UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________________

FORM 10-Q

~~__________________________________________________________~~

_________________________________________________________________________________________________



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

For the quarterly period ended September 30, ~~2017~~2020



¨☐			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~~FLEETCOR Technologies, Inc.

(Exact name of registrant as specified in its charter)

__________________________________________________________



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

~~5445 Triangle Parkway,~~3280 Peachtree ~~Corners, Georgia~~Road	Atlanta	~~30092~~Georgia	30305
(Address of principal executive offices)			(Zip Code)

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

~~__________________________________________________________~~Securities registered pursuant to Section 12(b) of the Act:


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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

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

☒

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



Class						Outstanding at ~~October 31, 2017~~November 2, 2020
Common Stock, $0.001 par value						~~89,560,788~~83,401,626

Table of Contents

FLEETCOR TECHNOLOGIES, INC. AND SUBSIDIARIES

FORM 10-Q

For the Three and Nine ~~Month Periods~~Months Ended September 30, ~~2017~~2020

INDEX


					Page
PART I—FINANCIAL INFORMATION

Item 1.			FINANCIAL STATEMENTS

				~~Page~~
~~PART I—FINANCIAL INFORMATION~~

~~Item 1.~~	~~FINANCIAL STATEMENTS~~

	Consolidated Balance Sheets at September 30, ~~2017~~2020 (unaudited) and December 31, ~~2016~~2019	1

			Unaudited Consolidated Statements of Income for the Three and Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019		2

			Unaudited Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2020 and 2019		3

			Unaudited Consolidated Statements of Stockholder's Equity for the Three and Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019		34

			Unaudited Statements of Cash Flows for the Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019		46

			Notes to Unaudited Consolidated Financial Statements		67

Item 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		2127

Item 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		4448

Item 4.			CONTROLS AND PROCEDURES		4448

PART II—OTHER INFORMATION

Item 1.			LEGAL PROCEEDINGS		4549

Item 1A.			RISK FACTORS		4549

Item 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		4749

Item 3.			DEFAULTS UPON SENIOR SECURITIES		4750

Item 4.			MINE SAFETY DISCLOSURES		4750

Item 5.			OTHER INFORMATION		4750

Item 6.			EXHIBITS		4851

SIGNATURES					4952

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

~~FleetCor~~FLEETCOR Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share and Par Value Amounts)

September 30, 2017 December 31, 2016
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 834,756
$ 475,018
Restricted cash 183,515
168,752
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
Securitized accounts receivable—restricted for securitization investors 794,000
591,000
Prepaid expenses and other current assets 252,975
90,914
Total current assets 3,521,501

2,527,693
Property and equipment, net 168,065
142,504
Goodwill 4,644,559
4,195,150
Other intangibles, net 2,876,440
2,653,233
Investments 33,526
36,200
Other assets 86,203
71,952
Total assets $ 11,330,294

$ 9,626,732
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 1,435,585
$ 1,151,432
Accrued expenses 285,841
238,812
Customer deposits 731,501
530,787
Securitization facility 794,000
591,000
Current portion of notes payable and lines of credit 808,507
745,506
Other current liabilities 117,464
38,781
Total current liabilities 4,172,898

3,296,318
Notes payable and other obligations, less current portion 2,933,976
2,521,727
Deferred income taxes 742,498
668,580
Other noncurrent liabilities 50,504
56,069
Total noncurrent liabilities 3,726,978

3,246,376
Commitments and contingencies (Note 12)

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
Additional paid-in capital 2,165,326
2,074,094
Retained earnings 2,676,224
2,218,721
Accumulated other comprehensive loss (466,367 ) (666,403 )
Less treasury stock 32,279,077 shares at September 30, 2017 and 29,423,022 shares at December 31, 2016 (944,887 ) (542,495 )
Total stockholders’ equity 3,430,418

3,084,038
Total liabilities and stockholders’ equity $ 11,330,294

$ 9,626,732

~~See accompanying notes to unaudited consolidated financial statements.~~


	September 30, 2020		December 31, 2019
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	788,854	$	1,271,494
Restricted cash	582,006		403,743
Accounts and other receivables (less allowance for credit losses of $83,882 at September 30, 2020 and $70,890 at December 31, 2019)	1,552,695		1,568,961
Securitized accounts receivable—restricted for securitization investors	688,000		970,973
Prepaid expenses and other current assets	359,461		403,400

Total current assets	3,971,016		4,618,571
Property and equipment, net	189,953		199,825

Goodwill	4,613,597		4,833,047
Other intangibles, net	2,115,189		2,341,882
Investments	7,480		30,440
Other assets	196,764		224,776
Total assets	$	11,093,999	$	12,248,541
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,297,236	$	1,249,586
Accrued expenses	299,396		275,511
Customer deposits	1,123,974		1,007,631
Securitization facility	688,000		970,973
Current portion of notes payable and lines of credit	645,769		775,865
Other current liabilities	141,432		183,502
Total current liabilities	4,195,807		4,463,068
Notes payable and other obligations, less current portion	3,158,810		3,289,947
Deferred income taxes	506,102		519,980
Other noncurrent liabilities	295,530		263,930
Total noncurrent liabilities	3,960,442		4,073,857
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock, $0.001 par value; 475,000,000 shares authorized; 125,997,304 shares issued and 83,396,765 shares outstanding at September 30, 2020; and 124,626,786 shares issued and 85,342,156 shares outstanding at December 31, 2019	126		124
Additional paid-in capital	2,713,022		2,494,721
Retained earnings	5,207,094		4,712,729
Accumulated other comprehensive loss	(1,583,136)		(972,465)
Less treasury stock, 42,600,539 shares at September 30, 2020 and 39,284,630 shares at December 31, 2019	(3,399,356)		(2,523,493)
Total stockholders’ equity	2,937,750		3,711,616
Total liabilities and stockholders’ equity	$	11,093,999	$	12,248,541

~~FleetCor~~


See accompanying notes to unaudited consolidated financial statements.

Table of Contents

FLEETCOR Technologies, Inc. and Subsidiaries

Unaudited Consolidated Statements of Income

(In Thousands, Except Per Share Amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenues, net	$	585,283	$	681,048	$	1,771,522	$	1,949,967
Expenses:

Processing	119,856		135,016		474,849		384,588
Selling	46,762		51,790		144,995		152,907
General and administrative	90,868		98,050		283,717		297,618
Depreciation and amortization	63,479		67,347		190,117		205,700
Other operating, net	(214)		(296)		(482)		(1,480)
Operating income	264,532		329,141		678,326		910,634
Investment loss (gain)	1,330		0		(30,008)		15,660
Other (income) expense, net	(3,591)		(120)		(10,477)		628
Interest expense, net	31,383		36,504		99,474		115,088

Total other expense	29,122		36,384		58,989		131,376
Income before income taxes	235,410		292,757		619,337		779,258
Provision for income taxes	46,593		66,952		124,972		119,695
Net income	$	188,817	$	225,805	$	494,365	$	659,563

Basic earnings per share	$	2.26	$	2.61	$	5.87	$	7.64
Diluted earnings per share	$	2.19	$	2.49	$	5.68	$	7.33
Weighted average shares outstanding:
Basic shares	83,719		86,662		84,170		86,332
Diluted shares	86,273		90,522		87,006		89,976

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Revenues, net $ 577,877
$ 484,426
$ 1,639,547
$ 1,316,593
Expenses:
Merchant commissions 27,687
28,214
82,690
78,755
Processing 111,283
96,233
316,429
256,738
Selling 45,060
34,180
122,854
92,680
General and administrative 92,043
77,904
275,046
209,084
Depreciation and amortization 69,156
57,084
198,731
141,848
Other operating, net 11
(244 ) 49
(690 )
Operating income 232,637

191,055
643,748

538,178
Investment loss (income) 47,766
2,744
52,497
(2,247 )
Other (income) expense, net (175,271 ) 293
(173,626 ) 1,056
Interest expense, net 29,344
17,814
76,322
49,905
Loss on extinguishment of debt 3,296
—
3,296
—
Total other (income) expense (94,865 )
20,851
(41,511 )
48,714
Income before income taxes 327,502
170,204
685,259
489,464
Provision for income taxes 124,679
40,586
227,756
132,503
Net income $ 202,823

$ 129,618
$ 457,503

$ 356,961
Basic earnings per share $ 2.23
$ 1.40
$ 4.99
$ 3.85
Diluted earnings per share $ 2.18
$ 1.36
$ 4.87
$ 3.75
Weighted average shares outstanding:
Basic shares 90,751
92,631
91,619
92,604
Diluted shares 93,001
95,307
93,923
95,204



See accompanying notes to unaudited consolidated financial statements.

~~FleetCor~~

Table of Contents

FLEETCOR 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,
	2020		2019		2020		2019
Net income	$	188,817	$	225,805	$	494,365	$	659,563
Other comprehensive loss:
Foreign currency translation losses, net of tax	(10,328)		(180,317)		(577,189)		(148,282)
Net change in derivative contracts, net of tax	9,167		(6,164)		(33,482)		(52,538)
Total other comprehensive loss	(1,161)		(186,481)		(610,671)		(200,820)
Total comprehensive income (loss)	$	187,656	$	39,324	$	(116,306)	$	458,743

See accompanying notes to unaudited consolidated financial statements.

~~FleetCor~~

Table of Contents

FLEETCOR 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, 2019	$	124	$	2,494,721	$	4,712,729	$	(972,465)	$	(2,523,493)	$	3,711,616
Net income	—		—		147,060		—		—		147,060
Other comprehensive loss, net of tax	—		—		—		(619,659)		—		(619,659)
Acquisition of common stock	—		75,000		—		—		(605,237)		(530,237)
Share-based compensation	—		14,175		—		—		—		14,175
Issuance of common stock	1		73,273		—		—		—		73,274


Balance at March 31, 2020	125		2,657,169		4,859,789		(1,592,124)		(3,128,730)		2,796,229
Net income	—		—		158,488		—		—		158,488
Other comprehensive income, net of tax	—		—		—		10,149		—		10,149
Acquisition of common stock	—		—		—		—		(32,230)		(32,230)
Share-based compensation	—		8,989		—		—		—		8,989
Issuance of common stock	1		24,808		—		—		—		24,809
Balance at June 30, 2020	126		2,690,966		5,018,277		(1,581,975)		(3,160,960)		2,966,434
Net income	—		—		188,817		—		—		188,817
Other comprehensive loss, net of tax	—		—		—		(1,161)		—		(1,161)
Acquisition of common stock	—		—		—		—		(238,396)		(238,396)
Share-based compensation	—		11,905		—		—		—		11,905
Issuance of common stock	—		10,151		—		—		—		10,151
Balance at September 30, 2020	$	126	$	2,713,022	$	5,207,094	$	(1,583,136)	$	(3,399,356)	$	2,937,750

Table of Contents


	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

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

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				2020		2019
Operating activities							Operating activities
Net income	$	457,503		$	356,961		Net income	$	494,365	$	659,563
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	35,096			25,706			Depreciation	48,150		46,393
Stock-based compensation	68,897			50,025			Stock-based compensation	35,069		46,120
Provision for losses on accounts receivable	35,949			24,512
Provision for losses on accounts and other receivables							Provision for losses on accounts and other receivables	152,485		54,735
Amortization of deferred financing costs and discounts	5,411			5,568			Amortization of deferred financing costs and discounts	5,028		3,741
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							Amortization of intangible assets and premium on receivables	141,967		159,307

Deferred income taxes	(38,092		)	(23,566		)	Deferred income taxes	(5,747)		11,142
Investment loss (income)	52,497			(2,247		)
Gain on disposition of business	(174,984		)	—
Investment (gain) loss							Investment (gain) loss	(30,008)		15,660

Other non-cash operating income	(49		)	(690		)	Other non-cash operating income	(482)		(1,778)
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):							Changes in operating assets and liabilities (net of acquisitions/dispositions):
Accounts and other receivables	(440,011		)	(527,255		)	Accounts and other receivables	49,690		(472,378)
Prepaid expenses and other current assets	(86,648		)	(1,291		)	Prepaid expenses and other current assets	26,105		(77,836)
Other assets	(15,378		)	(9,115		)	Other assets	6,129		(26,578)

Accounts payable, accrued expenses and customer deposits	364,473			418,280			Accounts payable, accrued expenses and customer deposits	291,945		373,044
Net cash provided by operating activities	419,490			404,286			Net cash provided by operating activities	1,214,696		791,135
Investing activities							Investing activities
Acquisitions, net of cash acquired	(602,298		)	(1,331,079		)	Acquisitions, net of cash acquired	(72,557)		(334,860)
Purchases of property and equipment	(49,459		)	(41,877		)	Purchases of property and equipment	(55,019)		(48,681)
Proceeds from disposal of a business	316,501			—
Other	(6,327		)	1,411

Proceeds from disposal of investment							Proceeds from disposal of investment	52,963		0
Net cash used in investing activities	(341,583		)	(1,371,545		)	Net cash used in investing activities	(74,613)		(383,541)
Financing activities							Financing activities

Proceeds from issuance of common stock	20,192			18,620			Proceeds from issuance of common stock	95,780		117,627
Repurchase of common stock	(402,392		)	(35,492		)	Repurchase of common stock	(788,409)		(59,362)
Borrowings on securitization facility, net	203,000			42,000
(Payments) borrowings on securitization facility, net							(Payments) borrowings on securitization facility, net	(282,973)		106,000
Deferred financing costs paid and debt discount	(11,230		)	(2,272		)	Deferred financing costs paid and debt discount	(2,474)		(2,421)
Proceeds from issuance of notes payable	780,656			600,000			Proceeds from issuance of notes payable	0		700,000
Principal payments on notes payable	(388,656		)	(85,125		)	Principal payments on notes payable	(134,097)		(97,313)
Borrowings from revolver – A Facility	845,000			1,105,107
Payments on revolver – A Facility	(804,808		)	(670,940		)
Borrowings on swing line of credit, net	7,800			5,188
Borrowings from revolver							Borrowings from revolver	1,198,500		965,709
Payments on revolver							Payments on revolver	(1,287,899)		(1,992,296)
(Payments) borrowings on swing line of credit, net							(Payments) borrowings on swing line of credit, net	(20,111)		1,775

Other	537			(673		)	Other	(244)		(189)
Net cash used in financing activities	250,099			976,413			Net cash used in financing activities	(1,221,927)		(260,470)
Effect of foreign currency exchange rates on cash	31,732			(50,871		)	Effect of foreign currency exchange rates on cash	(222,533)		(46,140)
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 (decrease) increase in cash and cash equivalents and restricted cash							Net (decrease) increase in cash and cash equivalents and restricted cash	(304,377)		100,984
Cash and cash equivalents and restricted cash, beginning of period							Cash and cash equivalents and restricted cash, beginning of period	1,675,237		1,364,893
Cash and cash equivalents and restricted cash, end of period							Cash and cash equivalents and restricted cash, end of period	$	1,370,860	$	1,465,877
Supplemental cash flow information							Supplemental cash flow information
Cash paid for interest	$	79,144		$	48,525		Cash paid for interest	$	98,564	$	136,850
Cash paid for income taxes	$	257,349		$	79,599		Cash paid for income taxes	$	119,089	$	148,727



See accompanying notes to unaudited consolidated financial statements.

~~FleetCor~~

Table of Contents

FLEETCOR Technologies, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

September 30, ~~2017~~2020

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 ~~FleetCor~~FLEETCOR 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~~notes 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.~~2019.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. These financial statements were prepared using information reasonably available as of September 30, 2020 and through the date of this Report. The accounting estimates used in the preparation of the Company’s consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Actual results may differ from these estimates due to the uncertainty around the magnitude and duration of the COVID-19 pandemic, as well as other factors.

Foreign Currency Translation

Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at the rates of exchange in effect at period-end. The related translation adjustments are ~~made directly~~recorded to accumulated other comprehensive ~~income.~~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 ~~gains~~gains/losses on long-term intra-entity transactions, net of ~~$0.6 million~~tax, and foreign exchange gains/losses ~~of $0.7 million in the three months ended September 30, 2017 and 2016, respectively, which are recorded~~ within ~~other (income) expense, net in~~ the Unaudited Consolidated Statements of ~~Income. The Company recognized foreign exchange losses of $0.2 million and $1.5 million in the nine month periods ended September 30, 2017 and 2016, respectively.~~Comprehensive Income (Loss) as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020	2019
Long-term intra-entity gain (loss)	$	50.4	$	(48.4)	235.8	(81.7)
Foreign exchange gain	3.7		0.1		3.2	0.3

Derivatives

~~With its acquisition of Cambridge Global Payments ("Cambridge") in August 2017, the~~The Company uses derivatives to minimize its exposures related to changes in interest rates and to facilitate cross-currency corporate payments by writing derivatives to ~~customers, which~~foreign currency payment customers.

The Company is exposed to the risk of changing interest rates because its borrowings are ~~not~~subject to variable interest rates. In order to mitigate this risk, the Company utilizes derivative instruments. Interest rate swap contracts designated as ~~hedging instruments.~~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. The ~~majority~~Company hedges a portion of ~~this business' revenue~~its variable rate debt utilizing derivatives designated as cash flow hedges.

Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in other assets or other noncurrent liabilities and offset against accumulated other comprehensive income/loss, net of tax. 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

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hedged risk. The portions of the change in fair value that are either considered ineffective or are excluded from ~~exchanges~~the measure of ~~currency at spot rates, which enable customers to make cross-currency payments.~~ effectiveness are recognized immediately within earnings.

In ~~addition, this~~the Company's cross-border payments business, ~~also~~the Company writes foreign currency forward and option contracts for its customers to facilitate future payments. 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, as necessary, and economically hedges ~~(economic hedge)~~ the ~~resulting~~ net currency risks by entering into offsetting ~~contracts~~derivatives with established financial institution counterparties. The gain or loss on changes in the fair value ~~related to~~of these ~~contracts~~derivatives are recorded in revenues, net in the Unaudited Consolidated Statements of Income.

The Company recognizes all ~~derivatives~~derivative assets, net in ~~"prepaid expenses~~prepaid expense and other current ~~assets"~~assets and ~~"other~~all derivative liabilities, net in other current ~~liabilities"~~liabilities, after netting at the customer level, as right of offset exists, in ~~the accompanying~~its 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 Note 13.

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.

Financial Instruments-Credit Losses

The Company adopted ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", on January 1, 2020, under which the Current Expected Credit Loss methodology for measurement of credit losses on financial assets measured at amortized cost basis, replaces the previous incurred loss impairment methodology. The Company’s financial assets subject to credit losses are primarily trade receivables. The Company utilizes a combination of aging and loss-rate methods to develop an estimate of current expected credit losses, depending on the nature and risk profile of the underlying asset pool, based on product, size of customer and historical losses. Expected credit losses are estimated based upon an assessment of risk characteristics, historical payment experience, and the age of outstanding receivables, adjusted for forward-looking economic conditions. The allowances for remaining financial assets measured at amortized cost basis are evaluated based on underlying financial condition, credit history, and current and forecast economic conditions. The estimation process for expected credit losses includes consideration of qualitative and quantitative risk factors associated with the age of asset balances, expected timing of payment, contract terms and conditions, changes in specific customer risk profiles or mix of customers, geographic risk, economic trends and relevant environmental factors.

Revenue

The Company provides payment solutions to our business, merchant, consumer and payment network customers. Our payment solutions are primarily focused on specific spend categories, including fuel, lodging, tolls, and general corporate payments, as well as gift card solutions (stored value cards and e-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, 2020. 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 accounting (ASC 815, "Derivatives").

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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*1	Three Months Ended September 30,								Nine Months Ended September 30,
	2020		%		2019		%		2020	%		2019	%
Fuel	$	255	44	%	$	296	43	%	797	45	%	874	45	%
Corporate Payments	107		18	%	120		18	%	319	18	%	329	17	%
Tolls	68		12	%	89		13	%	215	12	%	264	14	%
Lodging	53		9	%	56		8	%	150	8	%	148	8	%
Gift	39		7	%	48		7	%	108	6	%	133	7	%
Other	64		11	%	72		11	%	182	10	%	203	10	%
Consolidated revenues, net	$	585	100	%	$	681	100	%	1,772	100	%	1,950	100	%


1 Reflects certain reclassifications of revenue between product categories as the Company realigned its Corporate Payments business, resulting in reclassification of payroll paycard revenue from Corporate Payments to 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,
	2020		%		2019		%		2020	%		2019	%
United States	$	357	61	%	$	414	61	%	1,090	62	%	1,174	60	%
Brazil	80		14	%	106		16	%	254	14	%	316	16	%
United Kingdom	70		12	%	68		10	%	193	11	%	205	10	%
Other	78		13	%	93		14	%	235	13	%	256	13	%
Consolidated revenues, net	585		100	%	681		100	%	1,772	100	%	1,950	100	%


*Columns may not calculate due to rounding.

Contract Liabilities

Deferred revenue contract liabilities for customers subject to ASC 606 were $53.7 million and $71.8 million as of September 30, 2020 and December 31, 2019, respectively. We expect to recognize approximately $33.3 million and $42.6 million of these amounts in revenues within 12 months and the remaining $20.4 million and $29.2 million over the next five years as of September 30, 2020 and December 31, 2019, respectively. Revenue recognized in the nine months ended September 30, 2020 that was included in the deferred revenue contract liability as of December 31, 2019 was approximately $34.0 million.

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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 customers results in intermediary balances in the receivable from the customers and the payment to the customers' 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 customers' counterparties, with the receivables from the customers. 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, 2020 and December 31, 2019, (in millions).


	September 30, 2020						December 31, 2019
	Gross		Offset on the Balance Sheet		Net		Gross		Offset on the Balance Sheet		Net
Assets
Accounts Receivable	$	1,461.7	$	(1,421.8)	$	39.9	$	1,139.1	$	(1,084.6)	$	54.5


Liabilities
Accounts Payable	$	1,455.1	$	(1,421.8)	$	33.3	$	1,140.4	$	(1,084.6)	$	55.8

Adoption of New Accounting Standards

~~Revenue Recognition~~Cloud Computing Arrangements

~~In May 2014,~~On August 29, 2018, 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 exchange2018-15, "Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Customer’s Accounting 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 standardImplementation Costs Incurred in a ~~multi-phase approach. In~~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 ~~first phase,~~EITF at its June 2018 meeting, aligns the ~~Company is analyzing customer contracts~~accounting for ~~its most significant contract categories, applied~~such costs with the ~~five-step model of~~guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, 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 considerationASU amends ASC 350 to include in ~~transaction price, allocating transaction price~~its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to ~~each separate performance obligation and estimating expected customer lives.~~determine which implementation costs should be capitalized in such a CCA. The Company ~~has not completed its assessment or quantified the effect the new~~adopted this 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,~~2020, which ~~would result in an adjustment to retained earnings for the cumulative effect, if any, of applying the standard to contracts that are~~did not completed at the date of initial application. Under this method, the Company would not restate the prior financial statements presented, therefore the new standard requires the Company to provide additional disclosures of the amount by which each financial statement line item is affected in the current reporting period during 2018, as compared to the guidance that was in effect before the change, and an explanation of the reasons for significant changes, if any.

~~Accounting for Leases~~

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

~~Accounting for 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 Company's results of operations, financial condition, or cash flows.

~~Cash Flow Classification~~Fair Value Measurement

InOn August ~~2016,~~28, 2018, the FASB issued ASU ~~2016-15, "Classification of Certain Cash Receipts and Cash Payments"~~2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement", which ~~amends the guidance~~removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC ~~230, Statement of Cash Flows. This amended~~820. The 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~~fiscal years, and interim periods within those fiscal years, beginning after December 15, ~~2017. Early adoption is permitted. Entities must apply~~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 ~~but may apply it prospectively from the earliest date practicable if retrospective application would be impracticable.~~upon their effective date. The ~~Company’s adoption of~~Company adopted this ~~ASU is~~guidance on January 1, 2020, which did 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 theCompany's results of operations, financial condition, or cash flows.

~~Intangibles - Goodwill and Other Impairment~~Credit Losses on Financial Instruments

In ~~January 2017,~~June 2016, the FASB issued ASU ~~2017-04, "Simplifying~~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 ~~Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2~~remaining life of the ~~goodwill~~financial assets (including trade receivables) that are in the scope of the update. The update also made amendments to the current impairment ~~test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based~~model for held-to-maturity and available-for-sale debt securities and certain guarantees. The Company adopted this guidance 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~~2020, which did not ~~expected to~~ have a material impact on the Company's results of operations, financial condition, or cash ~~flows, unless~~flows. The Company has made updates to its policies and internal controls over financial reporting as a ~~goodwill impairment is identified.~~result of the adoption.

~~Definition~~

Table of ~~a Business~~Contents

In ~~January 2017,~~April 2019, the FASB issued ASU ~~2017-01, "Clarifying the Definition of a Business"~~2019-04, "Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments", which ~~amends~~clarifies certain aspects of accounting for credit losses, hedging activities, and financial instruments. For clarifications around credit losses, the ~~definition of a business~~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 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 guidanceAccounting for Hedging Activities", ASU 2019-04 is effective ~~for~~ the ~~Company for~~first annual reporting ~~periods~~period beginning after ~~December 15, 2017,~~the date of issuance of ASU 2019-04 and ~~interim periods within those years. Early adoption is permitted.~~may be early adopted. The ~~Company’s adoption of~~Company adopted this ~~ASU is~~guidance on January 1, 2020, which did not ~~expected to~~ have a material impact on the Company's results of operations, financial condition, or cash ~~flows, however it could~~flows. The Company has made updates to its policies and internal controls over financial reporting as a result ~~in accounting for acquisitions as asset acquisitions versus business combinations upon~~of the adoption.

Pending Adoption of Recently Issued Accounting ~~for Modifications to Stock-Based Compensation~~Standard

~~In May 2017,~~Income Taxes

On December 18, 2019, the FASB issued ASU ~~2017-09, "Compensation—Stock Compensation~~2019-12, Income Taxes (Topic ~~718): Scope of Modification Accounting"~~740), Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which ~~amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes~~removes certain exceptions to the ~~terms or conditions~~general principles of ~~share-based payment awards~~ASC 740 and simplifies other areas in order to ~~which an entity would be required to apply modification accounting under ASC 718. Specifically, an entity would not apply modification accounting if~~simplify its application. For public business entities, the ~~fair value, vesting conditions and classification of the awards~~amendments are ~~the same immediately before and after the modification. The guidance is~~ effective for ~~the Company for reporting periods~~fiscal years beginning after December 15, ~~2017, and~~2020, including interim periods within those ~~years. Early~~fiscal years, with early adoption is permitted. The Company's adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.

~~Accounting for Derivative Financial Instruments~~Reference Rate Reform

In ~~August 2017,~~March 2020, the FASB issued ASU ~~2017-12, "Derivatives and Hedging~~2020-04, Reference Rate Reform (Topic ~~815): Targeted Improvements to Accounting for Hedging Activities"~~848) ("ASU 2020-04"), which ~~amends~~provides optional expedients and exceptions to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference London Inter-bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the ~~hedge accounting recognition~~amendments do not apply to contract modifications made 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~~relationships entered into or evaluated after December ~~15, 2018,~~31, 2022, except for hedging relationships existing as of December 31, 2022 for which an entity has elected certain optional expedients and ~~interim periods~~are retained through the end of the hedging relationship. The amendments in this update also include a general principle that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. If elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions within ~~those years. Early adoption~~the relevant ASC Topic or Industry Subtopic that contains the guidance that otherwise would be required to be applied. The amendments in this update were effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is ~~permitted. The Company's adoption~~evaluating the effect of ~~this~~ ASU ~~is not expected to have a material impact~~2020-04 on ~~the results of operations,~~its consolidated financial ~~condition, or cash flows.~~statements.

2. Accounts ~~Receivable~~and Other Receivables

The Company's accounts and other receivables and securitized accounts receivable include the following at September 30, 2020 and December 31, 2019 (in thousands):


	September 30, 2020		December 31, 2019
Gross domestic accounts receivable	$	847,080	$	734,410
Gross domestic securitized accounts receivable	688,000		970,973
Gross foreign receivables	789,497		905,441
Total gross receivables	2,324,577		2,610,824
Less allowance for credit losses	(83,882)		(70,890)
Net accounts and other receivables and securitized accounts receivable	$	2,240,695	$	2,539,934

The Company maintains a ~~$950 million~~$1.0 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 ~~FleetCor~~FLEETCOR 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~~$1.0 billion of undivided ownership interests in this pool of accounts receivable to banks and 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 banks and Conduit. Purchases by the Conduit are financed with the sale of highly-rated commercial paper.

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The Company utilizes proceeds from the ~~sale of its accounts receivable~~transferred 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 securitized accounts

receivable sold as a form of credit enhancement. The residual interest’s fair value approximates carrying value due to its short-term nature. Funding determines the level of funding achieved by the sale of trade accounts receivable, subject to a maximum amount.

The Company’s ~~consolidated balance sheets~~Consolidated Balance Sheets and ~~statements~~Statements of ~~income~~Income reflect the activity related to securitized accounts receivable and the corresponding securitized debt, including interest income, fees generated from late payments, provision for losses on accounts receivable and interest expense. The cash flows from borrowings and repayments, associated with the securitized debt, are presented as cash flows from financing activities. The maturity date for the Company's Securitization Facility is November 14, 2020. On August 21, 2020, the Company signed a commitment letter to enter into an amendment to the Securitization Facility, effective on November 13, 2020, which will, among other things, extend the term to November 12, 2021, unless further extended.

The ~~Company’s accounts~~Company recorded a $90.1 million provision for credit losses and write-off related to a customer receivable ~~and securitized accounts receivable include~~in our foreign currency trading business during the ~~following at~~nine months ended 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

2020. The Company's estimated expected credit losses as of September 30, 2020, included estimated adjustments for economic conditions related to COVID-19. A rollforward of the Company’s allowance for ~~doubtful accounts~~credit losses related to accounts receivable for the nine months ended September 30 is as follows (in thousands):


	2020		2019
Allowance for credit losses beginning of period	$	70,890	$	59,963
Provision for credit losses	152,485		54,735
Write-offs	(138,939)		(51,273)
Recoveries	7,861		3,297
Impact of foreign currency	(8,415)		(2,057)
Allowance for credit losses end of period	$	83,882	$	64,665

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. 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.

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The following table presents the Company’s financial assets and liabilities which are measured at fair ~~values~~value on a recurring basis ~~as of~~at September 30, ~~2017~~2020 and December 31, ~~2016,~~2019, (in thousands).


	Fair Value		Level 1		Level 2		Level 3
September 30, 2020
Assets:
Repurchase agreements	$	312,939	$	0	$	312,939	$	0
Money market	46,846		0		46,846		0
Certificates of deposit	172		0		172		0


Foreign exchange derivative contracts	97,799		0		97,799		0
Total assets	$	457,756	$	0	$	457,756	$	0
Cash collateral for foreign exchange derivative contracts	$	18,984	$	0	$	0	$	0
Liabilities:
Interest rate swaps	$	100,722	$	0	$	100,722
Foreign exchange derivative contracts	79,141		0		79,141		0
Total liabilities	$	179,863	$	0	$	179,863	$	0
Cash collateral obligation for foreign exchange derivative contracts	$	24,234	$	0	$	0	$	0

December 31, 2019
Assets:
Repurchase agreements	$	833,658	$	0	$	833,658	$	0
Money market	54,978		0		54,978		0
Certificates of deposit	27,022		0		27,022		0
Trading Securities	22,955		22,955		0		0
Foreign exchange derivative contracts	72,076		0		72,076		0
Total assets	$	1,010,689	$	22,955	$	987,734	$	0
Cash collateral for foreign exchange derivative contracts	$	6,086	$	0	$	0	$	0
Liabilities:
Interest rate swaps	$	56,418	$	0	$	56,418	$	0
Foreign exchange derivative contracts	60,909		0		60,909		0
Total liabilities	$	117,327	$	0	$	117,327	$	0
Cash collateral obligation for foreign exchange derivative contracts	$	25,618	$	0	$	0	$	0

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 utilizes Level 1 fair value for financial assets designated as trading securities for which there are quoted market prices. During the nine month period ended September 30, 2020, the Company recognized a $30.0 million gain on trading securities sold. Cash flow from trading securities sold was recognized within the Investing section of the Statement of Cash Flows based on the nature of the investment.

The Company has highly-liquid investments classified as cash equivalents, with original maturities of 90 days or less, included in our Consolidated Balance Sheets. The Company utilizes Level 2 fair value determinations derived from directly or indirectly observable (market based) information to determine the fair value of these highly liquid investments. The Company has certain cash and cash equivalents that are invested on an overnight basis in repurchase agreements, money markets and certificates of deposit. The value of overnight repurchase agreements is determined based upon the quoted market prices for the treasury securities associated with the repurchase agreements. The value of money market instruments is the financial institutions' month-end statement, as these instruments are not ~~tradeable~~tradable 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 as~~approximates the fair value of these instruments.

The fair value represents ~~what would be received and or paid by~~ the ~~Company~~net settlement if the contracts were terminated as of the reporting date. Cash collateral received

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for foreign exchange derivatives is recorded within customer deposits in our Unaudited Consolidated Balance ~~Sheets~~Sheet at September 30, ~~2017.~~2020. Cash collateral ~~paid~~deposited for foreign exchange derivatives is recorded within restricted cash ~~and cash equivalents~~ in our Unaudited Consolidated Balance ~~Sheets~~Sheet at September 30, ~~2017.~~2020.

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 ~~2017~~September 30, 2020 and ~~2016.~~December 31, 2019.

The Company’s assets that are measured at fair value on a nonrecurring basis ~~and~~or are evaluated with periodic testing for impairment include property ~~plant~~ and equipment, ~~investments,~~ goodwill and other ~~intangible assets.~~intangibles, and investments. 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 ~~discussion~~as hedging instruments, the Company formally designates and documents, at inception, the financial instrument as a hedge of ~~Masternaut's other than temporary decline~~a 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 ~~during~~is immediately recognized into earnings. The Company determines the ~~third quarter~~fair values of ~~2017.~~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. The carrying amount of investments without readily determinable fair values is $7.5 million at September 30, 2020.

The fair value of the Company’s cash, accounts receivable, securitized accounts receivable and related facility, prepaid expenses and other current assets, accounts payable, accrued expenses, customer deposits and short-term borrowings approximate their respective carrying values due to the short-term maturities of the instruments. The carrying value of the Company’s debt obligations approximates fair value as the interest rates on the debt are variable market based interest rates that

reset on a quarterly basis. These are each Level 2 fair value measurements, except for cash, which is a Level 1 fair value measurement.

4. Stockholders' Equity

~~On February 4, 2016, the~~

The Company's Board of Directors (the "Board") has approved a stock repurchase program ~~(the~~(as updated from time to time, the "Program") ~~under which~~authorizing the Company ~~may purchase up~~ to ~~an aggregate of $500 million of~~repurchase its common stock ~~over~~from time to time until February 1, 2023. On October 22, 2020, the ~~following 18 month period. On July 27, 2017,~~Board increased the ~~Company's Board of Directors authorized an increase in the~~aggregate size of the Program by ~~an additional $250 million and an extension~~$1 billion, to $4.1 billion. Since the beginning of the Program, by14435566 shares have been repurchased for an ~~additional 18 months. On November 1, 2017,~~aggregate purchase price of $3.0 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 authorized~~up to approximately $1.06 billion available under the Program ~~of $1.1 billion. With the increase and giving effect to the Company's $590.1 million of previous~~for 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 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,~~December 18, 2019, the Company entered an ~~Accelerated Share Repurchase~~accelerated stock repurchase agreement ("2019 ASR Agreement") with a third-party financial institution to repurchase ~~$250~~$500 million of its common stock. Pursuant to the 2019 ASR Agreement, the Company delivered ~~$250~~$500 million in cash and received ~~1,491,647~~1,431,989 shares based on a stock price of ~~$142.46~~$285.70 on ~~August 7, 2017.~~December 18, 2019. The 2019 ASR Agreement was completed on ~~September 7, 2017,~~February 20, 2020, at which time the Company received ~~263,012~~175,340 additional shares based on a final weighted average per share purchase price during the repurchase period of ~~$142.48.~~$311.08.

The Company accounted for the 2019 ASR Agreement as ~~two~~2 separate transactions: (i) as shares of reacquired common stock for the shares delivered to usthe Company upon effectiveness of ~~the~~each ASR ~~Agreement~~agreement 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

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for basic and diluted earnings per share. The forward contracts indexed to ~~our~~the 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. 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 ~~for~~in the three and nine ~~month periods~~months ended September 30, 2020 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016			2020		2019		2020		2019
Stock options	$	16,212	$	8,304	$	42,254	$	25,942	Stock options	$	5,294	$	7,038	$	18,069	$	26,901
Restricted stock	8,443		9,101		26,643		24,083		Restricted stock	6,610		8,235		16,999		19,219
Stock-based compensation	$	24,655	$	17,405	$	68,897	$	50,025	Stock-based compensation	$	11,904	$	15,273	$	35,069	$	46,120

The tax benefits recorded on stock based compensation were ~~$36.1~~$52.1 million and ~~$28.4~~$36.8 million for the nine ~~month periods~~months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively.

The following table summarizes the Company’s total unrecognized compensation cost related to stock-based compensation as of September 30, ~~2017~~2020 (cost in thousands):


	Unrecognized Compensation Cost		Weighted Average Period of Expense Recognition (in Years)
Stock options	$	39,576	1.90
Restricted stock	33,479		2.07
Total	$	73,055

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 period~~months ended September 30, ~~2017 (shares~~2020 (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
	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
Outstanding at December 31, 2019												Outstanding at December 31, 2019	6,263	$	124.38	5,137	$	109.03			$	1,022,860
Granted	2,764		144.45					$	32.20			Granted	488	214.31					$	52.76
Exercised	(388	)	52.10							39,789		Exercised	(1,240)	86.52							188,010
Forfeited	(265	)	142.93									Forfeited	(122)	192.81
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
Outstanding at September 30, 2020												Outstanding at September 30, 2020	5,389	$	139.73	4,135	$	121.04			$	530,017
Expected to vest as of September 30, 2020												Expected to vest as of September 30, 2020	1,253	$	201.40

The aggregate intrinsic value of stock options exercisable at September 30, ~~2017~~2020 was ~~$330.4~~$484.0 million. The weighted average remaining contractual term of options exercisable at September 30, ~~2017~~2020 was ~~5.1~~4.6 years.

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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, 2020 and 2019:


	September 30,					September 30,
	2017		2016			2020		2019
Risk-free interest rate	1.65	%	1.09	%	Risk-free interest rate	0.38	%	2.40	%
Dividend yield	—		—		Dividend yield	0		0
Expected volatility	28.02	%	27.37	%	Expected volatility	30.91	%	26.41	%
Expected life (in years)	3.4		3.4		Expected life (in years)	3.9		3.7

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 ~~three~~four years.

The fair value of restricted stock units granted with market based vesting conditions was estimated using the Monte Carlo simulation valuation model with the following assumptions during 2019. There were no restricted stock shares granted with market based vesting conditions during the first nine months of 2020.


						2019
Risk-free interest rate						1.48%
Dividend yield						0
Expected volatility						25.40%
Expected life (in years)						2.36

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, ~~2017~~2020 (shares in thousands):


	Shares	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2019	243	$	246.34
Granted	171	259.35
Vested	(130)	223.48
Canceled or forfeited	(97)	256.92
Outstanding at September 30, 2020	187	$	261.94

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

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6. Acquisitions

~~2017~~2020 Acquisitions

~~Cambridge Global Payments~~

On August ~~9, 2017,~~10, 2020, the Company ~~acquired Cambridge, a leading business to business (B2B) international payments provider, for approximately $584.1 million in cash, net of cash acquired of $132.3 million and inclusive~~completed the acquisition of a ~~note payable of $23.9 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.~~lodging space in the U.S. The Company financed the acquisition using a combination of ~~existing~~available cash and borrowings under its existing credit facility. The results from ~~Cambridge~~the acquisition are reported in ~~its~~the North America ~~segment~~segment. In connection with this acquisition, the Company signed noncompete agreements with certain parties affiliated with the business with an estimated fair value of $3.8 million. These noncompete agreements were accounted for separately from the business ~~in the United States and Canada and within its International segment for business in all other countries outside of the United States and Canada, since~~ acquisition.

The following table summarizes the ~~preliminary~~ acquisition accounting ~~for Cambridge~~ (in thousands):


Accounts and other receivables	$	6,027
Prepaid expenses and other current assets	983
Property and equipment	3,167
Other assets	1,290
Goodwill	23,593
Other intangibles	36,900
Current liabilities	(1,127)
Other noncurrent liabilities	(782)

Aggregate purchase price	$	70,051

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

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 Trademarks	5	$	1,800
Licensed Software and Technology	10	4,400
Proprietary Technology	5	8,400
Supplier Network	10	300
Customer Relationships	16	22,000


		$	36,900

Useful Lives (in Years) Value
Customer relationships and other identifiable intangible assets 10 $ 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, the Company acquired a fuel card provider in Russia.~~ The accounting for ~~this acquisition~~these acquisitions is preliminary as the Company is still completing the valuation of goodwill, intangible assets, income taxes and evaluation of acquired contingencies.

Other

On September 17, 2020, the Company signed a definitive agreement to acquire Associated Foreign Exchange (AFEX), a cross-border payment solutions provider, for approximately $450 million. The transaction is expected to close in 2021, subject to regulatory approval and standard closing conditions.

2019 Acquisitions

NvoicePay

On April 1, 2019, the Company completed the acquisition of NvoicePay, a provider of full accounts payable automation for businesses. The aggregate purchase price of this acquisition was approximately $208 million, net of cash acquired of $4.1 million. This acquisition further expands the Company's corporate payments product offering. The Company financed the acquisition using a combination of available cash and borrowings under its existing credit facility. The results from NvoicePay are reported in the North America segment. Along with the acquisition of NvoicePay, the Company signed noncompete agreements with certain parties with an estimated fair value of $10.7 million that were accounted for separately from the business acquisition.

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The following table summarizes the ~~preliminary~~ acquisition accounting for ~~the Russian acquisition~~NvoicePay (in thousands):




Accounts and other receivables	$	1,513
Prepaid expenses and other current assets	396
Property and equipment	1,030
Other assets	5,612
Goodwill	168,990
Other intangibles	44,750
Current liabilities	(4,415)
Other noncurrent liabilities	(6,130)
Deferred income taxes	(4,178)
Aggregate purchase price	$	207,568

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

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 Trademarks	Indefinite	$	8,700
Proprietary Technology	6	15,600
Referral Partners	10	810
Supplier Network	10	2,640
Customer Relationships	20	17,000


		$	44,750

Useful Lives (in Years) Value
Customer relationships and other identifiable intangible assets 8 $ 46,034
$ 46,034
Other

~~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,~~During 2019, the Company acquired ~~all~~SOLE Financial, a payroll card provider in the U.S., r2c, a fleet maintenance, compliance and workshop management software provider in the U.K., and Travelliance, an airline lodging provider in the U.S. The aggregate purchase price of ~~the outstanding stock of Serviços e Tecnologia de Pagamentos S.A. (“STP”), for $1.23 billion,~~these acquisitions was approximately $207 million, 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.~~cash. 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 other 6,998
Deferred tax assets 20,644
Property and equipment 44,226
Other long term assets 14,280
Goodwill 663,040
Customer relationships and other identifiable intangible assets 548,682
Liabilities assumed (315,082 )
Aggregate purchase price $ 1,225,945

~~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 8.5-20 $ 348,414
Trade names and trademarks - indefinite N/A 154,851
Technology 6 45,417
$ 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 million.~~$9.0 million that were accounted for separately from the business acquisitions.

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~~the SOLE, r2c, and Travelliance acquisitions (in thousands):




Accounts and other receivables	$	91,457
Prepaid expenses and other current assets	1,833
Property and equipment	922
Other assets	8,650
Goodwill	121,460
Other intangibles	80,726
Current liabilities	(78,473)

Other noncurrent liabilities	(4,657)
Deferred taxes	(15,245)
Aggregate purchase price	$	206,673

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

The ~~estimated fair value~~accounting for the Travelliance acquisition is preliminary and subject to working capital adjustments.

Table of ~~intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):~~Contents

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

7. Goodwill and Other ~~Intangible Assets~~Intangibles

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


	December 31, 2019		Acquisitions		Acquisition Accounting Adjustments		Foreign Currency		September 30, 2020
Segment
North America	$	3,369,173	$	23,593	$	2,052	$	(4,886)	$	3,389,932
Brazil	756,975		0		0		(216,402)		540,573
International	706,899		0				(23,807)		683,092
	$	4,833,047	$	23,593	$	2,052	$	(245,095)	$	4,613,597

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, ~~2017~~2020 and December 31, ~~2016,~~2019, other ~~intangible assets~~intangibles consisted of the following (in thousands):


		September 30, 2017							December 31, 2016									September 30, 2020						December 31, 2019
	Weighted- Avg Useful Lives (Years)	Gross Carrying Amounts		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amounts		Accumulated Amortization			Net Carrying Amount			Weighted- Avg Useful Lives (Years)	Gross Carrying Amounts		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amounts		Accumulated Amortization		Net Carrying Amount
Customer and vendor relationships	15.9	$	2,845,048	$	(565,374	)	$	2,279,674	$	2,449,389	$	(458,118	)	$	1,991,271	Customer and vendor relationships	17.2	$	2,633,710	$	(1,065,679)	$	1,568,031	$	2,698,327	$	(943,537)	$	1,754,790
Trade names and trademarks—indefinite lived	N/A	476,648		—			476,648		510,952		—			510,952		Trade names and trademarks—indefinite lived	N/A	467,130		—		467,130		496,306		—		496,306
Trade names and trademarks—other	14.6	2,805		(2,130		)	675		2,746		(2,021		)	725		Trade names and trademarks—other	11.4	7,015		(3,244)		3,771		5,384		(2,877)		2,507
Software	6.0	203,643		(106,786		)	96,857		211,331		(85,167		)	126,164		Software	6.2	246,478		(190,280)		56,198		242,783		(180,839)		61,944
Non-compete agreements	4.9	38,628		(16,042		)	22,586		35,191		(11,070		)	24,121		Non-compete agreements	4.0	66,118		(46,059)		20,059		65,560		(39,225)		26,335
Total other intangibles		$	3,566,772	$	(690,332	)	$	2,876,440	$	3,209,609	$	(556,376	)	$	2,653,233	Total other intangibles		$	3,420,451	$	(1,305,262)	$	2,115,189	$	3,508,360	$	(1,166,478)	$	2,341,882

Changes in foreign exchange rates resulted in a ~~$53.8~~$127.3 million ~~increase~~decrease to the carrying values of other ~~intangible assets~~intangibles in the nine months ended September 30, ~~2017.~~2020. Amortization expense related to intangible assets for the nine months ended September 30, ~~2017~~2020 and ~~2016~~2019 was ~~$158.9~~$138.8 million and ~~$112.5~~$155.9 million, respectively. ~~As part~~

Table 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.Contents

8. Debt

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


						September 30, 2020		December 31, 2019
Term Loan A note payable (a), net of discounts					Term Loan A note payable (a), net of discounts	$	2,961,741	$	3,080,789
Term Loan B note payable (a), net of discounts					Term Loan B note payable (a), net of discounts	338,131		340,481
Revolving line of credit A Facility(a)					Revolving line of credit A Facility(a)	410,000		325,000
Revolving line of credit B Facility(a)					Revolving line of credit B Facility(a)	45,694		225,477
	September 30, 2017		December 31, 2016
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
Revolving line of credit A Facility - domestic swing line (a)					Revolving line of credit A Facility - domestic swing line (a)	12,000		0
Revolving line of credit B Facility - foreign swing line (a)					Revolving line of credit B Facility - foreign swing line (a)	16,090		52,038
Other debt(c)	41,771		12,934		Other debt(c)	20,923		42,027
Total notes payable and other obligations	3,742,483		3,267,233		Total notes payable and other obligations	3,804,579		4,065,812
Securitization Facility(b)	794,000		591,000		Securitization Facility(b)	688,000		970,973
Total notes payable, credit agreements and Securitization Facility	$	4,536,483	$	3,858,233	Total notes payable, credit agreements and Securitization Facility	$	4,492,579	$	5,036,785
Current portion	$	1,602,507	$	1,336,506	Current portion	$	1,333,769	$	1,746,838
Long-term portion	2,933,976		2,521,727		Long-term portion	3,158,810		3,289,947
Total notes payable, credit agreements and Securitization Facility	$	4,536,483	$	3,858,233	Total notes payable, credit agreements and Securitization Facility	$	4,492,579	$	5,036,785

______________________

~~(a)~~

The Company has a Credit Agreement, which has been amended multiple times and provides for senior secured credit facilities 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 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

(a)The Company has a Credit Agreement that provides for senior secured credit facilities (collectively, the "Credit Facility") consisting of a revolving credit facility in the amount of $1.285 billion, a term loan A facility in the amount of $3.225 billion and a term loan B facility in the amount of $350 million as of September 30, 2020. 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, revolving A or revolving B facility 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 April 24, 2020, the Company entered into the eighth amendment to the Credit Agreement to add a $250 million revolving D facility. On August 20, 2020, the Company terminated the revolving D facility. The maturity date for the term loan A and revolving credit facilities A, B and C is December 19, 2023. The maturity date for the term loan B is August 2, 2024.

~~$5.4 million~~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 1.75% for Eurocurrency Loans or the Base Rate plus 0.75% for Base Rate Loans. The Eurocurrency rate has a 0% floor. 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, 2020, the interest rate on the term loan A was 1.65%, the interest rate on the term loan B was 1.90%, the interest rate on the revolving A facility was 1.65%, and the interest rate on the revolving B facility was 1.55% for GBP borrowings. The unused credit facility fee was 0.30% at September 30, ~~2017. In August 2017,~~2020.

(b)The Company is party to a $1.0 billion Securitization Facility. On April 24, 2020, the Company ~~expensed $3.3 million~~reduced the Securitization Facility commitment from $1.2 billion to $1.0 billion. There is a program fee equal to one month LIBOR plus 0.90% or the Commercial Paper Rate plus 0.80% as of September 30, 2020 and ~~capitalized $10.6 million~~December 31, 2019. The program fee was 0.16% plus 0.88% as of September 30, 2020 and 1.80% plus 0.88% as of December 31, 2019. The unused facility fee is payable at a rate of 0.40% per annum as of September 30, 2020 and December 31, 2019. We have unamortized debt issuance costs of $1.6 million and $0.7 million related to the Securitization Facility as of September 30, 2020 and December 31, 2019, respectively, recorded within other assets in the Unaudited Consolidated Balance Sheet. On August 21, 2020, the Company executed a commitment letter to enter into the seventh amendment to the Securitization Facility effective November 13, 2020. This amendment will extend the Securitization Facility

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termination date to November 12, 2021, add an uncommitted accordion to increase the purchase limit by up to $500 million, revise obligor concentration limits and reserve calculations, add a 0.375% LIBOR floor and modify certain swing line terms. In addition, the program fee for LIBOR borrowings will increase from 0.90% to 1.25% and the program fee for Commercial Paper Rate borrowings will increase from 0.80% to 1.15%.

(c)Other debt includes the long-term portion of deferred payments associated with ~~the refinancing of its Credit Facility.~~business acquisitions and deferred revenue.

~~(b)~~

The Company is party to a $950 million receivables purchase agreement (Securitization Facility) that was amended and restated on December 1, 2015. There is a program fee equal to one month LIBOR and the Commercial Paper Rate of 1.27% plus 0.90% and 0.85% plus 0.90% as of September 30, 2017 and December 31, 2016, respectively. The unused facility fee is payable at a rate of 0.40% per annum as of September 30, 2017 and December 31, 2016.


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

The Company was in compliance with all financial and non-financial covenants at September 30, ~~2017.~~2020. 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 Note 13 for further details.

9. Income Taxes

The Company's tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter the Company updates the estimate of the annual effective tax rate, and if our estimated tax rate changes, makes a cumulative adjustment. The Company's quarterly tax provision and quarterly estimate of the annual effective tax rate are subject to significant variation due to several factors, including variability in accurately predicting the 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 our effective tax rate is greater when our 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 2020 and 2019 to income before income taxes for the three months ended September 30, ~~2017~~2020 and ~~2016~~2019 due to the following (in thousands):


	2020				2019
Computed “expected” tax expense	$	49,436	21.0	%	$	61,479	21.0	%
Changes resulting from:
Foreign income tax differential	(3,364)		(1.4)	%	(2,904)		(1.0)	%
Excess tax benefit related to stock-based compensation	(13,449)		(5.7)	%	(10,059)		(3.4)	%
State taxes net of federal benefits	786		0.3	%	3,324		1.1	%
Foreign-sourced nontaxable income	2,416		1.0	%	(1)		0	%
Foreign withholding	3,764		1.6	%	5,150		1.8	%
GILTI, net of foreign tax credits	2,341		1.0	%	2,486		0.9	%





Other	4,663		2.0	%	7,477		2.5	%
Provision for income taxes	$	46,593	19.8	%	$	66,952	22.9	%

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 %

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10. Earnings Per Share

The Company reports basic and diluted earnings per share. Basic earnings per share is computed by dividing net income attributable to shareholders of the Company by the weighted average number of common shares outstanding during the reported period. Diluted earnings per share reflect the potential dilution related to equity-based incentives using the treasury stock method. The calculation and reconciliation of basic and diluted earnings per share for the three and nine months ended September 30, 2020, and 2019 is as follows (in thousands, except per share data) ~~follows:~~:


	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016			2020		2019		2020		2019
Net income	$	202,823	$	129,618	$	457,503	$	356,961	Net income	$	188,817	$	225,805	$	494,365	$	659,563
Denominator for basic earnings per share	90,751		92,631		91,619		92,604		Denominator for basic earnings per share	83,719		86,662		84,170		86,332
Dilutive securities	2,250		2,676		2,304		2,600		Dilutive securities	2,554		3,860		2,836		3,644
Denominator for diluted earnings per share	93,001		95,307		93,923		95,204		Denominator for diluted earnings per share	86,273		90,522		87,006		89,976
Basic earnings per share	$	2.23	$	1.40	$	4.99	$	3.85	Basic earnings per share	$	2.26	$	2.61	$	5.87	$	7.64
Diluted earnings per share	$	2.18	$	1.36	$	4.87	$	3.75	Diluted earnings per share	$	2.19	$	2.49	$	5.68	$	7.33

Diluted earnings per share for the three ~~month periods~~months ended September 30, ~~2017~~2020 and 2019 excludes the effect of ~~3.5~~0.3 million ~~shares~~and 27 thousand, respectively, of common stock that may be issued upon the exercise of employee stock options because such effect would be ~~antidilutive.~~anti-dilutive. Diluted earnings per share also excludes the effect of ~~0.3~~0.1 million and 0.1 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, ~~2017~~2020 and ~~2016,~~2019, respectively.

11. Segments

~~The~~

As previously described in our Annual Report on Form 10-K for the year ended December 31, 2019, the Company ~~reports information about its~~historically managed and reported our operating ~~segments in accordance with the authoritative guidance related to segments. The Company’s~~results through 2 reportable segments, ~~represent components of the business for which separate financial information is evaluated regularly~~defined by ~~the chief operating decision maker in determining how to allocate resources and in assessing performance. The Company operates in two reportable segments,~~geographic regions: North America and International. ~~The Company began~~In the first quarter of 2020, we evaluated the identification of our operating and reportable segments based upon changes in business models, management reporting, ~~its results from Cambridge acquired~~and how the Chief Operating Decision Maker ("CODM") is currently allocating resources, assessing performance and reviewing financial information. We determined that these changes caused the composition of our reportable segments to change and that Brazil represented a third operating and reportable segment, which was previously reported in the ~~third quarter of 2017 in its~~International segment. We now manage and report our operating results through 3 operating and reportable segments defined by geographic regions: North America, ~~segment for Cambridge's business~~Brazil and International, which aligns with how the CODM allocates resources, assesses performance and reviews financial information. This change in ~~the United States and Canada and within its International segment for Cambridge's business in all other countries outside~~reporting segments did not impact our determination 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 no inter-segment sales.units.

The Company’s segment results are as follows for the three and nine month periods ended September 30, 2020 and 2019 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenues, net:
North America	$	383,828	$	442,704	$	1,175,950	$	1,257,544
Brazil	79,596		106,574		253,722		315,854
International	121,859		131,770		341,850		376,569
	$	585,283	$	681,048	$	1,771,522	$	1,949,967
Operating income:
North America	$	153,328	$	205,558	$	372,219	$	562,230
Brazil	35,600		42,469		104,462		126,884
International	75,604		81,114		201,645		221,520
	$	264,532	$	329,141	$	678,326	$	910,634
Depreciation and amortization:
North America	$	39,390	$	39,309	$	115,913	$	119,476
Brazil	12,260		16,224		39,019		49,314
International	11,829		11,814		35,185		36,910
	$	63,479	$	67,347	$	190,117	$	205,700
Capital expenditures:
North America	$	12,053	$	10,340	$	35,590	$	30,023
Brazil	3,501		4,296		10,309		12,273
International	2,595		2,070		9,120		6,385
	$	18,149	$	16,706	$	55,019	$	48,681

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

12. 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.

~~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. Plaintiff seeks class certification, unspecified monetary damages, costs, and attorneys’ fees. The Company disputes the allegations in the complaint and intends to vigorously defend against the claims.

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,

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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~~Federal Derivative Action pending a ruling on motions for summary judgment in the ~~defendants' motion to dismiss~~shareholder class action, notice a settlement has been reached in the ~~putative~~ shareholder class action, or until otherwise agreed to by the parties. After preliminary approval of the proposed settlement of the shareholder class action was granted, the stay on the Federal Derivative Action was lifted. Plaintiffs amended their complaint on February 22, 2020. FLEETCOR filed a motion to dismiss the amended complaint in the Federal Derivative Action on April 17, 2020, which the court granted without leave to amend on October 21, 2020.

On January 9, 2019, a similar shareholder derivative complaint was filed in the Superior Court of Gwinnett County, Georgia (“State Derivative Action”), which was 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. On the parties’ joint motion, the court has continued the stay of the State Derivative Action “pending further developments in the first-filed Federal Derivative Action.” The defendants dispute the allegations in the ~~complaint~~derivative complaints and intend to vigorously defend against the claims.

~~Estimating an amount~~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 the Company’s advertising and marketing practices, principally in its U.S. direct fuel card business within its North American Fuel Card business. The parties reached impasse primarily related to what the Company believes are unreasonable demands for redress made by the FTC.

On December 20, 2019, the FTC filed a lawsuit in the Northern District of Georgia against the Company and Ron Clarke. See FTC v. FLEETCOR and Ronald F. Clarke, No. 19-cv-05727 (N.D. Ga.). The complaint alleges the Company and Clarke violated the FTC Act’s prohibitions on unfair and deceptive acts and practices. The complaint seeks among other things injunctive relief, consumer redress, and costs of suit. The Company continues to believe that the FTC’s claims are without merit. The Company has incurred and continues to incur legal and other fees related to this complaint. Any settlement of this matter, or defense against the lawsuit, could involve costs to the Company, including legal fees, redress, penalties, and remediation expenses. At this time, in view of the complexity and ongoing nature of the matter, we are unable to estimate a reasonably possible loss or range of ~~possible losses resulting from litigation proceedings is inherently difficult and requires an extensive degree of judgment, particularly where~~loss that we may incur to settle this matter or defend against the ~~matters involve indeterminate claims for monetary damages, and are in~~lawsuit brought by 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.FTC.

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, the~~Foreign Currency Derivatives

The Company writes derivatives, primarily foreign currency forward contracts, ~~and~~ option contracts, ~~mostly~~and swaps, 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.

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. Concentrations of credit and performance risk may exist with counterparties, which includes customers and banking partners, as we are engaged in similar activities with similar economic characteristics related to fluctuations in foreign currency rates. 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, if the ~~possible termination~~counterparty does not perform under the term of the ~~related contracts.~~contract, the contract may be terminated. The Company does not designate any of its foreign exchange derivatives as hedging instruments in accordance with ASC 815.

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The aggregate equivalent ~~United States~~U.S. dollar notional amount of foreign exchange derivative customer contracts held by the Company as of September 30, ~~2017~~2020 and December 31, 2019 (in millions) is presented in the table below.


	Notional
	September 30, 2020		December 31, 2019
Foreign exchange contracts:
Swaps	$	926.5	$	599.5
Futures, forwards and spot	3,537.6		3,017.1
Written options	6,051.6		6,393.9
Purchased options	5,644.7		5,830.8
Total	$	16,160.4	$	15,841.3

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 spot 3,174.1
  Written options 1,338.6
  Purchased options 1,765.0
Total $ 6,550.5

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

The following table summarizes the fair value of foreign currency derivatives reported in the Unaudited Consolidated Balance ~~Sheet~~Sheets as of September 30, ~~2017~~2020 and December 31, 2019 (in millions):


								September 30, 2020								December 31, 2019
	Derivative Assets			Derivative Liabilities				Fair Value, Gross				Fair Value, Net				Fair Value, Gross				Fair Value, Net
	Fair Value			Fair Value				Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
Derivatives - undesignated:							Derivatives - undesignated:
Over the counter	$	111.2		$	105.8
Exchange traded	—			0.4
Foreign exchange contracts	111.2			106.2			Foreign exchange contracts	$	198.7	$	180.0	$	97.8	$	79.1	$	114.9	$	103.8	$	72.1	$	60.9
Cash collateral	(33.9		)	(20.3		)	Cash collateral	19.0		24.2		19.0		24.2		6.1		25.6		6.1		25.6
Total net derivative assets and liabilities	$	77.3		$	85.9
Total net of cash collateral							Total net of cash collateral	$	179.7	$	155.8	$	78.8	$	54.9	$	108.8	$	78.2	$	66.0	$	35.3

The fair values of derivative assets and liabilities associated with contracts, ~~that~~which include netting ~~language~~terms that the Company believes to be enforceable have been ~~netted to present~~recorded net within the ~~Company's net exposure with these counterparties.~~Unaudited Consolidated Balance Sheets. The Company ~~recognizes~~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 Sheets. The customer has the right to recall their collateral in the event exposures move in their favor, they perform on all ~~derivative assets~~outstanding contracts and have no outstanding amounts due to the Company 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 ~~prepaid expense~~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, 2020, the Company had the following outstanding interest rate derivatives that qualify as hedging instruments and ~~other current assets~~are designated as cash flow hedges of interest rate risk (in millions):


	Notional Amount as of September 30, 2020		Fixed Rates	Maturity 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 pays a fixed monthly rate and ~~all derivative liabilities in other current liabilities, both net at~~receives one month LIBOR.

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The table below presents the ~~customer level~~fair value of the Company’s interest rate swap contracts, as ~~right of offset exists, in its~~well as their classification on the Unaudited Consolidated Balance Sheets, ~~at their fair value. The gain or loss~~as of September 30, 2020 (in millions). See Note 3 for additional information on the fair value ~~is recognized immediately within other (income) expense, net~~of the Company’s swap contracts.

As of September 30, 2020

Balance Sheet Classification

Fair Value

Derivatives designated as cash flow hedges:

Swap contracts

Other liabilities

100.7

The table below displays the effect of the Company’s derivative financial instruments in the Unaudited Consolidated Statements of ~~Income. At~~Income and other comprehensive loss for the nine months ended September 30, ~~2017, $150.7~~2020 (in millions):


	2020
Interest Rate Swaps:
Amount of loss recognized in other comprehensive income (loss) on derivatives, net of tax of $24.6 million	$	33.5
Amount of loss reclassified from accumulated other comprehensive loss into interest expense	26.9

The estimated net amount of the existing losses expected to be reclassified into earnings within the next 12 months is approximately $49.0 million ~~derivative assets and $70.9 million derivative liabilities were recorded~~at September 30, 2020.

14. Accumulated Other Comprehensive Loss (AOCL)

The changes in the ~~Consolidated Balance Sheet.~~components of AOCL for the nine months ended September 30, 2020 and 2019 are as follows (in thousands):


	Cumulative Foreign Currency Translation		Unrealized Gains/Losses on Swap Contracts		Total Accumulated Other Comprehensive (Loss) Income
Balance at January 1, 2020	$	(929,713)	$	(42,752)	$	(972,465)
Other comprehensive loss before reclassifications	(577,189)		(85,033)		(662,222)
Amounts reclassified from AOCI	0		26,949		26,949
Tax effect	0		24,602		24,602
Other comprehensive loss	(577,189)		(33,482)		(610,671)
Balance at September 30, 2020	$	(1,506,902)	$	(76,234)	$	(1,583,136)


	Cumulative Foreign Currency Translation		Unrealized Gains/Losses on Swap Contracts		Total Accumulated Other Comprehensive (Loss) Income
Balance at January 1, 2019	$	(913,858)	$	0	$	(913,858)
Other comprehensive loss before reclassifications	(148,282)		(71,703)		(219,985)
Amounts reclassified from AOCI	0		2,185		2,185
Tax effect	0		16,980		16,980
Other comprehensive loss	(148,282)		(52,538)		(200,820)
Balance at September 30, 2019	$	(1,062,140)	$	(52,538)	$	(1,114,678)

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Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~The following discussion~~This Management’s Discussion and ~~analysis~~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. This discussion 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, 2019. 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~~

Impact of COVID-19 on Our Business

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. The pandemic and these containment and mitigation measures have created adverse impacts on the U.S. and global economies and it is unclear how long the pandemic and related economic impacts will continue. The COVID-19 pandemic has impacted our business operations for the first nine months of 2020 as described in more detail under “Results of Operations” below, due to a significant decrease in the level of business activity across industries worldwide, which reduced the volume of payment services provided to our customers and revenue generated beginning during the second half of the last month of the first quarter and continuing through the date of this Report.

The evolving COVID-19 pandemic has had, and could continue to have, an adverse impact on our results of operations and liquidity; the operations of our suppliers, vendors and customers; and on our employees as a result of quarantines, facility closures, travel and logistics restrictions and general decreases in the level of consumer confidence and business activity. We expect that our business operations and results of operations, including our net revenues, earnings and cash flows, will be negatively impacted by certain factors arising from the pandemic including, but not limited to:

•changes in business and consumer confidence and spending habits, including negative trends in our customers’ purchasing patterns due to decreased levels of business activity, credit availability, high debt levels and financial distress;

•lower fuel prices and related tightening of fuel spread prices;

•slowdowns in the volume of commercial trucking;

•fluctuations in the dollar compared to other currencies around the world;

•reduction in the level of business travel;

•decreased productivity due to travel bans, work-from-home policies or shelter-in-place orders;

•slowdown in the U.S. and global economies, and an uncertain global economic outlook or a potential credit crisis; and

•customers experiencing financial distress or declaring bankruptcy, including seeking extended payment terms, which would create incremental credit loss expense.

If the COVID-19 pandemic continues to impact the world economy and our customers, in particular, by restricting day-to-day operations and business activity generally, our annual revenues for the 2020 fiscal year will be adversely impacted. The extent to which the COVID-19 pandemic impacts our business operations, financial results, and liquidity for the remainder of the 2020 fiscal year and into the 2021 fiscal year will depend on numerous evolving factors that we may not be able to accurately predict or assess, including the duration and scope of the pandemic; our response to the impact of the pandemic; the negative impact it has on global and regional economies and general economic activity, including the duration and magnitude of its impact on unemployment rates and business spending levels; its short- and longer-term impact on the levels of consumer confidence; the ability of our suppliers, vendors and customers to successfully address the impacts of the pandemic; actions governments, businesses and individuals take in response to the pandemic; and how quickly economies recover after the pandemic subsides.

We have been ~~converted into U.S. dollars~~taking steps to mitigate the potential risks related to the circumstances and impacts of COVID-19. We are focused on addressing these recent challenges with proactive actions designed to protect our employees, provide uninterrupted service to our customers, and meet our near term liquidity needs. Such actions include, but are not limited to:

•Safety: ensuring the safety of our approximately 8,000 employees worldwide by transitioning the vast majority of our employees to work from home;

•BusinessContinuity: ensuring that our systems and payment products continue to operate efficiently for our customers;

•Liquidity: consolidating cash to the United States from around the world and actively monitoring our availability under our existing credit facilities;

•Expenses: slowing discretionary sales and technology spending, furloughing contractors, and the executive team taking pay cuts; and

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•Credit: in ~~this discussion~~select distressed verticals, tightening customer credit lines and payment terms, including closing inactive lines, reducing unused capacity, and reducing payment terms.

These efforts may not be enough to offset the anticipated impact of the COVID-19 pandemic. See “The extent to which the outbreak of the novel strain of the coronavirus (COVID-19) and measures taken in response thereto impact our business, results of operations and financial condition will depend on future developments, which are ~~based~~highly uncertain and are difficult to predict” in Part II, Item 1A. Risk Factors of the previously filed Quarterly Report on ~~the exchange rate as reported by OANDA for the applicable periods.~~

~~This management’s discussion and analysis should also be read in conjunction~~Form 10-Q, filed with the ~~management’s discussion~~Securities and ~~analysis~~Exchange Commission on May 11, 2020.

General Business

FLEETCOR Technologies, Inc. and ~~consolidated financial statements~~its subsidiaries (the Company) is a leading global business payment solutions company that simplifies the way businesses manage and ~~related notes included~~pay their expenses. The FLEETCOR portfolio of brands help companies automate, secure, digitize and control payments on behalf of their employees and suppliers. The Company serves businesses, partners, merchants and consumers and payment networks in North America, Latin America, Europe, and Asia Pacific.

As previously described in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019, we have historically managed and reported our operating results through two reportable segments, defined by geographic region: North America and International. In the first quarter of 2020, we evaluated the identification of our operating and reportable segments based upon changes in business models, management reporting, and how the Chief Operating Decision Maker (CODM) is currently allocating resources, assessing performance and reviewing financial information. We determined that these changes caused the composition of our reportable segments to change and that Brazil represented a third operating and reportable segment, which was previously reported in the International segment. We now manage and report our operating results through three operating and reportable segments defined by geographic region: North America, Brazil and International, which aligns with how the CODM allocates resources, assesses performance and reviews financial information.

~~General Business~~

~~Fleetcor is~~FLEETCOR solutions are comprised of payment products, networks and associated services. Our payment products generally function like a ~~leading global provider of commercial~~charge card, prepaid card, one-time use virtual card and electronic RFID (radio-frequency identification), etc. While the actual payment ~~solutions.~~mechanisms vary from category to category, they are structured to afford control and reporting to the end customer. We ~~primarily go to market with~~group our ~~fuel card payments product~~payment solutions ~~corporate payments~~into five primary categories: Fuel, Lodging, Tolls, Corporate Payments and Gift. Additionally, we provide other complementary payment products ~~toll products, lodging cards~~including fleet maintenance, employee benefits and ~~gift cards.~~long haul transportation-related services. Our ~~products~~payment solutions are used in 53more than 100 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%~~87% of our revenue in 2016. Our core products are primarily sold to businesses, retailers, major oil companies 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 merchants with a high volume customer base that can increase their sales and customer loyalty. 2019.

We also provide a suite of fleet related and workforce payment solution products, including mobile telematics services, fleet maintenance management and employee benefit and transportation related payments. In 2016, we processed approximately 2.2 billion transactions on ouruse both proprietary ~~networks~~ and third-party networks ~~(which includes approximately 1.3 billion transactions related~~ to deliver our ~~SVS product, acquired with Comdata). We believe that our size~~payment solutions. FLEETCOR owns and ~~scale, geographic reach, advanced technology and our expansive suite of products, services, brands and~~operates proprietary networks ~~contribute~~with well-established brands throughout the world, bringing incremental sales and loyalty to ~~our leading industry position.~~affiliated merchants. Third-party networks are used to broaden payment product acceptance and use.

~~We provide our payment~~FLEETCOR markets its products directly through multiple sales channels, including field sales, telesales 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 these~~which include major oil companies, leasing companies, petroleum marketers, value-added resellers (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.

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

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, we refer to this net revenue as ~~“revenue.”~~"revenue". See “Results of Operations” for additional segment information. ~~We report~~

Revenues, net, by Segment. The presentation of segment information has been recast for prior periods to align with our ~~results from Cambridge acquired in the third quarter of 2017 in our North America~~current 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.

presentation. For the three and nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, our ~~North America and International~~ segments generated the following revenue (in millions):.


	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
(Unaudited)	Revenues, net		% of Total Revenues, net		Revenues, net		% of Total Revenues, net		Revenues, net		% of Total Revenues, net		Revenues, net		% of Total Revenues, net
North America	$	383.8	65.6	%	$	442.7	65.0	%	$	1,176.0	66.4	%	$	1,257.5	64.5	%
Brazil	79.6		13.6	%	106.6		15.6	%	253.7		14.3	%	315.9		16.2	%
International	121.9		20.8	%	131.8		19.4	%	341.9		19.3	%	376.6		19.3	%
	$	585.3	100.0	%	$	681.0	100.0	%	$	1,771.5	100.0	%	$	1,950.0	100.0	%

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Three Months Ended September 30, Nine Months Ended September 30,
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
North America $ 364.4
63.1 % $ 345.9
71.4 % $ 1,037.4
63.3 % $ 950.5
72.2 %
International 213.4
36.9 % 138.6
28.6 % 602.2
36.7 % 366.1
27.8 %
$ 577.9
100.0 % $ 484.4
100.0 % $ 1,639.5
100.0 % $ 1,316.6
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, ~~2017~~2020 and ~~2016~~2019 (in ~~thousands,~~millions, except per share amounts).


	Three Months Ended September 30,				Nine Months Ended September 30,
(Unaudited)	2020		2019		2020		2019
Revenues, net	$	585.3	$	681.0	$	1,771.5	$	1,950.0
Net income	$	188.8	$	225.8	$	494.4	$	659.6
Net income per diluted share	$	2.19	$	2.49	$	5.68	$	7.33

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
Net income $ 202,823
$ 129,618
$ 457,503
$ 356,961
Net income per diluted share $ 2.18
$ 1.36
$ 4.87
$ 3.75

~~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, ~~2017~~2020 and ~~2016~~2019 (in ~~thousands,~~millions, except per share amounts).


	Three Months Ended September 30,				Nine Months Ended September 30,
(Unaudited)	2020		2019		2020		2019
Adjusted net income	$	241.9	$	280.6	$	703.9	$	775.7
Adjusted net income per diluted share	$	2.80	$	3.10	$	8.09	$	8.62

Three Months Ended September 30, Nine Months Ended September 30,
(Unaudited) 2017 2016 2017 2016
Adjusted revenues $ 550,190
$ 456,212
$ 1,556,857
$ 1,237,838
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

~~We use~~Adjusted net income and adjusted ~~revenues as~~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” for more information and a ~~basis to evaluate our revenues, net~~reconciliation of the ~~commissions that are paid~~non-GAAP financial measure to ~~merchants that participate~~the 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~~FLEETCOR offers a variety of business payment solutions that help to simplify, automate, secure, digitize and effectively control the way businesses manage and pay their expenses. We provide our payment solutions to our business, merchant, consumer and payment network customers in more than 100 countries around the world, although we operate primarily in 3 geographies, with approximately 87% of our ~~segments, we derive revenue from transactions. As illustrated~~business in the ~~diagram below,~~U.S., Brazil and the U.K. Our products help our customers pay their suppliers and manage spend related to their employees more efficiently. We have a ~~transaction is defined as a purchase by a customer.~~variety of products that help our customers achieve these goals, primarily in five product categories: fuel, corporate payments, toll, lodging and gift. Our customers may include ~~holders of our card products~~commercial businesses (obtained through direct and ~~those of our~~indirect channels), partners for whom we manage ~~card~~payment 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 individual consumers (for tolls).

Fuel represents approximately 44% of our ~~customers and partners. Through our merchant and network relationships we primarily offer~~revenues. Our fuel cards ~~corporate cards, virtual cards, purchasing cards, T&E cards, gift cards, stored value payroll cards, vehicle maintenance, food,~~and products help businesses monitor and control fuel ~~toll~~spend across multiple fuel networks, providing online analytical reporting to help customers managing the efficiency of their vehicles and ~~transportation cards and vouchers and lodging services to our customers.~~

~~The following diagram illustrates a typical transaction flow, for~~drivers, while offering potential discounts from the retail price of fuel. We generate revenue in our fuel ~~card, vehicle maintenance, lodging and food, toll and transportation card and voucher products. This illustration is not applicable to all of our businesses.~~

~~Illustrative Transaction Flow~~

~~From our customers and partners, we derive revenue from~~products through a variety of program fees, including transaction fees, card fees, network fees and charges, ~~which can~~as well as from interchange. These fees may be charged as fixed ~~fees, cost~~amounts, 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 also include other fees and charges associated with late payments and based on customer credit risk.

~~From~~Corporate payments represents approximately 18% of our ~~merchant~~revenues. Our products help streamline business to business ("B2B") payments for vendors and ~~network relationships,~~employees, both domestically and internationally. Our corporate payments products include virtual card solutions for invoice payments, corporate card programs, a fully-outsourced accounts payable solution, as well as a cross-border payments product to facilitate customers making payments across differing currencies. In our corporate payments products, a primary measure of volume is spend, the dollar amount of payments processed on behalf of customers through our various networks. In corporate payments, we ~~derive~~primarily earn revenue ~~mostly~~ from the difference between the ~~price~~amount charged to athe customer ~~for a transaction~~ and the ~~price~~amount paid to the ~~merchant or~~third party for a given transaction as interchange revenue. Our programs may also charge fixed fees for access to the network and ancillary services provided.

Tolls represents approximately 12% of our revenues. Our toll product is primarily delivered via an RFID sticker affixed to the windshield of a customer vehicle in Brazil. This RFID technology enables customers to utilize toll roads, toll parking lots, pay for gas at partner stations and pay for drive-through food, via automated access and payment upon scan while remaining in the ~~same~~vehicle. In our toll product, the relevant measure of volume is average monthly tags active during the period. We primarily earn revenue from fixed fees for access to the network and ancillary services provided. We also earn interchange on certain services provided.

Lodging represents approximately 9% of our revenues. Our lodging products provide customers with a proprietary network of hotels with discounted room rates, centralized billing and robust reporting to help customers manage and control costs. In our

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lodging products, we define a transaction as a hotel room night purchased by a customer. In our lodging products, we primarily earn revenue from the difference between the amount charged to the customer and the amount paid to the hotel for a given transaction. Our products may also charge fees for access to the network and ancillary services provided.

Gift represents approximately 7% of our revenues. We provide fully integrated gift card product management and processing services via plastic and digital gift cards to our customers. We primarily earn revenue from the processing of gift card transactions sold by our customers to end users, as well as ~~network fees and charges in certain businesses. As illustrated in~~from the ~~table below, the price paid to a merchant or network may be calculated as (i) the merchant’s wholesale cost~~sale of the ~~product plus~~plastic cards. Our products may also charge fixed fees for ancillary services provided.

The remaining 11% of revenues represents other products, which include telematics, maintenance, food, a ~~markup; (ii) the transaction purchase price less a percentage discount; or (iii) the transaction purchase price less a fixed fee per unit.~~payroll card solution for employers to distribute wages, and transportation related offerings.

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

~~Illustrative Revenue Model for Fuel Purchases~~

~~(unit of one gallon)~~

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, 2017 and 2016 (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 %

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

²~~Fees 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.

⁴~~Interchange revenue directly influenced by the absolute price of fuel and other interchange related to fuel products.~~

⁵~~Interchange revenue related to nonfuel products.~~

⁶~~Revenue 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.~~

⁷~~Revenue 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,~~key performance metric by product ~~category~~ for the three months ended September 30, ~~2017~~2020 and ~~2016~~2019 (in ~~millions except revenues, net per transaction)~~millions).*:

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 %


	As Reported											Pro Forma and Macro Adjusted3
	Three Months Ended September 30,											Three Months Ended September 30,
(Unaudited)	2020			2019			Change			% Change		2020			2019			Change			% Change
FUEL
'- Revenues, net	$	255.1		$	295.6		$	(40.5)		(14)	%	$	262.4		$	295.6		$	(33.2)		(11)	%
'- Transactions	113.6			129.4			(15.8)			(12)	%	113.6			129.4			(15.8)			(12)	%
'- Revenues, net per transaction	$	2.25		$	2.28		$	(0.04)		(2)	%	$	2.31		$	2.28		$	0.03		1	%
CORPORATE PAYMENTS
'- Revenues, net1	$	106.5		$	120.0		$	(13.5)		(11)	%	$	106.5		$	120.0		$	(13.4)		(11)	%
'- Spend volume	$	15,567		$	19,033		$	(3,466)		(18)	%	$	15,567		$	19,033		$	(3,466)		(18)	%
'- Revenue, net per spend $	0.68		%	0.63		%	0.05		%	9	%	0.68		%	0.63		%	0.05		%	9	%
TOLLS
'- Revenues, net	$	67.6		$	88.7		$	(21.1)		(24)	%	$	91.6		$	88.7		$	2.9		3	%
'- Tags (average monthly)	5.4			5.1			0.3			5	%	5.4			5.1			0.3			5	%
'- Revenues, net per tag	$	12.60		$	17.43		$	(4.83)		(28)	%	$	17.06		$	17.43		$	(0.37)		(2)	%
LODGING
'- Revenues, net	$	52.9		$	56.4		$	(3.5)		(6)	%	$	52.9		$	78.2		$	(25.3)		(32)	%
'- Room nights	5.4			4.4			1.0			22	%	5.4			7.1			(1.7)			(24)	%
'- Revenues, net per room night	$	9.77		$	12.74		$	(2.97)		(23)	%	$	9.77		$	10.94		$	(1.16)		(11)	%
GIFT
'- Revenues, net	$	39.1		$	48.5		$	(9.4)		(19)	%	$	39.1		$	48.5		$	(9.4)		(19)	%
'- Transactions	242.7			277.8			(35.1)			(13)	%	242.7			277.8			(35.1)			(13)	%
'- Revenues, net per transaction	$	0.16		$	0.17		$	(0.01)		(8)	%	$	0.16		$	0.17		$	(0.01)		(8)	%
OTHER2
'- Revenues, net1	$	64.1		$	71.9		$	(7.8)		(11)	%	$	65.6		$	71.9		$	(6.4)		(9)	%
'- Transactions1	9.9			14.6			(4.7)			(32)	%	9.9			14.6			(4.7)			(32)	%
'- Revenues, net per transaction	$	6.48		$	4.93		$	1.55		31	%	$	6.63		$	4.93		$	1.69		34	%
FLEETCOR CONSOLIDATED REVENUES, NET
'- Revenues, net	$	585.3		$	681.0		$	(95.8)		(14)	%	$	618.0		$	702.9		$	(84.9)		(12)	%



*Columns may not calculate due 1 Reflects certain reclassifications of revenue between product categories as the Company realigned its Corporate Payments business, resulting in reclassification of payroll paycard revenue from Corporate Payments to ~~impact of rounding.~~Other.
¹2Other includes telematics, maintenance, food, transportation and ~~transportation~~payroll card related businesses.
² 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.3 See ~~the~~ heading entitled ~~“Management’s~~"Managements' Use of Non-GAAP Financial ~~Measures”~~Measures" for a reconciliation of pro forma and macro adjusted revenue by product and metric non-GAAP measures to the ~~GAAP equivalent.~~comparable financial measure calculated in accordance with GAAP.
³~~2017 is adjusted~~* Columns may not calculate due 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.~~
⁴~~2016 is pro forma to include acquisitions and exclude dispositions consistent with 2017 ownership.~~
⁵~~2016 and YTD 2017 transactions reflect immaterial corrections from previously disclosed amounts for the prior period.~~ rounding.

Revenue per relevant key performance indicator ("KPI"), which may include transaction, spend volume, monthly tags, room nights, or other metrics, 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

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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~~KPI per customer ~~changes~~may change 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~~credit losses 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~~that do not relate to ~~the period and presented separately.~~

our core operations or that occur infrequently.

•Investment (gain) loss ~~(income)~~—Our investment results primarily relate to impairment charges related to our ~~minority~~investments and unrealized gains and losses related to a noncontrolling 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.

marketable security.

•Other expense (income), net—Our other expense (income), net includes ~~foreign currency transaction~~ gains orand losses ~~proceeds/costs~~ from the sale of assets, foreign currency transactions, 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 ~~expense~~ on our ~~outstanding debt and on our Securitization Facility. We have historically invested our cash primarily in short-term money market funds.~~

interest rate swaps.

~~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~~earnings resulting from the sale of our products and services ~~in the United States and internationally.~~

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:

•Global economic conditions—Our results of operations are materially affected by conditions in the economy generally, both in North America and internationally, including the ultimate impact of the COVID-19 pandemic. 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 our North America, Brazil 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 62% and 60% of our revenue in the nine months ended September 30, 2020 and 2019, 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 impacts on our total revenue, net.

Our cross-border foreign currency trading business aggregates foreign exchange exposures arising from customer contracts and economically hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties. These contracts are subject to counterparty credit risk.

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•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~~We believe approximately 11% and 13% of ~~Revenue” above for further information related to~~revenues, net were directly impacted by changes in fuel price in the ~~absolute~~three months ended September 30, 2020 and 2019, respectively. We believe approximately 11% and 13% of revenues, net were directly impacted by changes in fuel price ~~of fuel.~~

in the nine months ended September 30, 2020 and 2019, 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. ~~See “Sources~~The inverse of ~~Revenue” above for further information related to~~these situations produces fuel-price ~~spreads.~~

spread expansion. We believe approximately 7% and 5% of revenues, net were directly impacted by fuel-price spreads in both the three months ended September 30, 2020 and 2019, respectively. We believe approximately 8% and 5% of revenues, net were directly impacted by fuel-price spreads in both the nine months ended September 30, 2020 and 2019, respectively.

•Acquisitions—Since 2002, we have completed over 7580 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~~ On January 22, 2019, the Company entered into three swap contracts. The objective of ~~operations are materially affected by conditions~~these swap contracts is to reduce the variability of cash flows in the ~~economy generally, both in North America and internationally. Factors affected by~~previously unhedged interest payments associated with $2.0 billion of variable rate debt, the ~~economy include our transaction volumes and the credit risk~~sole source 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~~which is due to changes in ~~foreign currency rates; namely, by movements~~the LIBOR benchmark interest rate. For each of ~~the Australian dollar, Brazilian real, British pound, Canadian dollar, Czech koruna, Euro, Mexican peso, New Zealand dollar~~these swap contracts, we pay a fixed monthly rate and Russian ruble, relative to the U.S. dollar. Approximately 63% and 72% of our revenue in the nine months ended September 30, 2017 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.

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.

Acquisitions and Investments

On September 17, 2020, we signed a definitive agreement to acquire Associated Foreign Exchange (AFEX), a cross-border payment solutions provider, for approximately $450 million. The transaction is expected to close in 2021, subject to regulatory approval and standard closing conditions.

On August 9, 2017, we acquired Cambridge Global Payments (“Cambridge”), a leading business to business (B2B) international payments provider, for approximately $584.1 million in cash, net of cash acquired of $132.3 million and inclusive of a note payable of $23.9 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,~~10, 2020, we acquired a ~~fuel card provider~~business in ~~Russia. On October 13, 2017, we completed~~ the ~~acquisition of Creative Lodging Solutions ("CLS"), a small~~ lodging ~~tuck-in business.~~

space in the U.S.

During ~~2016,~~2019, we completed acquisitions with an aggregate purchase price of ~~$1.30 billion, net~~approximately $416 million.

•On April 1, 2019, we completed the acquisition of ~~cash acquired~~NvoicePay, a provider of ~~$51.3 million, which includes deferred payments made during~~full accounts payable automation for businesses in 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.U.S. The ~~purpose~~aggregate purchase price of this acquisition was ~~to expand our presence~~approximately $208 million, net of cash acquired.

•On April 1, 2019, we completed the acquisition of r2c, a fleet maintenance, compliance and workshop management software provider in the ~~toll market in Brazil. We financed~~U.K.

•On July 8, 2019, we completed the acquisition ~~using~~of SOLE Financial, a ~~combination~~payroll card provider in the U.S.

•On October 1, 2019, we completed the acquisition of ~~existing cash and borrowings under our credit facility.~~

~~During 2016, we acquired additional fuel card portfolios~~Travelliance, an airline lodging provider in the U.S. ~~and the United Kingdom, additional Shell fuel card markets in Europe and Travelcard in the Netherlands totaling $76.7~~The preliminary aggregate purchase price of this acquisition was approximately $110 million, net of cash acquired, which remains subject to working capital adjustments.

Table of ~~$11.1 million.~~Contents

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

We report our results from ~~Cambridge acquired~~our 2020 and 2019 U.S. acquisitions 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. The results of operations from the fuel card business 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~~dates of acquisition. ~~The~~We report our results ~~of operations of STP, the fuel card portfolio~~from our 2019 U.K. acquisition 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~~During the third quarter of 2020, we sold a trading security investment.

As part of our ~~plan~~plans to exit the telematics business, ~~on July 27, 2017,~~ we sold ~~NexTraq, a U.S. fleet telematics business,~~our investment in Masternaut to Michelin Group ~~for $316 million. We recorded a pre-tax gain on the disposal of NexTraq of $175.0 million~~ during the ~~third~~second quarter of ~~2017, which is net of transaction closing costs.~~2019. 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~~impaired 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~~by an additional $15.6 million during 2019, resulting in no gain or loss ~~of significant influence due to~~when 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.

sold.

Results of Operations

Three months ended September 30, ~~2017~~2020 compared to the three months ended September 30, ~~2016~~2019

The following table sets forth selected unaudited consolidated ~~statement~~statements of income and selected operational data for the three months ended September 30, ~~2017~~2020 and ~~2016~~2019 (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		(Unaudited)	Three Months Ended September 30, 2020			% of Total Revenues, net		Three Months Ended September 30, 2019			% of Total Revenues, net		Increase (decrease)			% Change
Revenues, net:																Revenues, net:
North America	$	364,443		63.1	%	$	345,868		71.4	%	$	18,575		5.4	%	North America	$	383.8		65.6	%	$	442.7		65.0	%	$	(58.9)		(13.3)	%
Brazil																Brazil	79.6			13.6	%	106.6			15.6	%	(27.0)			(25.3)	%
International	213,434			36.9	%	138,558			28.6	%	74,876			54.0	%	International	121.9			20.8	%	131.8			19.4	%	(9.9)			(7.5)	%
Total revenues, net	577,877			100.0	%	484,426			100.0	%	93,451			19.3	%	Total revenues, net	585.3			100.0	%	681.0			100.0	%	(95.8)			(14.1)	%
Consolidated operating expenses:																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	%	Processing	119.9			20.5	%	135.0			19.8	%	(15.2)			(11.2)	%
Selling	45,060			7.8	%	34,180			7.1	%	10,880			31.8	%	Selling	46.8			8.0	%	51.8			7.6	%	(5.0)			(9.7)	%
General and administrative	92,043			15.9	%	77,904			16.1	%	14,139			18.1	%	General and administrative	90.9			15.5	%	98.1			14.4	%	(7.2)			(7.3)	%
Depreciation and amortization	69,156			12.0	%	57,084			11.8	%	12,072			21.1	%	Depreciation and amortization	63.5			10.8	%	67.3			9.9	%	(3.9)			(5.7)	%
Other operating, net	11			—	%	(244		)	(0.1	)%	255			104.5	%	Other operating, net	(0.2)			—	%	(0.3)			—	%	(0.1)			(28)	%
Operating income	232,637			40.3	%	191,055			39.4	%	41,582			21.8	%	Operating income	264.5			45.2	%	329.1			48.3	%	(64.6)			(19.6)	%
Investment loss	47,766			8.3	%	2,744			0.6	%	45,022			1,640.7	%	Investment loss	1.3			0.2	%	—			—	%	1.3			NM
Other (income) expense, net	(175,271		)	(30.3	)%	293			0.1	%	175,564			NM		Other (income) expense, net	(3.6)			(0.6)	%	(0.1)			—	%	3.5			NM
Interest expense, net	29,344			5.1	%	17,814			3.7	%	11,530			64.7	%	Interest expense, net	31.4			5.4	%	36.5			5.4	%	(5.1)			(14.0)	%
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	%	Provision for income taxes	46.6			8.0	%	67.0			9.8	%	(20.4)			(30.4)	%
Net income	$	202,823		35.1	%	$	129,618		26.8	%	$	73,205		56.5	%	Net income	$	188.8		32.3	%	$	225.8		33.2	%	$	(37.0)		(16.4)	%
Operating income for segments:																Operating income for segments:
North America	$	138,748				$	135,760				$	2,988		2.2	%	North America	$	153.3				$	205.6				$	(52.2)		(25.4)	%
Brazil																Brazil	35.6					42.5					(6.9)			(16.2)	%
International	93,889					55,295					38,594			69.8	%	International	75.6					81.1					(5.5)			(6.8)	%
Operating income	$	232,637				$	191,055				$	41,582		21.8	%	Operating income	$	264.5				$	329.1				$	(64.6)		(19.6)	%
Operating margin for segments:																Operating margin for segments:
North America	38.1		%			39.3		%			(1.2		)%			North America	39.9		%			46.4		%			(6.5)		%
Brazil																Brazil	44.7		%			39.8		%			4.9		%
International	44.0		%			39.9		%			4.1		%			International	62.0		%			61.6		%			0.5		%
Consolidated	40.3		%			39.4		%			0.8		%			Consolidated	45.2		%			48.3		%			(3.1)		%

NM = Not Meaningful

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

Table of Contents

Revenues, net

Our consolidated revenues ~~increased from $484.4~~were $585.3 million in the three months ended September 30, ~~2016 to $577.9~~2020, a decrease of $95.8 million or 14.1%, from $681.0 million in the three months ended September 30, ~~2017, an increase of $93.5 million, or 19.3%. The increase in our consolidated revenue was~~2019. Consolidated revenues declined primarily due ~~to:~~

~~The~~to decreases in volume as a result of the COVID-19 pandemic. Organically, consolidated revenues were down approximately 12%. These decreases were partially offset by the impact of acquisitions ~~during 2016 and 2017, which contributed approximately $58 million~~completed in ~~additional revenue.~~

~~Organic growth~~2019. In addition, the third quarter of ~~approximately 8% 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~~2020 results reflect the impact of ~~our payment programs.~~

the negative quarter over quarter macroeconomic environment.

Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a ~~favorable~~negative impact on our consolidated ~~revenue~~revenues for the three months ended September 30, ~~2017~~2020 over the comparable period in ~~2016~~2019 of approximately $4$33 million. ~~This was~~Foreign exchange rates had an unfavorable impact on consolidated revenues of approximately $28 million, primarily due to ~~favorable~~unfavorable changes in foreign exchange rates in Brazil, and ~~the United Kingdom in the three months ended September 30, 2017 compared to 2016.~~

lower fuel prices had an unfavorable impact on revenues of approximately $9 million. These ~~increases~~decreases were partially offset by the impact of ~~the disposition of the NexTraq business in July 2017~~favorable fuel spread margins of approximately ~~$10~~$4 million.

North America segment revenues, net

North America segment revenues ~~increased from $345.9~~were $383.8 million in the three months ended September 30, ~~2016 to $364.4~~2020, a decrease of $58.9 million or 13.3%, from $442.7 million in the three months ended September 30, ~~2017, an increase~~2019. North America revenues declined primarily due to decreases in volume as a result of ~~$18.6 million, or 5.4%. The increase in our~~the COVID-19 pandemic. Organically, North America segment ~~revenue was primarily due to:~~

~~The~~revenues were down approximately 17%. These decreases were partially offset by the impact of ~~our Cambridge acquisition during~~acquisitions completed in 2019. In addition, the third quarter of ~~2017, which contributed approximately $12 million in additional revenue.~~

~~Organic growth~~2020 results reflect the impact of ~~approximately 5%, on a constant fuel price, fuel spread margin and pro forma basis, driven by increases in both volume and revenue per transaction in certain~~the negative quarter over quarter impact of ~~our payment programs.~~the macroeconomic environment.

Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a negative impact on our North America segment ~~revenue~~revenues in the three months ended September 30, ~~2017~~2020 over the comparable period in ~~2016~~2019 of approximately $2$4 million, driven primarily ~~due to the impact of~~by lower fuel ~~spread margins.~~

~~These increases were~~prices of approximately $9 million. This decrease was partially offset by the favorable impact of ~~the disposition of the NexTraq business in July 2017~~fuel spread margins of approximately ~~$10~~$4 million.

~~International~~Brazil segment revenues, net

~~International~~Brazil segment revenues ~~increased from $138.6~~were $79.6 million in the three months ended September 30, ~~2016~~2020, a decrease of $27.0 million or 25.3%, from $106.6 million in three months ended September 30, 2019. Brazil revenues declined primarily due to ~~$213.4~~the unfavorable impact of foreign exchange rates. We believe unfavorable foreign exchange rates negatively impacted Brazil segment revenues for the three months ended September 30, 2020 over the comparable period in 2019, by approximately $28 million. These decreases were partially offset by organic growth in Brazil segment revenues of approximately 1%.

International segment revenues, net

International segment revenues were $121.9 million in the three months ended September 30, ~~2017, an increase~~2020, a decrease of ~~$74.9~~$9.9 million or ~~54.0%. 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% 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 positive impact on our International segment revenue for the three months ended September 30, 2017 over the comparable period in 2016 of approximately $6 million. Changes in foreign exchange rates and fuel price had favorable impacts on consolidated revenues of approximately $4 million and $2 million, respectively.

~~Consolidated operating expenses~~

~~Merchant commissions.~~ ~~Merchant commissions decreased~~7.5%, from ~~$28.2~~$131.8 million in the three months ended September 30, ~~2016~~2019. International revenues declined primarily due to ~~$27.7~~decreases in volume as a result of the COVID-19 pandemic. Organically, International segment revenues were down approximately 6%. The macroeconomic environment for the three months ended September 30, 2020 over the comparable period in 2019 was relatively neutral.

Revenues, net by geography and product category. Set forth below are further breakdowns of revenues, net by geography and product category for the three months ended September 30, 2020 and 2019 (in millions).


	Three Months Ended September 30,
Revenues, net by Geography*	2020				2019
(Unaudited)	Revenues, net		% of Total Revenues, net		Revenues, net		% of Total Revenues, net
United States	$	357	61	%	$	414	61	%
Brazil	80		14	%	106		16	%
United Kingdom	70		12	%	68		10	%
Other	78		13	%	93		14	%
Consolidated revenues, net	$	585	100	%	681		100	%

* Columns may not calculate due to rounding.

Table of Contents


	Three Months Ended September 30,
Revenues, net by Product Category*1	2020				2019
(Unaudited)	Revenues, net		% of Total Revenues, net		Revenues, net		% of Total Revenues, net
Fuel	$	255	44	%	$	296	43	%
Corporate Payments	107		18	%	120		18	%
Tolls	68		12	%	89		13	%
Lodging	53		9	%	56		8	%
Gift	39		7	%	48		7	%
Other	64		11	%	72		11	%
Consolidated revenues, net	$	585	100	%	$	681	100	%


1 Reflects certain reclassifications of revenue between product categories as the Company realigned its Corporate Payments business, resulting in reclassification of payroll paycard revenue from Corporate Payments to Other.
*Columns may not calculate due to rounding.

Consolidated operating expenses

Processing. Processing expenses were $119.9 million in the three months ended September 30, ~~2017,~~2020, a decrease of ~~$0.5~~$15.2 million or ~~1.9%. This decrease was~~11.2%, from $135.0 million in the comparable prior period. Decreases in processing expenses were primarily due to the ~~fluctuation~~favorable impact of fluctuations in foreign exchange rates of approximately $6 million and lower variable costs due to reduced sales volumes and expense reductions in response to the ~~margin between the wholesale cost and retail price~~COVID-19 pandemic, partially offset by expenses related to acquisitions completed in 2019 of ~~fuel.~~approximately $3 million.

~~Processing.~~ ~~Processing~~Selling. Selling expenses ~~increased from $96.2~~were $46.8 million in the three months ended September 30, ~~2016~~2020, a decrease of $5.0 million or 9.7%, from $51.8 million in the comparable prior period. Decreases in selling expenses were primarily due to ~~$111.3~~lower commissions and other variable costs due to reduced sales volumes and the favorable impact of fluctuations in foreign exchange rates of approximately $2 million.

General and administrative. General and administrative expenses were $90.9 million in the three months ended September 30, ~~2017, an increase~~2020, a decrease of ~~$15.1~~$7.2 million or ~~15.6%. Increases~~7.3% from $98.1 million in ~~processing~~the comparable prior period. The decrease in general and administrative expenses ~~were~~was primarily due to ~~expenses related to acquisitions completed in 2016 and 2017~~decreased stock based compensation expense of approximately ~~$14~~$4 million, decreased discretionary spending and the favorable impact of fluctuations in foreign exchange rates of approximately $3 million. These decreases were partially offset by an increase in other professional fees of approximately $1 million and the impact of ~~foreign exchange rates and incremental spend due to increases~~acquisitions completed in ~~volume. These increases were partially offset by the impact of disposition of the NexTraq business~~2019 of approximately $3 ~~million~~million.

Depreciation and ~~lower bad debt expense of approximately $2 million.~~

~~Selling.~~ ~~Selling~~amortization. Depreciation and amortization expenses ~~increased from $34.2~~were $63.5 million in the three months ended September 30, ~~2016~~2020, a decrease of $3.9 million or 5.7%, from $67.3 million. Decreases in depreciation and amortization expenses were primarily due to ~~$45.1~~the favorable impact of fluctuations in foreign exchange rates of approximately $4 million and certain assets being fully amortized as of the beginning of the current period, partially offset by expenses related to acquisitions completed in 2019 of approximately $2 million.

Investment loss. Investment loss of $1.3 million in the three months ended September 30, ~~2017,~~2020 relates to market value gains and losses recorded each period on an ~~increase~~investment in a trading security, which we sold during the third quarter of $10.9 million, or 31.8%. Increases in spending were primarily due to ongoing incremental expenses related to acquisitions completed in 2016 and 2017 of approximately $9 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.2020.

~~General and administrative.~~ ~~General and administrative expenses increased from $77.9~~

Interest expense, net. Interest expense, net was $31.4 million in the three months ended September 30, ~~2016 to $92.0~~2020, a decrease of $5.1 million or 14.0%, from $36.5 million in the ~~three months ended September 30, 2017, an increase of $14.1 million, or 18.1%.~~comparable prior period. The ~~increase~~decrease in interest expense was primarily due to ~~ongoing expenses related to acquisitions completed~~decreases in ~~2016~~LIBOR 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~~lower borrowings on our Securitization Facility, 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 million in the three months ended September 30, 2016 to $69.2 million in the three months ended September 30, 2017, an increase of $12.1 million, or 21.1%. The increase was primarily due to amortization of intangible assets 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 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 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, compared to other expense, net of $0.3 million in the three 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 $17.8 million in the three months ended September 30, 2016 to $29.3 million in the three months ended September 30, 2017, an increase of $11.5 million, or 64.7%. 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.~~repurchase our common stock. 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,
(Unaudited)	2020		2019
Term loan A	1.66	%	3.73	%
Term loan B	1.91	%	4.25	%
Revolving line of credit A, B & C USD Borrowings	1.67	%	3.87	%
Revolving line of credit B GBP Borrowings	1.57	%	2.21	%
Foreign swing line	1.55	%	2.17	%

Table of Contents

Three Months Ended September 30,
(Unaudited) 2017 2016
Term loan A 2.98 % 1.99 %
Term loan B 3.32 % 3.75 %
Domestic Revolver A 2.99 % 2.08 %
Foreign Revolver A 2.00 % 1.77 %
Foreign swing line 1.97 % 1.73 %

There were no borrowings on the revolving D facility in 2020. The average unused ~~credit~~ facility fee for ~~Domestic Revolver A~~the Credit Facility excluding the revolving D facility was ~~0.35%~~ ~~and~~ 0.30% in the three month period ~~ending~~ ended September 30, ~~2017~~ ~~and~~ ~~2016, respectively.~~2020. On August 20, 2020, we terminated the revolving D facility.

~~Loss on extinguishment~~On January 22, 2019, we entered into three interest rate swap cash flow contracts. The objective of ~~debt.~~ ~~Loss on early extinguishment~~these interest rate swap contracts is to reduce the variability of ~~debt of $3.3 million relates to our write-off of debt issuance costs~~cash flows in the previously unhedged interest payments associated with $2 billion of variable rate debt, tied to the ~~refinancing~~one month LIBOR benchmark interest rate. During the three months ended September 30, 2020, as a result of ~~our existing credit facility during~~these swap contracts, we incurred additional interest expense of $12.2 million or 2.39% over the ~~third quarter~~average LIBOR rates on $2 billion of ~~2017.~~borrowings.

Provision for income taxes. The provision for income taxes ~~increased from $40.6~~and effective tax rate were $46.6 million and 19.8%, respectively, in the three months ended September 30, ~~2016 to $124.7~~2020, a decrease of $20.4 million and 310 basis points from $67.0 million and 22.9%, respectively, in the three months ended September 30, ~~2017, an increase of $84.1 million, or 207.2%.~~2019. 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 increased from 23.9%~~The decrease in the provision for ~~three months ended September 30, 2016 to 38.1% for the three months ended September 30, 2017.~~income taxes was driven primarily by lower pre-tax earnings. The ~~2017~~decrease in adjusted tax rate was ~~impacted by the gain on sale of the NexTraq business of $175 million, all at the higher U.S. tax rate, and the Masternaut impairment charge~~due primarily to an increase in the quarter, which had no corresponding tax benefit. Our tax rate in the quarter was 29.4%, excluding the impact of the NexTraq sale, investment impairment and loss on extinguishment of debt. The 2016 tax rate was favorably impacted by a one-time nonrecurring net gain at our Masternaut investment that favorably impacted pre-tax earnings, but was not subject to income tax. The 2016 rate was also favorably impacted by higher excess tax benefits on ~~share-based compensation~~stock option exercises in 2020 over the ~~third quarter of 2016 versus the third quarter of 2017.~~comparable period in 2019.

~~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~~decreased to $188.8 million in the three months ended September 30, ~~2016 to $202.8~~2020, a decrease of $37.0 million or 16.4%, from $225.8 million in the three months ended September 30, ~~2017, an increase of $73.2 million, or 56.5%.~~2019.

Operating income and operating margin

Consolidated operating income. Operating income ~~increased from $191.1~~was $264.5 million in the three months ended September 30, ~~2016 to $232.6~~2020, a decrease of $64.6 million or 19.6%, from $329.1 million in the ~~three months ended September 30, 2017, an increase of $41.6 million, or 21.8%.~~comparable prior period. Our operating margin was ~~39.4%~~45.2% and ~~40.3%~~48.3% for the three months ended September 30, ~~2016~~2020 and ~~2017,~~2019, 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,These decreases were driven primarily by ~~favorable~~decreases in volume as a result of the COVID-19 pandemic, unfavorable movements in the foreign exchange rates of approximately $13 million and lower fuel prices ~~and fluctuations in foreign exchange rates.~~of approximately $9 million. These ~~increases~~decreases were partially offset by the ~~negative~~favorable impact of ~~higher amortization~~fuel spread margins of approximately $4 million 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~~lower stock based compensation ~~of approximately $7 million and the disposition of the NexTraq business in July 2017 of approximately $4 million.~~expense.

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

North America segment operating income. North America operating income ~~increased from $135.8~~was $153.3 million in the three months ended September 30, ~~2016 to $138.7~~2020, a decrease of $52.2 million or 25.4%, from $205.6 million in the comparable prior period. North America operating margin was 39.9% and 46.4% for the three months ended September 30, 2020 and 2019, respectively. These decreases were primarily driven by decreases in volume as a result of the COVID-19 pandemic and lower fuel prices of approximately $9 million. These decreases were partially offset by the favorable impact of fuel spread margins of approximately $4 million and lower stock based compensation expense.

Brazil segment operating income. Brazil operating income was $35.6 million in the three months ended September 30, ~~2017, an increase~~2020, a decrease of ~~$3.0~~$6.9 million or ~~2.2%. North America~~16.2%, from $42.5 million in the comparable prior period. Brazil operating margin was ~~39.3%~~44.7% and ~~38.1%~~39.8% for the three months ended September 30, ~~2016~~2020 and ~~2017,~~2019, respectively. The decrease in operating income was primarily driven by the unfavorable impact of foreign exchange rates of approximately $13 million, partially offset by organic growth in Brazil segment revenues of approximately 1%. The increase in operating ~~income~~margin was due ~~primarily~~ to ~~organic growth and the positive impact of the macroeconomic environment~~lower bad debt expense of approximately $1$5 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.~~2020.

International segment operating income. International operating income ~~increased from $55.3~~was $75.6 million in the three months ended September 30, ~~2016 to $93.9~~2020, a decrease of $5.5 million or 6.8%, from $81.1 million in the ~~three months ended September 30, 2017, an increase of $38.6 million, or 69.8%.~~comparable prior period. International operating margin was ~~39.9%~~62.0% and ~~44.0%~~61.6% for the three months ended September 30, ~~2016~~2020 and ~~2017,~~2019, respectively. The ~~increase~~decrease 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~~decreases in ~~foreign exchange rates. The higher operating margin was driven by~~volume as a result of the ~~positive impact~~COVID-19 pandemic.

Table 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.Contents

Nine months ended September 30, ~~2017~~2020 compared to the nine months ended September 30, ~~2016~~2019

The following table sets forth selected unaudited consolidated ~~statement~~statements of income data for the nine months ended September 30, ~~2017~~2020 and ~~2016~~2019 (in ~~thousands)~~millions, except percentages)*.


(Unaudited)	Nine Months Ended September 30, 2020			% of Total Revenues, net		Nine Months Ended September 30, 2019			% of Total Revenues, net		Increase (decrease)			% Change
Revenues, net:
North America	$	1,176.0		66.4	%	$	1,257.5		64.5	%	$	(81.6)		(6.5)	%
Brazil	253.7			14.3	%	315.9			16.2	%	(62.1)			(19.7)	%
International	341.9			19.3	%	376.6			19.3	%	(34.7)			(9.2)	%
Total revenues, net	1,771.5			100.0	%	1,950.0			100.0	%	(178.4)			(9.2)	%
Consolidated operating expenses:
Processing	474.8			26.8	%	384.6			19.7	%	90.3			23.5	%
Selling	145.0			8.2	%	152.9			7.8	%	(7.9)			(5.2)	%
General and administrative	283.7			16.0	%	297.6			15.3	%	(13.9)			(4.7)	%
Depreciation and amortization	190.1			10.7	%	205.7			10.5	%	(15.6)			(7.6)	%
Other operating, net	(0.5)			—	%	(1.5)			(0.1)	%	(1.0)			(67.4)	%
Operating income	678.3			38.3	%	910.6			46.7	%	(232.3)			(25.5)	%
Investment (gain) loss	(30.0)			(1.7)	%	15.7			0.8	%	(45.7)			NM
Other (income) expense, net	(10.5)			(0.6)	%	0.6			—	%	(11.1)			NM
Interest expense, net	99.5			5.6	%	115.1			5.9	%	(15.6)			(13.6)	%

Provision for income taxes	125.0			7.1	%	119.7			6.1	%	5.3			4.4	%
Net income	$	494.4		27.9	%	$	659.6		33.8	%	$	(165.2)		(25.0)	%
Operating income for segments:
North America	$	372.2				$	562.2				$	(190.0)		(33.8)	%
Brazil	104.5					126.9					(22.4)			(17.7)	%
International	201.6					221.5					(19.9)			(9.0)	%
Operating income	$	678.3				$	910.6				$	(232.3)		(25.5)	%
Operating margin for segments:
North America	31.7		%			44.7		%			(13.1)		%
Brazil	41.2		%			40.2		%			1.0		%
International	59.0		%			58.8		%			0.2		%
Consolidated	38.3		%			46.7		%			(8.4)		%

(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, net

Our consolidated revenues ~~increased from $1,316.6~~were $1,771.5 million, in the nine months ended September 30, ~~2016 to $1,639.5~~2020, a decrease of $178.4 million, or 9.2%, from $1,950.0 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~~2019. Consolidated revenues declined primarily due ~~to:~~

~~The~~to decreases in volume as a result of the COVID-19 pandemic. Organically, consolidated revenues were down approximately 8%. These decreases were partially offset by the impact of acquisitions ~~during 2016 and 2017, which contributed approximately $175 million~~completed in ~~additional revenue.~~

~~Organic growth~~2019. In addition, the first nine months 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~~2020 results reflect the impact of ~~our payment programs.~~the negative period over period impact of the macroeconomic environment.

Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a ~~positive~~negative impact on our consolidated ~~revenue~~revenues for the nine months ended September 30, ~~2017~~2020 over the comparable period

in ~~2016~~2019 of approximately ~~$17~~$60 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 foreignForeign exchange rates had an unfavorable impact on consolidated revenues of approximately $5$84 million, due to unfavorable fluctuations in foreign exchange rates primarily in Brazil, Mexico and ~~the United Kingdom in the nine months ended September 30, 2017 compared to 2016.~~Russia, and lower fuel prices

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had an unfavorable impact of $22 million. These ~~increases~~decreases were partially offset by the impact of ~~the disposition of the NexTraq business in July 2017~~favorable fuel spread margins of approximately ~~$10~~$45 million.

North America segment revenues, net

North America segment revenues ~~increased from $950.5~~were $1,176.0 million in the nine months ended September 30, ~~2016 to $1,037.4~~2020, a decrease of $81.6 million, or 6.5%, from $1,257.5 million in the nine months ended September 30, ~~2017, an increase~~2019. North America revenues declined primarily due to decreases in volume as a result of ~~$86.8 million, or 9.1%. The increase in our~~the COVID-19 pandemic. Organically, North America segment ~~revenue~~revenues were down approximately 12%.

This decrease was ~~primarily due to:~~

~~The~~partially offset by the impact of ~~our Cambridge acquisition~~acquisitions completed during 2019, as well as the ~~third quarter~~favorable impact 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.~~

margins. 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 the nine months ended September 30, ~~2017~~2020 over the comparable period in ~~2016~~2019 of approximately ~~$19~~$22 million, driven primarily by favorable fuel spread margins of approximately $45 million, partially offset by lower fuel prices of approximately $21 million and the unfavorable impact of foreign exchange rates in Canada of $2 million. ~~This~~

Brazil segment revenues, net

Brazil segment revenues were $253.7 million in the nine months ended September 30, 2020, a decrease of $62.1 million or 19.7%, from $315.9 million in nine months ended September 30, 2019. Brazil revenues declined primarily due to the unfavorable impact of foreign exchange rates. We believe unfavorable foreign exchanges rates negatively impacted Brazil segment revenues for the nine months ended September 30, 2020 over the comparable period in 2019, by approximately $73 million. These decreases were partially offset by organic growth in Brazil segment revenues of approximately 3%.

International segment revenues, net

International segment revenues were $341.9 million in the nine months ended September 30, 2020, a decrease of $34.7 million, or 9.2%, from $376.6 million in the nine months ended September 30, 2019. International revenues declined primarily due to decreases in volume as a result of the COVID-19 pandemic and the unfavorable impact of foreign exchange rates. Organically, International segment revenues were down approximately 7%. We believe unfavorable foreign exchange rates had a negative impact on our International segment revenues for the nine months ended September 30, 2020 over the comparable period in 2019 of approximately $9 million. These decreases were partially offset by the impact of an acquisition completed in 2019.

Revenues, net by geography and product category. Set forth below are further breakdowns of revenue by geography and product category for the nine months ended September 30, 2020 and 2019 (in millions).


	Nine Months Ended September 30,
Revenues, net by Geography*	2020				2019
(Unaudited)	Revenues, net		% of total revenues, net		Revenues, net		% of total revenues, net
United States	$	1,090	62	%	$	1,174	60	%
Brazil	254		14	%	316		16	%
United Kingdom	193		11	%	205		10	%
Other	235		13	%	256		13	%
Consolidated revenues, net	$	1,772	100	%	$	1,950	100	%

* Columns may not calculate due to rounding.


	Nine Months Ended September 30,
Revenues, net by Product Category*1	2020				2019
(Unaudited)			% of total revenues, net				% of total revenues, net
Fuel	$	797	45	%	$	874	45	%
Corporate Payments	319		18	%	329		17	%
Tolls	215		12	%	264		14	%
Lodging	150		8	%	148		8	%
Gift	108		6	%	133		7	%
Other	182		10	%	203		10	%
Consolidated revenues, net	$	1,772	100	%	$	1,950	100	%

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1Reflects certain reclassifications of revenue between product categories as the Company realigned its Corporate Payments business, resulting in reclassification of payroll paycard revenue from Corporate Payments to Other.

* Columns may not calculate due to rounding.

Consolidated operating expenses

Processing. Processing expenses were $474.8 million in the nine months ended September 30, 2020, an increase of $90.3 million, or 23.5%, from $384.6 million in the comparable prior period. Increases in processing expenses were primarily due to a write-off of a significant customer receivable in our foreign currency trading business of approximately $90 million in the first quarter of 2020, acquisitions completed in 2019 of approximately $23 million and an increase in credit losses of approximately $14 million. These increases were partially offset by the favorable impact of fluctuations in foreign exchange rates of approximately $23 million and lower variable costs due to reduced sales volumes and expense reductions in response to the COVID-19 pandemic.

Selling. Selling expenses were $145.0 million in the nine months ended September 30, 2020, a decrease of $7.9 million, or 5.2%, from $152.9 million in the nine months ended September 30, 2019. Decreases in selling expenses were primarily due to lower commissions and other variable costs due to reduced sales volumes and the favorable impact of fluctuations in foreign exchange rates of approximately $6 million, partially offset by expenses related to acquisitions completed in 2019 of approximately $4 million.

General and administrative. General and administrative expenses were $283.7 million in the nine months ended September 30, 2020, a decrease of $13.9 million, or 4.7% from $297.6 million in the comparable prior period. The decrease was primarily due to decreased stock based compensation expense of approximately $11 million, decreased discretionary spending and the favorable impact of fluctuations in foreign exchange rates of approximately $9 million. These decreases were partially offset by the impact of acquisitions completed in 2019 of approximately $13 million and professional fees of $7 million over the comparable prior period.

Depreciation and amortization. Depreciation and amortization expenses were $190.1 million in the nine months ended September 30, 2020, a decrease of $15.6 million, or 7.6% from $205.7 million in the comparable prior period. The decrease was primarily due to the favorable impact of ~~changes in fuel prices~~foreign exchange rates of approximately $12 million and ~~slightly higher fuel spread margins.~~

~~These increases were~~assets being fully amortized, partially offset by ~~the impact of the disposition of the NexTraq business~~expenses related to acquisitions completed in ~~July 2017~~2019 of approximately ~~$10~~$9 million.

~~International segment revenues~~

~~International segment revenues increased from $366.1~~Investment (gain) loss. Investment gain of $30.0 million in the nine months ended September 30, ~~2016~~2020 relates to ~~$602.2~~market value gains and losses recorded each period on an investment in a trading security, which we sold during the third quarter of 2020. The loss in 2019 was due to a non-cash impairment charge of $16 million recorded on a cost method investment.

Other (income) expense, net. Other income, net was $10.5 million in the nine months ended September 30, ~~2017, an increase~~2020, compared to other expense, net 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~~$0.6 million in the nine months ended September 30, ~~2016~~2019. Other income in 2020 includes a credit of approximately $7 million related to ~~$82.7~~a purchase price settlement in our Cambridge acquisition.

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Interest expense, net. Interest expense, net was $99.5 million in the nine months ended September 30, ~~2017, an an increase~~2020, a decrease of ~~$3.9~~$15.6 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~~13.6%, from ~~$256.7~~$115.1 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.comparable prior period. 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 increasedecrease in interest expense is primarily due to decreases in LIBOR and lower borrowings on our Securitization Facility, partially offset by 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.~~repurchase our common stock. 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.


	Nine Months Ended September 30,
(Unaudited)	2020		2019
Term loan A	2.23	%	3.89	%
Term loan B	2.53	%	4.41	%
Revolving line of credit A, B & C USD Borrowings	2.27	%	3.97	%
Revolving line of credit B GBP Borrowings	1.79	%	2.22	%
Foreign swing line	1.73	%	2.17	%

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 %

There were no borrowings on the revolving D facility in 2020. The average unused ~~credit~~ facility fee for ~~Domestic Revolver A~~the Credit Facility excluding the revolving D facility was ~~0.35% and~~ 0.30% in the nine month period ended September 30, 2020. The fixed unused facility fee for the revolving D facility was 0.375% for the nine month period ending September 30, ~~2017 and 2016, respectively.~~2020. On August 20, 2020, we terminated the revolving D facility.

~~Loss on extinguishment~~On January 22, 2019, we entered into three interest rate swap contracts. The objective of ~~debt.~~ ~~Loss on extinguishment~~these interest rate swap contracts is to reduce the variability of ~~debt of $3.3 million relates to our write-off of debt issuance costs~~cash flows in the previously unhedged interest payments associated with $2 billion of variable rate debt, tied to the ~~refinancing~~one month LIBOR benchmark interest rate. During the nine months ended September 30, 2020, as a result of ~~our existing credit facility during~~these swaps, we incurred additional interest expense of approximately $26.9 million or 1.78% over the ~~third quarter~~average LIBOR rates on $2 billion of ~~2017.~~borrowings.

Provision for income taxes. The provision for income taxes ~~increased from $132.5~~and effective tax rate was $125.0 million and 20.2% in the nine months ended September 30, ~~2016 to $227.8 million in the nine months ended September 30, 2017,~~2020, an increase of ~~$95.3~~$5.3 million, or ~~71.9%.~~4.4% change, from $119.7 million and 15.4%, respectively, in the comparable prior period. 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%~~The provision for ~~the nine months ended September 30, 2017 as compared to 27.1%~~income taxes in the nine months ended September 30, ~~2016. The~~2020 included a $9.8 million increase in ~~the provision~~a reserve for uncertain tax positions related to prior years. The comparable period of 2019 included an income ~~taxes was~~tax benefit of $65 million due ~~primarily~~ to the ~~pretax~~final disposition of our remaining interest in Masternaut, which allowed us to carryback the capital loss on our investment in Masternaut and offset it against a previously recorded capital gain onfrom the sale of Nextraq in 2017. Excluding these discrete tax items, income tax expense would be $66.0 million lower in the ~~Nextraq business of $175 million at~~nine months ended September 30, 2020 than the ~~higher U.S.~~comparable period in 2019, primarily due to a decrease in pre-tax earnings. Excluding these discrete items, our tax rate ~~all at~~for the ~~higher U.S.~~nine months ended September 30, 2020 would have been 18.6% compared to 23.3% in 2019. The decrease in the tax rate ~~and the Masternaut impairment charge in the quarter, which had no corresponding tax benefit. The 2016 tax rate~~excluding these discrete items was ~~favorably impacted by a one-time nonrecurring net gain at our Masternaut investment that favorably impacted pre-tax earnings, but was not subject~~primarily due 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, theadditional excess tax benefit on ~~share based compensation is part of~~stock option exercises in 2020 over 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.~~comparable period in 2019.

Net income. For the reasons discussed ~~above,~~above, our net income ~~increased from $357.0~~was $494.4 million in the nine months ended September 30, ~~2016 to $457.5~~2020, a decrease of $165.2 million, or 25.0% from $659.6 million in the nine months ended September 30, ~~2017, an increase of $100.5 million, or 28.2%.~~2019.

Operating income and operating margin

Consolidated operating income. Operating income ~~increased from $538.2~~was $678.3 million in the nine months ended September 30, ~~2016 to $643.7~~2020, a decrease of $232.3 million, or 25.5%, from $910.6 million in the ~~nine months ended September 30, 2017, an increase of $105.6 million, or 19.6%.~~comparable prior period. Our operating margin was ~~40.9%~~38.3% and ~~39.3%~~46.7% for the nine months ended September 30, ~~2016~~2020 and ~~2017,~~2019, respectively. ~~The increase~~These decreases were primarily driven by the write-off of a significant customer receivable in ~~operating income was primarily due to~~our cross border payments business of approximately $90 million, decreases in volume as a result of the COVID-19 pandemic, unfavorable movements in foreign exchange rates of approximately $34 million, lower fuel prices of approximately $22 million and the negative impact of acquisitions completed in 2016 and 2017, organic growth, as well as the positive impact of the macroeconomic environment of approximately $14 million, driven primarily by favorable fuel prices, partially offset by the unfavorable impact of fluctuations in foreign exchange rates.2019. These ~~increases~~decreases were partially offset by the ~~negative~~favorable impact of ~~higher amortization and depreciation expense related to acquisitions completed in 2016 and 2017, additional bad debt expense~~fuel spread margins of $11 million, due to bad debt inherent in the acquired STP business, additional stock based compensation of approximately $19 million and the disposition of the NexTraq business in July 2017 of approximately $4$45 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~~was $372.2 million in the nine months ended September 30, ~~2016~~2020, a decrease of $190.0 million, or 33.8%, from $562.2 million in the comparable prior period. North America operating margin was 31.7% and 44.7% and for the nine months ended September 30, 2020 and 2019, respectively. These decreases were due primarily to ~~$394.6~~the write-off of a significant customer receivable in our cross border payments business

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of approximately $90 million, decreases in volume as a result of the COVID-19 pandemic, lower fuel prices of approximately $21 million and the negative impact of acquisitions completed in 2019. These decreases were partially offset by the favorable impact of fuel spread margins of $45 million and favorable movements in the foreign exchange rates of $3 million.

Brazil segment operating income. Brazil operating income was $104.5 million in the nine months ended September 30, ~~2017, an increase~~2020, a decrease of ~~$27.4~~$22.4 million, or ~~7.5%. North America~~17.7%, from $126.9 million in the comparable prior period. Brazil operating margin was ~~38.6%~~41.2% and ~~38.0%~~40.2% for the nine months ended September 30, ~~2016~~2020 and ~~2017,~~2019, respectively. The ~~increase~~decrease in operating income was due primarily to ~~organic growth and~~ the ~~positive~~unfavorable impact of ~~the macroeconomic environment~~foreign exchange rates of ~~approximately $18 million, driven by primarily by higher fuel prices. These increases were~~$31 million. The decrease was partially offset by ~~additional stock based compensation~~organic growth in Brazil segment revenues of approximately $14 million, 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 million.3%.

International segment operating income. International operating income ~~increased from $171.0~~was $201.6 million in the nine months ended September 30, ~~2016 to $249.1~~2020, a decrease of $19.9 million, or 9.0%, from $221.5 million in the ~~nine months ended September 30, 2017, an increase of $78.1 million, or 45.7%.~~comparable prior period. International operating margin was ~~46.7%~~59.0% and ~~41.4%~~58.8% for the nine months ended September 30, ~~2016~~2020 and ~~2017,~~2019, respectively. The ~~increase~~decrease 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~~decreases in volume as a result of the ~~acquired STP business, additional stock based compensation of approximately $5 million~~COVID-19 pandemic and the ~~negative~~unfavorable impact of the macroeconomic environment of approximately $4$6 million, primarily driven ~~primarily~~ by ~~the~~ unfavorable ~~impact of fluctuations~~movements in foreign exchange rates.

Liquidity and capital resources

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

Sources of ~~liquidity~~

liquidity. We believe that our current level of cash and borrowing capacity under our Credit Facility and Securitization Facility (each defined below), together with expected future cash flows from operations, will be sufficient to meet the needs of our existing operations and planned requirements for the foreseeable future, based on our current assumptions. At September 30, ~~2017,~~2020, we had approximately $1.6 billion in total liquidity, consisting of approximately $800 million available under our Credit Facility (defined below) and available cash ~~balances totaled $1,018.3~~of $789 million, ~~with approximately $183.5 million restricted.~~net of restricted cash. Restricted cash represents customer deposits in the Czech Republic and in our Comdata business in the U.S., as well as collateral received from customers for cross-currency transactions in our Cambridge business, which we are restricted from ~~using~~use other than to repay customer ~~deposits.~~

At September 30, 2017, cash and cash equivalents held in foreign subsidiaries where we have determined we are permanently reinvested is $509.3 million. All of the cash and cash equivalents held by our foreign subsidiaries, excluding restricted cash, are available for general corporate purposes. Our current intent is to permanently reinvest these funds outside of the U.S. Our current expectation for funds held in our foreign subsidiaries is to use the funds to finance foreign organic growth, to pay for potential future foreign acquisitions and to repay any foreign borrowings that may arise from time to time. We currently believe that funds generated from our U.S. operations, along with available borrowing capacity in the U.S. will be sufficient to fund our

U.S. operations for the foreseeable future, and therefore do not foresee a need to repatriate cash held by our foreign subsidiaries in a taxable transaction to fund our U.S. operations. However, if at a future date or time these funds are needed for our operations in the U.S. or we otherwise believe it is in our best interests to repatriate all or a portion of such funds, we may be required to accrue and pay U.S. taxes to repatriate these funds. No assurances can be provideddeposits, as well 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.~~

secure and settle cross-currency transactions.

We also 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,~~2020, we had no additional liquidity under our Securitization Facility.

Additionally, we have immaterial outside basis differences in our investments in foreign subsidiaries and have not recorded incremental income taxes for any additional outside basis differences, as these amounts continue to be indefinitely reinvested in foreign operations.

We cannot assure you that our assumptions used to estimate our liquidity requirements will remain accurate due to the unprecedented nature of the disruption to our operations and the unpredictability of the COVID-19 global pandemic. As a consequence, our estimates of the duration of the pandemic and the severity of the impact on our future earnings and cash flows could change and have a material impact on our results of operations and financial condition. The following have impacted or may impact our liquidity:

•The negative impact of the COVID-19 global pandemic on our business as discussed above under “Impact of COVID-19 on Our Business”.

•In April 2020, we amended the Credit Agreement to add a $250 million revolving D 364 day facility as a precautionary measure to provide us with additional financial flexibility to manage our business with a safety-first emphasis during the unknown duration and impact of the COVID-19 global pandemic. On August 20, 2020, management determined that, due to a recovery in our business operations and other safeguards being in place, the revolving D facility was no longer necessary and the facility was terminated.

•We have principal and interest obligations under our debt and ongoing financial covenants under those debt facilities.

•During the third quarter, we repurchased approximately 1 million shares in connection with our stock repurchase program for $238.4 million. At September 30, ~~2017,~~2020, we had approximately ~~$612 million available~~$1.06 billion remaining repurchase authorization under our ~~Credit Facility.~~current share repurchase program.

~~Based~~

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•We have never declared or paid any dividends on our ~~current forecasts~~common stock and ~~anticipated market conditions,~~do not anticipate paying cash dividends to holders of our common stock in the foreseeable future.

•While we ~~believe that our current cash balances, our available borrowing capacity~~intend to employ a disciplined 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, andhighly selective approach, we may ~~elect to raise additional funds for these purposes~~pursue strategic business acquisitions in the ~~future, either through the issuance of debt or equity securities.~~ future.

•We ~~may not be able~~intend to ~~obtain additional financing on terms favorable to us, if at all.~~balance discretionary spending and hiring with revenue and volume trends.

Cash flows

The following table summarizes our cash flows for the nine ~~months~~month periods ended September 30, ~~2017~~2020 and ~~2016~~2019 (in millions).


	Nine Months Ended September 30,
(Unaudited)	2020		2019
Net cash provided by operating activities	$	1,214.7	$	791.1
Net cash used in investing activities	(74.6)		(383.5)
Net cash used in financing activities	(1,221.9)		(260.5)

Nine Months Ended September 30,
(Unaudited) 2017 2016
Net cash provided by operating activities $ 419.5
$ 404.3
Net cash used in investing activities (341.6 ) (1,371.5 )
Net cash provided by financing activities 250.1
976.4

Operating activities. Net cash provided by operating activities ~~increased from $404.3~~was $1,214.7 million in the nine months ended September 30, ~~2016 to $419.5~~2020, an increase from $791.1 million in the ~~nine months ended September 30, 2017. Included~~comparable prior period. The increase in operating cash flows ~~from operating activities were~~was primarily due to 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 ~~during~~in the nine months ended September 30, ~~2017~~2020 over the comparable period in ~~2016.~~2019.

Investing activities. Net cash used in investing activities ~~decreased from $1,371.5~~was $74.6 million in the nine months ended September 30, ~~2016~~2020 compared to ~~$341.6~~$383.5 million in the nine months ended September 30, ~~2017.~~2019. The decrease was primarily due to the ~~reduction~~decrease in cash ~~outlay~~paid for acquisitions in the nine months ended September 30, 2020 over the comparable period in 2019 and the proceeds ~~received~~ from the sale of ~~our Nextraq business during~~an investment in the third quarter of ~~2017.~~2020.

Financing activities. Net cash ~~provided by~~used in financing activities ~~decreased from $976.4~~was $1,221.9 million in the nine months ended September 30, ~~2016~~2020, compared to ~~$250.1~~$260.5 million in the nine months ended September 30, ~~2017.~~2019. The ~~decrease in~~increased use of cash ~~provided by financing activities~~ is primarily due to an increase in ~~debt repayments~~repurchases of ~~$437.4 million on our credit facility in the nine months ended September 30, 2017 as compared to 2016, increased spending to repurchase~~ our common stock of ~~$367~~$729 million and ~~a decrease in~~decreased net 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~~Facility of $389 million in the nine months ended September 30, ~~2016 to $49.5~~2020 over the comparable period in 2019, partially offset by increased net borrowings on our Credit Facility of $179 million.

Capital spending summary

Our capital expenditures were $55.0 million in the nine months ended September 30, ~~2017,~~2020, an increase of ~~$7.6~~$6.3 million or ~~18.1%. This increase is primarily~~13.0%, from $48.7 million in the comparable prior period due to ~~increased spending on strategic projects, including~~the impact of acquisitions and continued ~~investment~~investments in ~~our operating systems, as well as incremental spending related to acquisitions in 2016 and 2017.~~

technology.

Credit Facility

~~FleetCor~~FLEETCOR Technologies Operating Company, LLC, and certain of our domestic and foreign owned subsidiaries, as designated co-borrowers (the “Borrowers”), ~~has~~are parties to a ~~$4.33~~$5.11 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~~$350 million as of September 30, ~~2017.~~2020. 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~~dollars or New Zealand ~~Dollars.~~dollars. The Credit Agreement also includes an accordion feature for borrowing an additional $750 million in term loan A, term loan B, revolving A or revolving B facility 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 ~~January 20, 2017,~~April 24, 2020, we entered into the ~~second~~eighth amendment to the Credit Agreement ~~which established~~to add a ~~new term B loan.~~$250 million revolving D facility. On August 20, 2020, we terminated the revolving D facility. The maturity date for the term loan A and revolving credit facilities A, B and C is December 19, 2023. The maturity date for the term loan B is August 2, ~~2017, we entered into the third amendment to~~2024.

Interest on amounts outstanding under 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~~(other than the term ~~B maturity date is August 2,2024. The term A and revolver pricing remains~~loan B) accrues based on the ~~same and~~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 ~~pricing was reduced by 25 basis points to LIBOR~~facility accrues based on the Eurocurrency Rate plus ~~200 basis points.~~1.75% for Eurocurrency Loans or the Base Rate plus 0.75% for Base Rate

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Loans. The Eurocurrency rate has a 0% floor. In addition, we pay a quarterly commitment fee at a rate per annum ranging from ~~0.20%~~0.25% to ~~0.40%~~0.35% of the daily unused portion of the Credit Facility.

At September 30, 2020, the interest rate on the term loan A was 1.65%, the interest rate on the term loan B was 1.90%, the interest rate on the revolving A facility was 1.65%, and the interest rate on the revolving B facility was 1.55% for GBP borrowings. The unused credit ~~facility.~~

The Credit Agreement also contains an accordion feature for borrowing an additional $750 million in term A or revolver A and term B. Proceeds from the Credit Facility may be used for working capital purposes, acquisitions, and other general corporate purposes.facility fee was 0.30% at September 30, 2020.

The term loans are payable in quarterly installments and are due on the last business day of each March, June, September, and December with the final principal payment due on the respective maturity date. Borrowings on the revolving line of credit are repayable at our option of one, two, three or ~~nine~~six months after borrowing, depending on the term of the borrowing on the facility. Borrowings on the foreign swing line of credit are due no later than ~~ten~~twenty 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,~~2020, 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 to 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,~~2020, we had ~~$2,690~~$3.0 billion in borrowings outstanding on the term loan A, net of discounts and $338.1 million in borrowings outstanding on the term A loan ~~excluding~~B, net of discounts. We have unamortized debt issuance costs of $5.4 million related to the ~~related debt discount, $350 million~~revolving facilities as of September 30, 2020 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 million~~and debt issuance costs related to the term ~~A facility~~loans of $7.7 million and ~~$0.7~~$1.0 million ~~related to the term B facility~~ at September 30, ~~2017.~~2020, respectively.

During the nine months ended September 30, ~~2017,~~2020, we made principal payments ~~of $388.7~~of $123.6 million on the term loans, ~~$715.0 million~~$1.3 billion on the ~~domestic~~ revolving ~~A facility, $89.8 million on the foreign revolving A facility~~facilities, and ~~$52.7~~$92.8 million on the swing line revolving A facility. In addition, we made principal payments on a notes payable related to an acquisition of $10.6 million.

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 pay a fixed monthly rate and receive one month LIBOR. We reclassified approximately $26.9 million of losses from accumulated other comprehensive income into interest expense during the nine months ended September 30, 2020 as a result of these hedging instruments.

Securitization Facility

We are a party to a $1.0 billion receivables purchase agreement among ~~FleetCor~~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. The ~~current purchase limit under the Securitization Facility is $950 million and the~~ Securitization Facility expires on November 14, ~~2017. The Securitization Facility~~2020 and contains ~~certain~~ customary financial covenants. On April 24, 2020, we reduced our Securitization Facility commitment from $1.2 billion to $1.0 billion. On August 21, 2020, we executed a commitment letter to enter into the seventh

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amendment to the Securitization Facility effective November 13, 2020. This amendment will extend the facility termination date to November 12, 2021, add an uncommitted accordion to increase the purchase limit by up to $500.0 million, revise obligor concentration limits and reserve calculations, add a 0.375% LIBOR floor and modify certain swing line terms.

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 0.16% plus 0.88% and ~~0.85%~~1.80% plus ~~0.90%~~0.88% as of September 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively. In connection with the proposed seventh amendment discussed above, the program fee for LIBOR borrowings will increase from 0.90% to 1.25%, and the program fee for Commercial Paper Rate borrowing will increase from 0.80% to 1.15%. The unused facility fee is payable at a rate of 0.40% per annum as of September 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively. We have unamortized debt issuance costs of $1.6 million and $0.7 million related to the Securitization Facility as of September 30, 2020 and December 31, 2019, respectively, 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.~~2020.

Stock Repurchase Program

~~On February 4, 2016, our~~The Company's Board of Directors has approved a stock repurchase program ~~(the~~(as updated from time to time, the "Program") ~~under which we may purchase up~~, authorizing the Company to ~~an aggregate of $500 million of our~~repurchase its common stock ~~over the following 18 month period.~~from time to time until February 1, 2023. On ~~July 27, 2017,~~October 22, 2020, our Board ~~of Directors authorized an increase in~~increased the aggregate size of the Program by ~~an additional $250 million and an extension~~$1 billion, to $4.1 billion. Since the beginning of the Program, by14435566 shares have been repurchased for an ~~additional 18 months. On November 1, 2017, we announced that our Board~~aggregate purchase price of ~~Directors had authorized an increase in~~$3.0 billion, leaving the ~~size of the Program by an additional $350 million, resulting in total aggregate repurchases authorized~~Company up to approximately $1.06 billion available under the Program ~~of $1.1 billion. With the increase and giving effect to our $590 million of previous~~for future repurchases ~~we may repurchase up to $510 million~~ in shares of ~~our~~its common ~~stock at any time prior to February 1, 2019.~~stock.

On ~~August 3, 2017, as part of~~December 18, 2019, the ~~Program, we~~Company entered an ~~Accelerated Share Repurchase~~accelerated stock repurchase agreement ("2019 ASR Agreement") with a third-party financial institution to repurchase ~~$250~~$500 million of its common stock. Pursuant to the 2019 ASR Agreement, wethe Company delivered ~~$250~~$500 million in cash and received ~~1,491,647~~1,431,989 shares based on a stock price of ~~$142.46~~$285.70 on ~~August 7, 2017.~~December 18, 2019. The 2019 ASR Agreement was completed on ~~September 7, 2017,~~February 20, 2020, at which time wethe Company received ~~263,012~~175,340 additional shares based on a final weighted average per share purchase price during the repurchase period of ~~$142.48.~~$311.08.

We accounted for the 2019 ASR Agreement as two separate transactions: (i) as shares of reacquired common stock for the shares delivered to usthe Company upon effectiveness of ~~the~~each ASR ~~Agreement~~agreement and (ii) as a forward contract indexed to ~~our~~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 ~~our~~the 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~~capital.

Pending Acquisition

On September 17, 2020, we signed a definitive agreement to ~~treasury stock upon completion of the ASR agreement.~~

~~Since the beginning of the Program, 4,114,104 shares~~acquire Associated Foreign Exchange (AFEX), a cross-border payment solutions provider, 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 $65.8approximately $450 million. The ~~gain on the disposal~~transaction is ~~included~~expected to close 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.~~2021, subject to regulatory approval and standard closing conditions.

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~~revenues 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 ~~nine~~three months ended September 30, ~~2017, other than noted in footnote 1, "Summary of Significant Accounting Policies",~~2020, 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

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any critical accounting policies from the year ended December 31, ~~2016.~~2019. 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, ~~2016~~2019 and our summary of significant accounting policies in Note 1 of our ~~notes~~Notes to the ~~unaudited consolidated financial statements~~Unaudited Consolidated Financial Statements in this Quarterly Report on 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~~each non-GAAP financial measure to the most directly comparable financial measure calculated in accordance with GAAP, and discuss the reasons that we believe this information is useful to management and may be useful to investors.

~~Adjusted revenues~~

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

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

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

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

~~Adjusted net income and adjusted net income per diluted share~~

We have defined the non-GAAP measure adjusted net income as net income as reflected in our statement of income, adjusted to eliminate (a) non-cash stock based compensation expense related to 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) our proportionate share of amortization of intangible assets at our Masternaut investment, (e) a non-recurring net gain at our Masternaut investment (f) impairment of our Masternaut investment, (g) net gain on disposition of business, (h) loss on extinguishment of debt, and (i) a non-recurring loss due to merger of entities.

~~We have defined the non-GAAP measure adjusted net income per diluted share as the calculation previously noted divided~~metric 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 investment and business is 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

*Columns may not calculate due to impact of rounding.

¹Excludes the results of our Masternaut investment on our effective tax rate, as results from our Masternaut investment are reported within the Consolidated Income Statements on a post-tax basis and no tax-over-book outside basis differences related to our investment reversed during 2016 or are expected to reverse in 2017. Also excludes the net gain realized upon our disposition of NexTraq, representing a pretax gain of $175.0 and tax on gain of $65.8. The tax on the gain is included in "Net gain on disposition of business".

~~Pro Forma and Macro Adjusted Revenue and Transactions by Product~~

product. We define the 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):*

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	Revenue						Transactions						Revenues, net				Key Performance Metric
	Three Months Ended September 30,						Three Months Ended September 30,						Three Months Ended September 30,				Three Months Ended September 30,
(Unaudited)	2017			2016			2017		2016⁴			(Unaudited)	2020*		2019*		2020*	2019*
FUEL CARDS
Pro forma and macro adjusted^2,3	$	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 adjusted^2,3	$	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 adjusted^2,3	$	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 adjusted^2,3	$	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 adjusted^2,3	$	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 adjusted^2,3	$	58.1		$	57.1		$	19.4	$	20.4
FUEL - TRANSACTIONS												FUEL - TRANSACTIONS
Pro forma and macro adjusted												Pro forma and macro adjusted	$	262.4	$	295.6	113.6	129.4
Impact of acquisitions/dispositions	—			10.3			—		0.4			Impact of acquisitions/dispositions	—		—		—	—
Impact of fuel prices/spread	—			—			—		—			Impact of fuel prices/spread	(4.5)		—		—	—
Impact of foreign exchange rates	0.4			—			—		—			Impact of foreign exchange rates	(2.8)		—		—	—
As reported	$	58.5		$	67.4		$	19.4	$	20.8		As reported	$	255.1	$	295.6	113.6	129.4

FLEETCOR CONSOLIDATED REVENUES
Pro forma and macro adjusted^2,3	$	572.6		$	532.1		$	679.1	$	642.2

CORPORATE PAYMENTS - SPEND												CORPORATE PAYMENTS - SPEND
Pro forma and macro adjusted												Pro forma and macro adjusted	$	106.5	$	120.0	15,567	19,033
Impact of acquisitions/dispositions												Impact of acquisitions/dispositions	—		—		—	—
Impact of fuel prices/spread												Impact of fuel prices/spread	(0.4)		—		—	—
Impact of foreign exchange rates												Impact of foreign exchange rates	0.3		—		—	—
As reported												As reported	$	106.5	$	120.0	15,567	19,033
TOLLS - TAGS												TOLLS - TAGS
Pro forma and macro adjusted												Pro forma and macro adjusted	$	91.6	$	88.7	5.4	5.1
Impact of acquisitions/dispositions												Impact of acquisitions/dispositions	—		—		—	—
Impact of fuel prices/spread												Impact of fuel prices/spread	—		—		—	—
Impact of foreign exchange rates												Impact of foreign exchange rates	(23.9)		—		—	—
As reported												As reported	$	67.6	$	88.7	5.4	5.1
LODGING - ROOM NIGHTS												LODGING - ROOM NIGHTS
Pro forma and macro adjusted												Pro forma and macro adjusted	$	52.9	$	78.2	5.4	7.1
Impact of acquisitions/dispositions												Impact of acquisitions/dispositions	—		(21.8)		—	(2.7)
Impact of fuel prices/spread												Impact of fuel prices/spread	—		—		—	—
Impact of foreign exchange rates												Impact of foreign exchange rates	—		—		—	—
As reported												As reported	$	52.9	$	56.4	5.4	4.4
GIFT - TRANSACTIONS												GIFT - TRANSACTIONS
Pro forma and macro adjusted												Pro forma and macro adjusted	$	39.1	$	48.5	242.7	277.8
Impact of acquisitions/dispositions												Impact of acquisitions/dispositions	—		—		—	—
Impact of fuel prices/spread												Impact of fuel prices/spread	—		—		—	—
Impact of foreign exchange rates												Impact of foreign exchange rates	—		—		—	—
As reported												As reported	$	39.1	$	48.5	242.7	277.8
OTHER1- TRANSACTIONS												OTHER1- TRANSACTIONS
Pro forma and macro adjusted												Pro forma and macro adjusted	$	65.6	$	71.9	9.9	14.6
Impact of acquisitions/dispositions	—			(47.6		)	—		(144.7		)	Impact of acquisitions/dispositions	—		—		—	—
Impact of fuel prices/spread	(0.5		)	—			—		—			Impact of fuel prices/spread	—		—		—	—
Impact of foreign exchange rates	5.8			—			—		—			Impact of foreign exchange rates	(1.4)		—		—	—
As reported	$	577.9		$	484.4		$	679.1	$	497.5		As reported	$	64.1	$	71.9	9.9	14.6

* 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.
FLEETCOR CONSOLIDATED REVENUES, NET												FLEETCOR CONSOLIDATED REVENUES, NET
Pro forma and macro adjusted												Pro forma and macro adjusted	$	618.0	$	702.9	Intentionally Left Blank
Impact of acquisitions/dispositions												Impact of acquisitions/dispositions	—		(21.8)
Impact of fuel prices/spread												Impact of fuel prices/spread	(4.9)		—
Impact of foreign exchange rates												Impact of foreign exchange rates	(27.8)		—
As reported												As reported	$	585.3	$	681.0

* Columns may not calculate due to rounding.												* Columns may not calculate due to rounding.
1Other includes telematics, maintenance, food, transportation and payroll card related businesses.												1Other includes telematics, maintenance, food, transportation and payroll card related businesses.

Adjusted net income and adjusted net income per diluted share. We have defined the non-GAAP measure adjusted net income as net income as reflected in our Statement of Income, adjusted to eliminate (a) non-cash stock based compensation expense related to share based compensation awards, (b) amortization of deferred financing costs, discounts and intangible assets, amortization of the premium recognized on the purchase of receivables, and our proportionate share of amortization of intangible assets at our equity method investment, (c) integration and deal related costs, and (d) other non-recurring items, including unusual losses occurring due largely to COVID-19, the impact of discrete tax items, impairment charges, asset write-offs, restructuring costs, gains due to disposition of assets and a business, loss on extinguishment of debt, and legal settlements.

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 Statements 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

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price and point in time do not necessarily reflect how our business is performing at any particular time and stock based compensation expense is not a key measure of our core operating performance. We also believe that amortization expense can vary substantially from company to company and from period to period depending upon their financing and accounting methods, the fair value and average expected life of their acquired intangible assets, their capital structures and the method by which their assets were acquired. Therefore, we have excluded amortization expense from adjusted net income. We also believe non-recurring expenses, gains, losses, and impairment charges do not necessarily reflect how our investments and business are performing. We have also excluded a write-off of a customer receivable due to their liquidation as a result of the impact of COVID-19 to their business. 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 in 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.


	Three Months Ended September 30,				Nine Months Ended September 30,
(Unaudited)	2020		2019		2020		2019
Net income	$	188,817	$	225,805	$	494,365	$	659,563
Stock based compensation	11,905		15,273		35,069		46,120
Amortization of intangible assets, premium on receivables, deferred financing costs and discounts	49,078		52,907		146,995		163,048
Investment loss (gain)	1,330		—		(30,008)		15,660
Integration and deal related costs1	1,768		—		11,035		—
Restructuring and related costs	185		—		4,912		—
Legal settlements/litigation	2,048		—		(2,989)		3,474



Write-off of customer receivable2	—		—		90,058		—

Total pre-tax adjustments	66,314		68,180		255,072		228,302
Income tax impact of pre-tax adjustments at the effective tax rate3	(13,196)		(15,177)		(55,429)		(49,023)
Impact of discrete tax item4	—		1,782		9,848		(63,098)
Adjusted net income	$	241,935	$	280,590	$	703,856	$	775,744
Adjusted net income per diluted share	$	2.80	$	3.10	$	8.09	$	8.62
Diluted shares	86,273		90,522		87,006		89,976


1 Beginning in the first quarter of 2020, the Company included integration and deal related costs in its definition to calculate adjusted net income and adjusted net income per diluted share. Prior period amounts were approximately $1.0 million and $3.8 million for the three and nine months ended September 30, 2019, which we consider immaterial.
2 Represents a bad debt loss in the first quarter of 2020 from a large client in our Cambridge business entering voluntary bankruptcy due to the extraordinary impact of the COVID-19 pandemic.
3 Excludes the results of the Company's investment in the nine months ended September 30, 2019, on our effective tax rate, as results from Masternaut investment are reported within the consolidated Statements of Income on a post-tax basis and no tax-over-book outside basis difference prior to disposition.
4 Represents the impact of a discrete tax reserve adjustment related to prior year tax positions in the nine months ended September 30, 2020 and tax reform in 2019. Also, includes the impact from the disposition of our investment in Masternaut of $64.9 million during the nine months ended September 2019.
*Columns may not calculate due to rounding.

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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~~FLEETCOR's beliefs, assumptions, expectations and future performance, are forward-looking statements. Forward-looking statements can be identified by the use of words such as “anticipate,” “intend,” “believe,” “estimate,” “plan,” “seek,” “project” or “expect,” “may,” “will,” “would,” “could” or “should,” the negative of these terms or other comparable terminology.

These forward-looking statements are not a guarantee of performance, and you should not place undue reliance on such statements. We have based these forward-looking statements largely on ~~our current~~preliminary information, internal estimates and management assumptions, expectations and ~~projections~~plans about future ~~events.~~conditions, events and results. Forward-looking statements are subject to many uncertainties and other variable circumstances, such as the impact of global, political, market, health and other conditions, including the impact of the coronavirus (COVID-19); regulatory measures or voluntary actions, including social distancing, shelter-in-place, shutdowns of nonessential businesses and similar measures imposed or undertaken in an effort to contain and mitigate the spread of the coronavirus (COVID-19); adverse outcomes with respect to current and future legal proceedings, including, without limitation, the FTC lawsuit, or actions of governmental or quasi-governmental bodies or standards or industry organizations with respect to our payment cards; 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~~partnerships and customer arrangements or acquisitions and ~~the failure~~ to successfully integrate or otherwise achieve anticipated benefits from such partnerships and customer arrangements or acquired businesses; failure to successfully expand and manage our business internationally; other risks related to our international operations, including the potential impact to our business as a result of the United ~~Kingdom's~~Kingdom’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, 2017~~2019 filed with the Securities and Exchange Commission on March ~~1, 2017~~2, 2020 and ~~August 8, 2017, respectively.~~subsequent filings made by us, including this Quarterly Report on Form 10-Q. These factors could cause our actual results and experience to differ materially from any forward-looking statement. ~~Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements.~~ The forward-looking statements included in this ~~report~~presentation are made only as of the date hereof. We do not undertake, and specifically disclaim, any obligation to update any such statements ~~or to publicly announce the results~~as a result of ~~any revisions to any of such statements to reflect~~new 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 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,~~2020, 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.~~2019.



Item 4.			Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of September 30, ~~2017,~~2020, 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,~~2020, 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,~~2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION



Item 1.			Legal Proceedings

In the ordinary course of business, ~~we are subject to~~the Company is involved in various pending ~~and potential~~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.

~~Shareholder Class Action and~~ Derivative Lawsuits

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 (“Federal Derivative Action”) seeking recovery on behalf of the Company. The ~~derivative complaint~~Federal Derivative Action 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~~Federal Derivative Action pending a ruling on motions for summary judgment in the ~~defendants' motion to dismiss~~shareholder class action, notice a settlement has been reached in the ~~putative~~ shareholder class action, or until otherwise agreed to by the parties. After preliminary approval of the proposed settlement of the shareholder class action was granted, the stay on the Federal Derivative Action was lifted. Plaintiffs amended their complaint on February 22, 2020. FLEETCOR filed a motion to dismiss the amended complaint in the Federal Derivative Action on April 17, 2020, which the court granted without leave to amend on October 21, 2020.

~~Estimating an amount~~FTC Investigation

On December 20, 2019, the FTC filed a lawsuit in the Northern District of Georgia against the Company and Ron Clarke. See FTC v. FLEETCOR and Ronald F. Clarke, No. 19-cv-05727 (N.D. Ga.). The complaint alleges the Company and Clarke violated the FTC Act’s prohibitions on unfair and deceptive acts and practices. The complaint seeks among other things injunctive relief, consumer redress, and costs of suit. The Company continues to believe that the FTC’s claims are without merit and these matters are not and will not be material to the Company’s financial performance. The Company has incurred and continues to incur legal and other fees related to this complaint. Any settlement of this matter, or defense against the lawsuit, could involve costs to the Company, including legal fees, redress, penalties, and remediation expenses. At this time, the Company believes the possible range of ~~possible losses resulting from~~outcomes includes continuing litigation ~~proceedings is inherently difficult and requires an extensive degree~~or discussions leading to a settlement, or the closure of ~~judgment, particularly where the~~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, 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.without further action.



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~~2019 and in Part II, Item ~~1A.~~1A, "Risk Factors" in ~~our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 filed~~other reports we file with the Securities and Exchange Commission, ~~on March 1, 2017 and August 8, 2017, respectively,~~from time to time, all of which could materially affect our business, financial condition or future results. Other than the risk factors set forth below, there have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

~~Derivatives Regulations~~

Rules adopted under the Dodd-Frank Act by the Commodity Futures Trading Commission (the "CFTC"), as well as the provisions of the European Market Infrastructure Regulation and its technical standards, which are directly applicable 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 way 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 likelihood that we will have to register one or more of our subsidiaries with the CFTC as swap dealers. Swap dealers are subject to a comprehensive regulatory framework and compliance with this framework will lead 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, would have on our hedging activities and operations.

Our compliance with these requirements has resulted, and may continue to result, in additional costs to our business and may impact our international payments provider business operations. Furthermore, our failure to comply with these requirements could result in fines and other sanctions, as well as necessitate a temporary or permanent cessation to some or all of our derivative related activities. Any such fines, sanctions or limitations on our business could adversely affect our operations and financial results. Additionally, the regulatory regimes for derivatives 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 requirements and increased regulation of derivative contracts, may result in additional costs to our business. Other jurisdictions outside the United States and the European Union are considering, have implemented, or are implementing regulations similar to those described above 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 and~~financial 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 mitigateFor example, these risks ~~we enter into derivative contracts. However, these contracts do not eliminate all of the~~now include risks related to ~~fluctuating foreign currency rates.~~the COVID-19 pandemic and related economic developments.

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 an adverse effect on our business, financial condition, results of operations, cash flows, and 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 enterprises 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.

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

~~On February 4, 2016, our~~The Company's Board of Directors has approved a stock repurchase program ~~(the~~(as updated from time to time, the "Program") ~~under which we may begin purchasing up~~authorizing the Company to ~~an aggregate of $500 million of the Company's~~repurchase its common stock ~~over~~from time to time until February 1, 2023. On October 22, 2020, our Board increased the ~~following 18 month period. On July 27, 2017, the Company's Board of Directors authorized an increase in the~~aggregate size of the Program by an additional $250 million and an extension of the Program by an additional 18 months. On November 1, 2017, 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 authorized under the Program of $1.1$1 billion, to $4.1 billion. Since the beginning of the Program ~~4,114,104~~through September 30, 2020, 14435566 shares have been repurchased for an aggregate purchase price of ~~$590 million~~$3.0 billion, leaving the Company up to approximately $1.06 billion available under the Program for future repurchases in shares of its common stock.

Any stock repurchases may be made at times and in such amounts as deemed appropriate. The timing and amount of stock repurchases, if any, will depend on a variety of factors including the stock price, market conditions, corporate and regulatory requirements, and any additional constraints related to material inside information 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 18, 2019, the Company entered an accelerated stock repurchase agreement ("2019 ASR Agreement") with a third-party financial institution to repurchase $500 million of its common stock. Pursuant to the 2019 ASR Agreement, the Company delivered $500 million in cash and received 1,431,989 shares based on a stock price of $285.70 on December 18, 2019. The 2019 ASR Agreement was completed on February 20, 2020, at which time the Company received 175,340 additional shares based on a final weighted average per share purchase price during the repurchase period of $311.08.

The Company accounted for the 2019 ASR Agreement as two separate transactions: (i) as shares of reacquired common stock for the shares delivered to the Company upon effectiveness of each ASR agreement 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 the Company's own common stock met the criteria for equity classification, and these amounts were initially recorded in additional paid-in capital.

The following table presents information as of September 30, 2020, with respect to ~~purchases~~purchase of common stock of the Company made during the three months ended September 30, ~~2017~~2020 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)
July 1, 2020 through July 31, 2020	412	$	217.19	13,436,063	$	293,983
August 1, 2020 through August 31, 2020	—	$	—	13,436,063	$	293,983
September 1, 2020 through September 30, 2020	999,503	$	238.43	14,435,566	$	55,676

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



Item 3.			Defaults Upon Senior Securities

Not applicable.



Item 4.			Mine Safety Disclosures

Not applicable.



Item 5.			Other Information

Not applicable.

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Item 6. Exhibits




Exhibit No.
~~2.1~~3.1		Acquisition agreement to acquire Serviços e Tecnologia de Pagamentos S.A. (incorporated by reference to Exhibit 2.1 to the Registrant's Form 8-K, File No. 001-35004, filed with the Securities and Exchange Commission ("SEC") on March 18, 2016)

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

3.2		Certificate of Amendment to the Amended and Restated ~~Bylaws~~Certificate of ~~FleetCor~~Incorporation of FLEETCOR Technologies, Inc. (incorporated by reference to Exhibit ~~3.2~~3.1 to the Registrant's Current Report on Form 8-K, File No. 001-35004, file with the SEC on June 8, 2018)

3.3		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)

3.4		Amended and Restated Bylaws of FLEETCOR Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s ~~Annual~~Current Report on Form ~~10-K,~~8-K, File No. 001-35004, filed with the SEC on October 28, ~~2016)~~2020)

~~4.1~~10.1**		~~Form of Stock Certificate for Common Stock~~Offer letter, dated September 1, 2020, between FLEETCOR Technologies, Inc. and Charles Freund (incorporated by reference to Exhibit ~~4.1 to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1, File No. 333-166092, filed with the SEC on June 29, 2010)~~

~~10.1~~	Third Amendment to Credit Agreement, date as of August 2, 2017, among FleetCor Technologies Operating Company, LLC, as the Company, FleetCor Technologies, Inc., as the Parent, the designated borrowers party hereto, the other guarantors party hereto, Bank of America, N.A., as administrative agent, swing line lender and l/c issuer, and the other lenders party hereto Merrill Lynch, Pierce, Fenner & Smith Incorporated, as sole lead arranger and sole book runner (incorporated by reference to Exhibit 10.199.1 to the Registrant's ~~Quarterly~~Current Report on Form ~~10-Q,~~8-K/A, File No. 001-35004, filed with the SEC on ~~August 8, 2017)~~September 4, 2020)

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

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

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

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

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

104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Filed Herein

**Identifies management contract or compensatory plan or arrangement.

Table of Contents

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.~~2020.

FLEETCOR Technologies, Inc.

~~FleetCor Technologies, Inc.~~(Registrant)

~~(Registrant)~~

Signature

Title

~~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~~Charles R. ~~Dey~~Freund

Chief Financial Officer (Principal Financial ~~Officer and Principal Accounting~~ Officer)

~~Eric~~Charles R. ~~Dey~~Freund



	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



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



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



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



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



	December 31, 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



	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	%



	Net Notional
Foreign exchange contracts:
Swaps	$	272.8
Futures, forwards and spot	3,174.1
Written options	1,338.6
Purchased options	1,765.0
Total	$	6,550.5



				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



	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	%



	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	%



	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 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	%



(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		)%