, 2017.
Sale of NexTraq
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 million during the third quarter of 2017, which is net of transaction closing costs.We recorded tax on 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 historically been included in the Company's North America segment.
Critical accounting policies and estimates
In applying the accounting policies that we use to prepare our consolidated financial statements, we necessarily make accounting estimates that affect our reported amounts of assets, liabilities, revenue and expenses. Some of these estimates require us to make assumptions about matters that are highly uncertain at the time we make the accounting estimates. We base these assumptions and the resulting estimates on historical information and other factors that we believe to be reasonable under the circumstances, and we evaluate these assumptions and estimates on an ongoing basis. In many instances, however, we reasonably could have used different accounting estimates and, in other instances, changes in our accounting estimates could occur from period to period, with the result in each case being a material change in the financial statement presentation of our financial condition or results of operations. We refer to estimates of this type as critical accounting estimates.
Accounting estimates necessarily require subjective determinations about future events and conditions. During the ninethree months ended September 30, 2017,2019, other than noted in footnote 1, "Summary of Significant Accounting Policies" and footnote 2, "Leases", related to our adoption of new lease guidance, we have not adopted any new critical accounting policies that had a significant impact upon our consolidated financial statements, have not changed any critical accounting policies and have not changed the application of any critical accounting policies from the year ended December 31, 2016.2018. For critical accounting policies, refer to the Critical Accounting Estimates in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 20162018 and our summary of significant accounting policies in Notefootnote 1 of our notes to the unaudited consolidated financial statements in this Quarterly Report Form 10-Q.
Management’s Use of Non-GAAP Financial Measures
We have included in the discussion above certain financial measures that were not prepared in accordance with GAAP. Any analysis of non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP.

Below, we define the non-GAAP financial measures, provide a reconciliation of the non-GAAP financial measure to the most directly comparable financial measure calculated in accordance with GAAP, and discuss the reasons that we believe this information is useful to management and may be useful to investors.
Adjusted revenues
Pro forma and macro adjusted revenue and key performance metric by product. We have defineddefine the non-GAAP measurepro forma and macro adjusted revenuesrevenue as revenues,revenue, net less merchant commissions as reflected in our statement of income, statement.
adjusted to eliminate the impact of the macroeconomic environment and the impact of acquisitions and dispositions. The macroeconomic environment includes the impact that market fuel spread margins, fuel prices and foreign exchange rates have on our business. We use pro forma and macro adjusted revenues as a basisrevenue and key performance metric to evaluate our revenues, net of the commissions that are paid to merchants to participateorganic growth in our card programs. The commissions paid to merchants can vary when market spreads fluctuate in muchrevenue and the same way as revenues are impacted when market spreads fluctuate. We believe that adjusted revenue is an appropriate supplemental measure of financialassociated performance and may be useful to investors to understanding our revenue performance on a consistent basis. Adjusted revenues are not intended to be a substitute for GAAP financial measures and should not be used as such.
metric. Set forth below is a reconciliation of pro forma and macro adjusted revenuesrevenue and key performance metric to the most directly comparable GAAP measure, revenues,revenue, net and performance metric (in thousands)millions):
  Three Months Ended September 30, Nine Months Ended September 30,
(Unaudited) 2017 2016 2017 2016
Revenues, net $577,877
 $484,426
 $1,639,547
 $1,316,593
Merchant commissions (27,687) (28,214) (82,690) (78,755)
Total adjusted revenues $550,190

$456,212

$1,556,857

$1,237,838

  Revenue  Key Performance Metric
  Three Months Ended September 30, Three Months Ended September 30,
(Unaudited) 2019* 2018*  2019* 2018*
FUEL - TRANSACTIONS         
Pro forma and macro adjusted $299.7
 $272.3
  129.4
 126.1
Impact of acquisitions/dispositions/Uber 
 10.9
  
 3.8
Impact of fuel prices/spread 0.2
 
  
 
Impact of foreign exchange rates (4.3) 
  
 
As reported $295.6
 $283.2
  129.4
 129.8
CORPORATE PAYMENTS - TRANSACTIONS         
Pro forma and macro adjusted $139.4
 $112.0
  14.4
 13.3
Impact of acquisitions/dispositions 
 (6.5)  
 (0.2)
Impact of fuel prices/spread (0.1) 
  
 
Impact of foreign exchange rates (0.9) 
  
 
As reported $138.5
 $105.5
  14.4
 13.1
CORPORATE PAYMENTS - SPEND         
Pro forma and macro adjusted Intentionally Left Blank  18,574
 13,817
Impact of acquisitions/dispositions   
 
Impact of fuel prices/spread   
 
Impact of foreign exchange rates   (156) 
As reported   18,417
 13,817
TOLLS - TAGS         
Pro forma and macro adjusted $89.3
 $76.4
  5.1
 4.7
Impact of acquisitions/dispositions 
 
  
 
Impact of fuel prices/spread 
 
  
 
Impact of foreign exchange rates (0.6) 
  
 
As reported $88.7
 $76.4
  5.1
 4.7
LODGING - ROOM NIGHTS         
Pro forma and macro adjusted $56.4
 $48.0
  4.4
 4.5
Impact of acquisitions/dispositions 
 
  
 
Impact of fuel prices/spread 
 
  
 
Impact of foreign exchange rates 
 
  
 
As reported $56.4
 $48.0
  4.4
 4.5
GIFT - TRANSACTIONS         
Pro forma and macro adjusted $48.5
 $57.8
  277.8
 277.9
Impact of acquisitions/dispositions 
 (1.2)  
 (0.3)
Impact of fuel prices/spread 
 
  
 
Impact of foreign exchange rates 
 
  
 
As reported $48.5
 $56.7
  277.8
 277.6
OTHER1- TRANSACTIONS
         
Pro forma and macro adjusted $54.6
 $50.9
  12.4
 12.4
Impact of acquisitions/dispositions 
 (1.1)  
 
Impact of fuel prices/spread 
 
  
 
Impact of foreign exchange rates (1.2) 
  
 
As reported $53.4
 $49.8
  12.4
 12.4
          
FLEETCOR CONSOLIDATED REVENUES         
Pro forma and macro adjusted $687.8
 $617.5
  Intentionally Left Blank
Impact of acquisitions/dispositions 
 2.1
  
Impact of fuel prices/spread 0.2
 
  
Impact of foreign exchange rates (6.9) 
  
As reported $681.0
 $619.6
  
          
* Columns may not calculate due to rounding.  
1Other includes telematics, maintenance, and transportation related businesses.
  
Adjusted net income and adjusted net income per diluted share
share. We have defined the non-GAAP measure adjusted net income as net income as reflected in our statement of income, adjusted to eliminate (a) non-cash stock based compensation expense related to share based compensation awards, (b) amortization of deferred financing costs, discounts and intangible assets, (c) amortization of the premium recognized on the purchase of receivables, (d)and our proportionate share of amortization of

intangible assets at our Masternautequity method investment, (e) aand (c) other non-recurring net gain at our Masternaut investment (f)items, including the impact of the Tax Act, impairment of our Masternaut investment, (g) net gain onasset write-offs, restructuring costs, gains and related taxes due to disposition of assets and a business, (h) loss on extinguishment of debt, legal settlements, and (i) a non-recurring loss due to merger of entities.the unauthorized access impact.
We have defined the non-GAAP measure adjusted net income per diluted share as the calculation previously noted divided by the weighted average diluted shares outstanding as reflected in our statement of income.
We use adjusted net income to eliminate the effect of items that we do not consider indicative of our core operating performance. We believe it is useful to exclude non-cash stock based compensation expense from adjusted net income because non-cash equity grants made at a certain price and point in time do not necessarily reflect how our business is performing at any particular time and stock based compensation expense is not a key measure of our core operating performance. We also believe that amortization expense can vary substantially from company to company and from period to period depending upon their financing and accounting methods, the fair value and average expected life of their acquired intangible assets, their capital structures and the method by which their assets were acquired. Therefore, we have excluded amortization expense from our adjusted net income. We also believe one-time non-recurring gains, losses, and impairment charges do not necessarily reflect how our investmentinvestments and business is performing.Weare performing. We believe that adjusted net income and adjusted net income per diluted share are appropriate supplemental measures of financial performance and may be useful to investors to understanding our operating performance on a consistent basis. Adjusted net income and adjusted net income per diluted share are not intended to be a substitute for GAAP financial measures and should not be used as such.

Set forth below is a reconciliation of adjusted net income and adjusted net income per diluted share to the most directly comparable GAAP measure, net income and net income per diluted share (in thousands, except shares and per share amounts)*:*
  Three Months Ended September 30, Nine Months Ended September 30,
(Unaudited) 2017 2016 2017 2016
Net income $202,823
 $129,618
 $457,503
 $356,961
Net income per diluted share 2.18
 1.36
 4.87
 3.75
Stock based compensation 24,654
 17,405
 68,897
 50,025
Amortization of intangible assets 54,003
 46,341
 158,897
 112,455
Amortization of premium on receivables 1,650
 1,348
 4,738
 3,687
Amortization of deferred financing costs and discounts 1,611
 1,917
 5,411
 5,568
Amortization of intangibles at Masternaut investment 2,965
 2,406
 8,341
 7,533
Impairment of Masternaut investment 44,600
 
 44,600
 
Net gain on disposition of business (109,205) 
 (109,205) 
Loss on extinguishment of debt 3,296
 
 3,296
 
Non recurring loss due to merger of entities 2,028
 
 2,028
 
Non-recurring net gain at Masternaut investment 
 
 
 (10,845)
Total pre-tax adjustments 25,602

69,417
 187,003

168,423
Income tax impact of pre-tax adjustments at the effective tax rate1
 (25,656) (15,726) (69,711) (46,425)
Adjusted net income $202,769
 $183,310
 $574,795
 $478,959
Adjusted net income per diluted share $2.18
 $1.92
 $6.12
 $5.03
Diluted shares 93,001
 95,307
 93,923
 95,204
  Three Months Ended September 30, Nine Months Ended September 30,
(Unaudited) 2019 2018 2019 2018
Net income $225,805
 $157,694
 $659,563
 $509,483
Stock based compensation 15,273
 20,702
 46,120
 54,207
Amortization of intangible assets, premium on receivables, deferred financing costs and discounts 52,907
 55,482
 163,048
 173,239
Impairment of investment 
 7,147
 15,660
 7,147
Legal settlements 
 
 3,474
 
Restructuring costs 
 481
 
 3,917
Unauthorized access impact 
 322
 
 2,065
Total pre-tax adjustments 68,180
 84,134
 228,302
 240,575
Income tax impact of pre-tax adjustments at the effective tax rate1
 (15,177) (17,977) (49,023) (54,904)
Impact of investment sale, other discrete item and tax reform2
 1,782
 22,731
 (63,098) 22,731
Adjusted net income $280,590
 $246,582
 $775,744
 $717,885
Adjusted net income per diluted share $3.10
 $2.68
 $8.62
 $7.75
Diluted shares 90,522
 92,081
 89,976
 92,671
*Columns may not calculate due to impact of rounding.
1Excludes the results of our Masternaut investmentthe Company's investments on our effective tax rate, as results from our Masternaut investmentinvestments are reported within the Consolidated Income Statementsconsolidated statements of income on a post-tax basis and no tax-over-book outside basis differences related to our investmentinvestments reversed during 2016 or are expected to reverse in 2017.the periods. Also excludes the net gain realized upon ourimpact of a Section 199 tax adjustment related to a prior tax year on the 2019 effective income tax rate.
2 Represents the impact to taxes from the disposition of NexTraq, representing a pretax gainour investment in Masternaut of $175.0$64.9 million in the second quarter of 2019 and impact of tax on gain of $65.8. The tax on the gain isreform adjustments included in "Net gain on dispositionour effective tax rate of business".$22.7 million in the third quarter of 2018, respectively. Also, includes the impact of a Section 199 adjustment related to a prior tax year in the third quarter of 2019 results of $1.8 million.
*Columns may not calculate due to rounding.


Pro Forma and Macro Adjusted Revenue and Transactions by Product

We define pro forma and macro adjusted revenue as revenue, net as reflected in our statement of income, adjusted to eliminate the impact of the macroeconomic environment and the impact of acquisitions and dispositions. The macroeconomic environment includes the impact that market fuel spread margins, fuel prices and foreign exchange rates have on our business. We use pro forma and macro adjusted revenue and transactions to evaluate the organic growth in our revenue and the associated transactions. Set forth below is a reconciliation of pro forma and macro adjusted revenue and transactions to the most directly comparable GAAP measure, revenue, net and transactions (in millions):*
  Revenue Transactions
  Three Months Ended September 30,Three Months Ended September 30,
(Unaudited) 2017 2016 2017 
20164
FUEL CARDS        
Pro forma and macro adjusted2,3
 $274.0
 $259.5
 $119.6
 $113.6
Impact of acquisitions/dispositions 
 (0.7) 
 (1.0)
Impact of fuel prices/spread (0.6) 
 
 
Impact of foreign exchange rates 2.9
 
 
 
As reported $276.3
 $258.8
 $119.6
 $112.5
CORPORATE PAYMENTS        
Pro forma and macro adjusted2,3
 $71.7
 $61.3
 $10.9
 $10.2
Impact of acquisitions/dispositions 
 (15.2) 
 (0.2)
Impact of fuel prices/spread 0.1
 
 
 
Impact of foreign exchange rates 0.4
 
 
 
As reported $72.2
 $46.1
 $10.9
 $10.0
TOLLS        
Pro forma and macro adjusted2,3
 $80.8
 $67.8
 $231.0
 $225.0
Impact of acquisitions/dispositions 
 (42.0) 
 (143.9)
Impact of fuel prices/spread 
 
 
 
Impact of foreign exchange rates 2.1
 
 
 
As reported $82.9
 $25.8
 $231.0
 $81.1
LODGING        
Pro forma and macro adjusted2,3
 $33.2
 $28.1
 $4.1
 $3.5
Impact of acquisitions/dispositions 
 
 
 
Impact of fuel prices/spread 
 
 
 
Impact of foreign exchange rates 
 
 
 
As reported $33.2
 $28.1
 $4.1
 $3.5
GIFT        
Pro forma and macro adjusted2,3
 $54.8
 $58.3
 $294.1
 $269.5
Impact of acquisitions/dispositions 
 
 
 
Impact of fuel prices/spread 
 
 
 
Impact of foreign exchange rates 
 
 
 
As reported $54.8
 $58.3
 $294.1
 $269.5
OTHER1
        
Pro forma and macro adjusted2,3
 $58.1
 $57.1
 $19.4
 $20.4
Impact of acquisitions/dispositions 
 10.3
 
 0.4
Impact of fuel prices/spread 
 
 
 
Impact of foreign exchange rates 0.4
 
 
 
As reported $58.5
 $67.4
 $19.4
 $20.8
         
FLEETCOR CONSOLIDATED REVENUES        
Pro forma and macro adjusted2,3
 $572.6
 $532.1
 $679.1
 $642.2
Impact of acquisitions/dispositions 
 (47.6) 
 (144.7)
Impact of fuel prices/spread (0.5) 
 
 
Impact of foreign exchange rates 5.8
 
 
 
As reported $577.9
 $484.4
 $679.1
 $497.5
         
* Columns may not calculate due to impact of rounding.  
1Other includes telematics, maintenance, food and transportation related businesses.
  
22016 is pro forma to include acquisitions and exclude dispositions, consistent with 2017 ownership.
32017 is adjusted to remove the impact of changes in the macroeconomic environment to be consistent with the same period of prior year, using constant fuel prices, fuel price spreads and foreign exchange rates.
42016 transactions reflect immaterial corrections from previously disclosed amounts for the prior period.


Special Cautionary Notice Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about FleetCor's beliefs, expectations and future performance, are forward-looking statements. Forward-looking statements can be identified by the use of words such as “anticipate,” “intend,” “believe,” “estimate,” “plan,” “seek,” “project” or “expect,” “may,” “will,” “would,” “could” or “should,” the negative of these terms or other comparable terminology.
These forward-looking statements are not a guarantee of performance, and you should not place undue reliance on such statements. We have based these forward-looking statements largely on our currentpreliminary information, internal estimates and management assumptions, expectations and projectionsplans about future events.conditions, events and results. Forward-looking statements are subject to many uncertainties and other variable circumstances, such as delays or failures associated with implementation;implementation of, or adaption to, new technology; fuel price and spread volatility; changes in credit risk of customers and associated losses; the actions of regulators relating to payment cards or resulting from investigations; failure to maintain or renew key business relationships; failure to maintain competitive product offerings; failure to maintain or renew sources of financing; failure to complete, or delays in completing, anticipated new partnership and customer arrangements or acquisitions and the failure to successfully integrate or otherwise achieve anticipated benefits from such partnershipspartnership and customer arrangements or acquired businesses; failure to successfully expand business internationally; other risks related to our international operations, including the potential impact to our business as a result of the United Kingdom'sKingdom’s referendum to leave the European Union; the impact of foreign exchange rates on operations, revenue and income; the effects of general economic and political conditions on fueling patterns and the commercial activity of fleets,fleets; risks related to litigation; our ability to complete an accelerated share repurchase,the impact of new tax regulations and the resolution of tax contingencies resulting in additional tax liabilities; as well as the other risks and uncertainties identified under the caption “Risk Factors”"Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2016, and 10-Q for the quarter ended June 30, 20172018 filed with the Securities and Exchange Commission on March 1, 20172019 and in our Quarterly Report on Form 10-Q for the three months ended March 31, 2019 filed with the Securities and Exchange Commission on May 10, 2019, Quarterly Report on Form 10-Q for the three months ended June 30, 2019 filed with the Securities and Exchange Commission on August 8, 2017, respectively.9, 2019 and this Quarterly Report. These factors could cause our actual results and experience to differ materially from any forward-looking statement. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this reportpresentation are made only as of the date hereof. We do not undertake, and specifically disclaim, any obligation to update any such statements or to publicly announce the resultsas a result of any revisions to any of such statements to reflectnew information, future events or developments.developments, except as specifically stated or to the extent required by law. You may get FLEETCOR’s Securities and Exchange Commission (“SEC”) filings for free by visiting the SEC web site at www.sec.gov.
This report includes non-GAAP financial measures, which are used by the Company and investors as supplemental measures to evaluate the overall operating performance of companies in our industry. By providing these non-GAAP financial measures, together with reconciliations, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing strategic initiatives. See "Management’s Use of Non-GAAP Financial Measures" elsewhere in this Quarterly Report on on Form 10-Q for additional information regarding these GAAP financial measures and a reconciliation to the nearest corresponding GAAP measure.

Item 3.Quantitative and Qualitative Disclosures About Market Risk
With the acquisition of Cambridge in August 2017, we have additional foreign exchange risk and associated foreign exchange risk management requirements due to the nature of our international payments provider business. The majority of this business' revenue is from exchanges of currency at spot rates, which enable customers to make cross-currency payments. In addition, this business also writes foreign currency forward and option contracts for our customers to facilitate future payments. The duration of these derivative contracts at inception is generally less than one year. Cambridge aggregates its foreign exchange exposures arising from customer contracts, including the derivative contracts described above, and hedges (economic hedge) the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties.

A hypothetical uniform 10% strengthening or weakening in the value of the U.S. dollar relative to all other currencies in which our net income is generated would have resulted in a decrease/increase to pre-tax income of approximately $1.5 million based on our unhedged exposure to foreign currency at September 30, 2017.
As of September 30, 2017, other than noted above,2019, there have been no material changes to our market risk from that disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016.2018.
Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures
As of September 30, 2017,2019, management carried out, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2017,2019, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and are designed to ensure that information required to be disclosed in those reports is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2017,2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION


Item 1.Legal Proceedings

In the ordinary course of business, we are subject to various pending and potential legal actions, arbitration proceedings, claims, subpoenas, and matters relating to compliance with laws and regulations (collectively, legal proceedings).  Based on our current knowledge, management presently does not believe that the liabilities arising from these legal proceedings will have a material adverse effect on our consolidated financial condition, results of operations or cash flows. However, it is possible that the ultimate resolution of these legal proceedings could have a material adverse effect on our results of operations and financial condition for any particular period.
Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, and are in the stages of the proceedings where key factual and legal issues have not been resolved. For these reasons, we are currently unable to predict the ultimate timing or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from the matters described above.
Shareholder Class Action and Derivative Lawsuits
On June 14, 2017, a shareholder filed a class action complaint in the United States District Court for the Northern District of Georgia against the Company and certain of its officers and directors on behalf of all persons who purchased or otherwise acquired the Company’s stock between February 5, 2016 and May 2, 2017. On October 13, 2017, the shareholder filed an amended complaint asserting claims on behalf of a putative class of all persons who purchased or otherwise acquired the Company's common stock between February 4, 2016 and May 3, 2017. The complaint alleges that the defendants made false or misleading statements regarding fee charges and the reasons for its earnings and growth in certain press releases and other public statements in violation of the federal securities laws. PlaintiffOn July 17, 2019, the court granted plaintiff's motion for class certification. The complaint seeks class certification, unspecified monetary damages, costs, and attorneys’ fees. On October 3, 2019, the parties executed a term sheet to settle the case for a payment of $50 million for the benefit of the class. The full settlement amount is covered by the Company’s insurance policies. On November 7, 2019, the lead plaintiff filed a motion for preliminary approval of the settlement. The Company disputes the allegations in the complaint and intends to vigorously defend against the claims.settlement is without any admission of the allegations in the complaint.
On July 10, 2017, a shareholder derivative complaint was filed against the Company and certain of the Company’s directors and officers in the United States District Court for the Northern District of Georgia seeking recovery on behalf of the Company. The derivative complaint alleges that the defendants issued a false and misleading proxy statement in violation of the federal securities laws; that defendants breached their fiduciary duties by causing or permitting the Company to make allegedly false and misleading public statements concerning the Company’s fee charges, and financial and business prospects; and that certain defendants breached their fiduciary duties through allegedly improper sales of stock. The complaint seeks unspecified monetary damages on behalf of the Company, corporate governance reforms, disgorgement of profits, benefits and compensation by the defendants, restitution, costs, and attorneys’ and experts’ fees. On August 18, 2017,September 20, 2018, the court entered an order deferring the case pending a ruling on motions for summary judgment in the defendants' motion to dismissshareholder class action, notice a settlement has been reached in the putative shareholder class action, or until otherwise agreed to by the parties. On January 9, 2019, a similar shareholder derivative complaint was filed in the Superior Court of Gwinnett County, Georgia, which is stayed pending a ruling on motions for summary judgment in the shareholder class action, notice a settlement has been reached in the shareholder class action, or until otherwise agreed by the parties.  Both derivative actions remain stayed at this time. The defendants dispute the allegations in the complaintderivative complaints and intend to vigorously defend against the claims.
Estimating anOn February 1, 2019, Schultz Transfer Systems, Inc. filed a complaint against Fleetcor Technologies Operating Company, LLC (“Fleetcor LLC”) in the United States District Court for the Northern District of Georgia.  The complaint alleges that it is a Fleetcor LLC customer and member of the Fuelman program, and that Fleetcor LLC overcharged the plaintiff for fees and fuel through the Fuelman program.  Based on these allegations, the complaint asserts claims for breach of contract, breach of the covenant of good faith and fair dealing, fraud, fraudulent concealment, money had and received, and unjust enrichment.  The complaint seeks to represent a class defined as all persons, including corporate entities, who were enrolled in the Fuelman program between June 2016 and the present. On April 1, 2019, the Company filed a motion to compel arbitration and to dismiss the case, which was granted without prejudice on July 8, 2019. On September 20, 2019, the case was settled with the individual plaintiff for $10,000.
FTC Investigation
In October 2017, the Federal Trade Commission (“FTC”) issued a Notice of Civil Investigative Demand to the Company for the production of documentation and a request for responses to written interrogatories. After discussions with the Company, the FTC proposed in October 2019 to resolve potential claims relating to the Company’s advertising and marketing practices. To date, the FTC has not offered a specific proposal as to the amount orof potential redress. The Company believes that the FTC’s potential claims, which relate principally to its North American Fuel Card business’s practices, are without merit. At this time,

the Company believes the possible range of possible losses resulting from litigation proceedings is inherently difficultoutcomes includes the filing by the Commission of a contested civil complaint, further discussions leading to a settlement, or the closure of these matters without further action. The Company believes that these matters are not and requires an extensive degree of judgment, particularly wherewill not be material to the matters involve indeterminate claims for monetary damages, and are in the stagesfinancial performance of the proceedings where key factual and legal issues have not been resolved. For these reasons, we are currently unable to predict the ultimate timing or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from the matters described above.Company. 
Item 1A.Risk Factors


In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016 and in Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended June 30, 20172018 filed with the Securities and Exchange Commission on March 1, 2017 and August 8, 2017, respectively,2019, which could materially affect our business, financial condition or future results. Other than the risk factors set forthas disclosed below, there have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2018.


Derivatives RegulationsLitigation and regulatory actions could subject us to significant fines, penalties or requirements resulting in significantly increased expenses, damage to our reputation and/or material adverse effects on our business.


Rules adopted underWe are subject to claims and a number of judicial and administrative proceedings considered normal in the Dodd-Frank Act bycourse of our current and past operations, including employment-related disputes, contract disputes, intellectual property disputes, government inquiries, investigations, audits and regulatory proceedings, customer disputes and tort claims. Responding to proceedings may be difficult and expensive, and we may not prevail. In some proceedings, the Commodity Futures Trading Commission (the "CFTC"),claimant seeks damages as well as the provisions of the European Market Infrastructure Regulation and its technical standards,other relief, which, are directly applicableif granted, would require expenditures on our part or changes in the member states of the European Union, have subjected certain of the foreign exchange derivative contracts we offer to our customers as part of Cambridge's business, to reporting, recordkeeping, and other requirements. Additionally, certain foreign exchange derivatives transactions we may enter into in the future may be subject to centralized clearing requirements, or may be subject to margin requirements in the United States and European Union. Other jurisdictions outside the United States and the European Union are considering, have implemented, or are implementing regulations similar to those described above. Derivatives regulations have added costs to our business and any additional requirements, such as future registration requirements and increased regulation of derivative contracts, may result in additional costs or impact the wayhow we conduct our hedging activities, as well as impact how we

conduct our business within our international payments provider operations. In particular, the CFTC has recently issued a proposed rule that, if adopted as proposed, would increase the likelihoodbusiness. There can be no certainty that we will not ultimately incur charges in excess of presently established or future financial accruals or insurance coverage, or that we will prevail with respect to such proceedings. Regardless of whether we prevail or not, such proceedings could have a material adverse effect on our business, reputation, financial condition and results of operations. From time to register one or moretime, we have had, and expect to continue to receive, inquiries from regulatory bodies and administrative agencies relating to the operation of our subsidiariesbusiness. We have received a Civil Investigative Demand from the Federal Trade Commission, along with the CFTC as swap dealers. Swap dealers are subjectproposals to a comprehensive regulatory frameworkresolve potential claims, arising from our advertising and compliance with this framework will leadmarketing practices, which relate principally to additional costs, including costs relating to regulatory capital and margin requirements, and may impact how we conduct our hedging activities and derivatives business with customers. We are currently evaluating the impact the proposed rule, if adopted, wouldNorth American Fuel Card business. Any potential claims or any such inquiries or potential claims have on our hedging activities and operations.

Our compliance with these requirements has resulted in, and may continue to result in, additional costs to our businessvarious audits, reviews and may impact our international payments provider business operations. Furthermore, our failure to comply with these requirementsinvestigations, which can be time consuming and expensive. These types of inquiries, audits, reviews, and investigations could result in the institution of administrative or civil proceedings, sanctions and the payment of fines and other sanctions, as well as necessitate a temporary or permanent cessation to some or allpenalties, various forms of our derivative related activities. Any such fines, sanctions or limitations on our business could adversely affect our operationsinjunctive relief and financial results. Additionally, the regulatory regimes for derivativesredress, changes in the United States and European Union, such as under the Dodd-Frank Act and the European Markets in Financial Instruments Directive known as "MiFID II," are continuing to evolve and changes to such regimes, our designation under such regimes, or the implementation of new rules under such regimes, such as future registration requirementspersonnel, and increased regulation of derivative contracts, may result in additional costs to our business. Other jurisdictions outsidereview and scrutiny by customers, regulatory authorities, the United Statesmedia and the European Union are considering, have implemented, or are implementing regulations similar to those described aboveothers, which could be significant and these may result in greater costs to us as well.

Global economic downturns or slower growth or declines in the money transfer, payment service, and other markets in which we operate, including downturns or declines related to interruptions in migration patterns, and difficult conditions in global financial markets andfinancial market disruptions could adversely affect our business, financialcondition, results of operations, and cash flows.

The global economy has experienced in recent years, and may experience, downturns, volatility and disruption, and we face certain risks relating to such events, including:

Our international payments provider business provides currency conversion and foreign exchange hedging services to our customers, exposing us to foreign currency exchange risk. In order to help mitigate these risks, we enter into derivative contracts. However, these contracts do not eliminate all of the risks related to fluctuating foreign currency rates.
Our international payments provider business is heavily dependent on global trade. A downturn in global trade or the failure of long-term import growth rates to return to historic levels could have ana material adverse effect on our business, reputation, financial condition and results of operations, cash flows, andoperations. For more information about our cash management strategies. Additionally, as customer hedging activity in our international payments provider business generally varies with currency volatility, we have experienced and may experience in the future lower foreign exchange revenues in periods of lower currency volatility.
The counterparties to the derivative financial instruments that we use in our international payments provider business to reduce our exposure to various market risks, including changes in foreign exchange rates, may fail to honor their obligations, which could expose us to risks we had sought to mitigate. This includes the exposure generated when we write derivative contracts to our customers as part of our cross-currency payments business, and we typically hedge the net exposure through offsetting contracts with established financial institution counterparties. That failure could have an adverse effect on our financial condition, results of operations, and cash flows.
Risks associated with operations outside the United States and foreign currencies could adversely affect our business, financial condition, results of operations, and cash flows.

We have additional foreign exchange risk and associated foreign exchange risk management requirements due to the nature of our international payments provider business. The majority of this business' revenue is from exchanges of currency at spot rates, which enable customers to make cross-currency payments. Additionally, this business also writes foreign currency forward and option contracts for our customers. The duration of these derivative contracts at inception is generally less than one year. The credit risk associated with our derivative contracts increases when foreign currency exchange rates move against our customers, possibly impacting their ability to honor their obligations to deliver currency to us or to maintain appropriate collateral with us.

Our international payments provider business aggregates its foreign exchange exposures arising from customer contracts, including the derivative contracts described above, and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties. If we are unable to obtain offsetting positions, our business, financial condition, results of operations, and cash flows could be adversely affected.

We face credit, liquidity and fraud risks from our agents, consumers, businesses, and third-party processors that could adversely affect our business, financial condition, results of operations, and cash flows.

We are exposed to credit risk in our international payments provider business relating to: (a) derivatives written by us to our customers and (b) the extension of trade credit when transactions are paid to recipients prior to our receiving cleared funds from the sending customers. The credit risk associated with our derivative contracts increases when foreign currency exchange rates move against our customers, possibly impacting their ability to honor their obligations to deliver currency to us or
to maintain appropriate collateral with us. If a customer becomes insolvent, files for bankruptcy, commits fraud or otherwise fails to pay us, we may be exposed to the value of an offsetting position with a financial institution counterparty for the derivatives or may bear financial risk for those receivables where we have offered trade credit.

If we are unable to maintain our relationships with banks needed to conduct our services, or fail to comply with our contract requirements, our business, financial condition, results of operations, and cash flows would be adversely affected.

In our international payments provider business, we facilitate payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprisesjudicial and other organizations. Increased regulation and compliance requirements are impacting these businesses by making it more costly for us to provide our services or by making it more cumbersome for businesses to do business with us. We may also have difficulty establishing or maintaining banking relationships needed to conduct our services due to banks’ policies. If we are unable to maintain our current business or banking relationships or establish new relationships under terms consistent with those currently in place, our ability to continue to offer our services may be adversely impacted, which could have an adverse effect on our business, financial condition, results of operations, and cash flows.proceedings, see “Business-Legal Proceedings”.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
On February 4, 2016, ourThe Company's Board of Directors has approved a stock repurchase program, as updated from time to time, (the "Program") under, which we may begin purchasing up towas most recently updated on October 22, 2019, with an aggregate of $500 million of the Company's common stock over the following 18 month period. On July 27, 2017, the Company's Board of Directors authorized an increase in the size of the Program by an additional $250 million and an extension of the Program by an additional 18 months. On November 1, 2017,$1 billion, under which the Company announced thatmay purchase up to an aggregate of $3.1 billion of its Board of Directors had authorized an increase incommon stock through the size of the Program by an additional $350 million, resulting in total aggregate repurchases authorized under the Program of $1.1 billion.period ending February 1, 2023. Since the beginning of the Program, 4,114,1049,238,760 shares have been repurchased for an aggregate purchase price of $590 million$1.6 billion, leaving the Company up to $1.5 billion available under the Program for future repurchases in shares of its common stock.
Any stock repurchases under the Program may be made at times and in such amounts as deemed appropriate. The timing and amount of stock repurchases, if any, will depend on a variety of factors including the stock price, market conditions, corporate and regulatory requirements, and any additional constraints related to material inside information the Company may possess. Any repurchases have been repurchased.and are expected to be funded by a combination of available cash flow from the business, working capital and debt.

On December 14, 2018, as part of the Program, the Company entered an accelerated stock repurchase agreement ("2018 ASR Agreement") with a third-party financial institution to repurchase $220 million of its common stock. Pursuant to the 2018 ASR Agreement, the Company delivered $220 million in cash and received 1,057,035 shares based on a stock price of $176.91 on December 14, 2018. The 2018 ASR Agreement was completed on January 29, 2019, at which time the Company received 117,751 additional shares based on a final weighted average per share purchase price during the repurchase period of $187.27.

The following table presents information as of September 30, 2019, with respect to purchasespurchase of common stock of the Company made during the three months ended September 30, 20172019 by the Company as defined in Rule 10b-18(a)(3) under the Exchange Act:Act.
Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of the Publicly Announced Plan Maximum Value that May Yet be Purchased Under the Publicly Announced Plan (in thousands)
August 1, 2017 through August 31, 2017 1,491,647
 $142.46
 3,161,958
 $647,430
September 1, 2017 through September 30, 2017 952,146
 $144.38
 4,114,104
 $509,957
Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of the Publicly Announced Plan Maximum Value that May Yet be Purchased Under the Publicly Announced Plan (in thousands)
July 1, 2019 through July 31, 2019 622
 $285.15
 9,055,134
 $544,248
August 1, 2019 through August 31, 2019 
 $
 9,055,134
 $544,248
September 1, 2019 through September 30, 2019 183,626
 $300.39
 9,238,760
 $489,089


Item 3.Defaults Upon Senior Securities
Not applicable.
Item 4.Mine Safety Disclosures
Not applicable.
Item 5.Other Information
Not applicable.

Item 6. Exhibits


   
Exhibit
No.
   
Acquisition agreement to acquire Serviços e Tecnologia de Pagamentos S.A. (incorporated by reference to Exhibit 2.1 to the Registrant's Form 8-K, File No. 001-35004, filed with the Securities and Exchange Commission ("SEC") on March 18, 2016)
  Amended and Restated Certificate of Incorporation of FleetCor Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K, File No. 001-35004, filed with the SEC on March 25, 2011)
  
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of FleetCor Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, File No. 001-35004, file with the SEC on June 8, 2018)
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of FleetCor Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, File No. 001-35004, filed with the SEC on June 14, 2019)
  Amended and Restated Bylaws of FleetCor Technologies, Inc. (incorporated by reference to Exhibit 3.23.1 to the Registrant’s Annual Report on Form 10-K,8-K, File No. 001-35004, filed with the SEC on October 28, 2016)January 29, 2018)
  
 Form of Stock Certificate for Common Stock (incorporated by reference to Exhibit 4.1 to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1, File No. 333-166092, filed with the SEC on June 29, 2010)
ThirdSixth Amendment to Credit Agreement, datedated as of August 2, 2017,2019, among FleetCorFLEETCOR Technologies Operating Company, LLC, as the Company, FleetCorFLEETCOR Technologies, Inc., as the Parent, the designated borrowers party hereto, the other guarantors party hereto, Bank of America, N.A., as administrative agent, swing line lender and l/cL/C issuer, and the other lenders party hereto Merrill Lynch, Pierce, Fenner & Smith Incorporated, as sole lead arranger and sole book runnerbookrunner (incorporated by reference to Exhibit 10.1exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q, File No. 001-35004, filed with the SEC on August 8, 2017)9, 2019)
   
  Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended
  Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended
  
  Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2001
  
  Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2001
  
101101*  The following financial information for the Registrant formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Unaudited Consolidated Statements of Income, (iii) the Unaudited Consolidated Statements of Comprehensive Income; (iv) the Unaudited Consolidated Statements of Cash Flows and (v) the Notes to Unaudited Consolidated Financial Statements
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)



*Filed Herein

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned; thereunto duly authorized, in their capacities indicated on November 9, 2017.12, 2019.
 
     
    FleetCor Technologies, Inc.
    (Registrant)
   
Signature   Title
   
/s/ Ronald F. Clarke   
President, Chief Executive Officer and Chairman of the Board of Directors (Duly Authorized Officer and Principal
Executive Officer)
Ronald F. Clarke   
   
/s/ Eric R. Dey   Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
Eric R. Dey   




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