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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 March 31, 2019
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 001-35004
 __________________________________________________________
FleetCor Technologies, Inc.
(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, Peachtree Corners, Georgia
 
30092
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (770) 449-0479
 __________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 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
¨ 
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.


Table of Contents

Class
 
Outstanding at April 15, 2019
Common Stock, $0.001 par value
 
86,193,402
 

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



Table of Contents

FLEETCOR TECHNOLOGIES, INC. AND SUBSIDIARIES
FORM 10-Q
For the Three Months Ended March 31, 2019
INDEX
 
 
 
Page
PART I—FINANCIAL INFORMATION
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II—OTHER INFORMATION
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 

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Table of Contents

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
FLEETCOR Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Share and Par Value Amounts)
 
 
March 31, 20191
 
December 31, 2018
 
 
(Unaudited)
 
 
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
1,057,465

 
$
1,031,145

Restricted cash
 
315,106

 
333,748

Accounts and other receivables (less allowance for doubtful accounts of $66,194 at March 31, 2019 and $59,963 at December 31, 2018)
 
1,655,459

 
1,425,815

Securitized accounts receivable—restricted for securitization investors
 
942,000

 
886,000

Prepaid expenses and other current assets
 
202,029

 
199,278

Total current assets
 
4,172,059


3,875,986

Property and equipment, net
 
186,251

 
186,201

Goodwill
 
4,549,099

 
4,542,074

Other intangibles, net
 
2,355,639

 
2,407,910

Investments
 
26,506

 
42,674

Other assets
 
225,361

 
147,632

Total assets
 
$
11,514,915


$
11,202,477

Liabilities and stockholders’ equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
1,518,827

 
$
1,117,649

Accrued expenses
 
311,357

 
261,594

Customer deposits
 
768,342

 
926,685

Securitization facility
 
942,000

 
886,000

Current portion of notes payable and lines of credit
 
865,318

 
1,184,616

Other current liabilities
 
156,254

 
118,669

Total current liabilities
 
4,562,098


4,495,213

Notes payable and other obligations, less current portion
 
2,708,251

 
2,748,431

Deferred income taxes
 
494,025

 
491,946

Other noncurrent liabilities
 
219,574

 
126,707

Total noncurrent liabilities
 
3,421,850


3,367,084

Commitments and contingencies (Note 13)
 

 

Stockholders’ equity:
 
 
 
 
Common stock, $0.001 par value; 475,000,000 shares authorized; 123,406,538 shares issued and 86,189,402 shares outstanding at March 31, 2019; and 123,035,859 shares issued and 85,845,344 shares outstanding at December 31, 2018
 
123

 
123

Additional paid-in capital
 
2,382,179

 
2,306,843

Retained earnings
 
3,989,763

 
3,817,656

Accumulated other comprehensive loss
 
(934,192
)
 
(913,858
)
Less treasury stock, 37,217,136 shares at March 31, 2019 and 37,190,515 shares at December 31, 2018
 
(1,906,906
)
 
(1,870,584
)
Total stockholders’ equity
 
3,530,967


3,340,180

Total liabilities and stockholders’ equity
 
$
11,514,915


$
11,202,477

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

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FLEETCOR Technologies, Inc. and Subsidiaries
Unaudited Consolidated Statements of Income
(In Thousands, Except Per Share Amounts)
 
 
 
Three Months Ended
March 31,
 
 
2019
 
2018
Revenues, net
 
$
621,825

 
$
585,500

Expenses:
 
 
 
 
Processing
 
129,114

 
116,485

Selling
 
49,261

 
47,111

General and administrative
 
92,784

 
90,370

Depreciation and amortization
 
67,445

 
71,502

Other operating, net
 
(955
)
 
(55
)
Operating income
 
284,176


260,087

Investment loss
 
15,660

 

Other expense (income), net
 
220

 
(297
)
Interest expense, net
 
39,055

 
31,065

Total other expense
 
54,935


30,768

Income before income taxes
 
229,241

 
229,319

Provision for income taxes
 
57,134

 
54,382

Net income
 
$
172,107


$
174,937

Basic earnings per share
 
$
2.00

 
$
1.95

Diluted earnings per share
 
$
1.93

 
$
1.88

Weighted average shares outstanding:
 
 
 
 
Basic shares
 
85,941

 
89,765

Diluted shares
 
89,244

 
93,250

See accompanying notes to unaudited consolidated financial statements.



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FLEETCOR Technologies, Inc. and Subsidiaries
Unaudited Consolidated Statements of Comprehensive Income
(In Thousands)
 
 
 
Three Months Ended
March 31,
 
 
2019
 
2018
Net income
 
$
172,107

 
$
174,937

Other comprehensive (loss) income:
 
 
 
 
Foreign currency translation gains, net of tax
 
373

 
43,254

Net change in derivative contracts, net of tax
 
(20,707
)
 

Total other comprehensive (loss) income
 
(20,334
)

43,254

Total comprehensive income
 
$
151,773


$
218,191

See accompanying notes to unaudited consolidated financial statements.


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FLEETCOR Technologies, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity
(In Thousands)
 
 
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Treasury
Stock
 
Total
Balance at December 31, 2018
 
$
123

 
$
2,306,843

 
$
3,817,656

 
$
(913,858
)
 
$
(1,870,584
)
 
$
3,340,180

Net income
 

 

 
172,107

 

 

 
172,107

Other comprehensive loss, net of tax
 

 

 

 
(20,334
)
 

 
(20,334
)
Acquisition of common stock
 

 
33,000

 

 

 
(36,322
)
 
(3,322
)
Share-based compensation
 

 
12,541

 

 

 

 
12,541

Issuance of common stock
 

 
29,795

 

 

 

 
29,795

Balance at March 31, 2019
 
$
123

 
$
2,382,179

 
$
3,989,763

 
$
(934,192
)
 
$
(1,906,906
)
 
$
3,530,967


 
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Treasury
Stock
 
Total
Balance at December 31, 2017
 
$
122

 
$
2,214,224

 
$
2,958,921

 
$
(551,857
)
 
$
(944,888
)
 
$
3,676,522

Net income
 

 

 
174,937

 

 

 
174,937

Cumulative effect of change in accounting principle
 

 

 
47,252

 

 

 
47,252

Other comprehensive income from currency, net of tax of $0
 

 

 

 
43,254

 

 
43,254

Acquisition of common stock
 

 

 

 

 
(88,292
)
 
(88,292
)
Share-based compensation
 

 
14,403

 

 

 


14,403

Issuance of common stock
 
1

 
19,975

 

 

 

 
19,976

Balance at March 31, 2018
 
$
123

 
$
2,248,602

 
$
3,181,110

 
$
(508,603
)
 
$
(1,033,180
)
 
$
3,888,052


See accompanying notes to unaudited consolidated financial statements.


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FLEETCOR Technologies, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
(In Thousands)
 
 
Three Months Ended
March 31,
 
 
2019¹
 
2018
Operating activities
 
 
 
 
Net income
 
$
172,107

 
$
174,937

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation
 
15,132

 
12,397

Stock-based compensation
 
12,541

 
14,403

Provision for losses on accounts receivable
 
22,164

 
11,997

Amortization of deferred financing costs and discounts
 
1,205

 
1,339

Amortization of intangible assets and premium on receivables
 
52,313

 
59,105

Deferred income taxes
 
(2,696
)
 
(4,829
)
Investment loss
 
15,660

 

Other non-cash operating income
 
(1,574
)
 
(57
)
Changes in operating assets and liabilities (net of acquisitions):
 
 
 
 
Accounts and other receivables
 
(302,395
)
 
(288,152
)
Prepaid expenses and other current assets
 
644

 
32,074

Other assets
 
(14,517
)
 
(7,101
)
Accounts payable, accrued expenses and customer deposits
 
326,910

 
194,589

Net cash provided by operating activities
 
297,494


200,702

Investing activities
 
 
 
 
Acquisitions, net of cash acquired
 

 
(3,875
)
Purchases of property and equipment
 
(14,506
)
 
(15,214
)
Other
 

 
(3,642
)
Net cash used in investing activities
 
(14,506
)

(22,731
)
Financing activities
 
 
 
 
Proceeds from issuance of common stock
 
29,795

 
19,975

Repurchase of common stock
 
(3,322
)
 
(88,292
)
Borrowings on securitization facility, net
 
56,000

 
18,000

Deferred financing costs paid and debt discount
 
(284
)
 

Principal payments on notes payable
 
(32,438
)
 
(34,500
)
Borrowings from revolver
 

 
420,258

Payments on revolver
 
(353,638
)
 
(439,351
)
Borrowings on swing line of credit, net
 
31,032

 
5,009

Other
 
(63
)
 
(92
)
Net cash used in financing activities
 
(272,918
)

(98,993
)
Effect of foreign currency exchange rates on cash
 
(2,392
)
 
12,653

Net increase in cash and cash equivalents and restricted cash
 
7,678

 
91,631

Cash and cash equivalents and restricted cash, beginning of period
 
1,364,893

 
1,130,870

Cash and cash equivalents and restricted cash, end of period
 
$
1,372,571


$
1,222,501

Supplemental cash flow information
 
 
 
 
Cash paid for interest
 
$
46,904

 
$
35,634

Cash paid for income taxes
 
$
17,894

 
$
16,830

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

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FLEETCOR Technologies, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
March 31, 2019
1. Summary of Significant Accounting Policies
Basis of Presentation
Throughout this report, the terms “our,” “we,” “us,” and the “Company” refers to FLEETCOR Technologies, Inc. and its subsidiaries. The Company prepared the accompanying interim consolidated financial statements in accordance with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”). The unaudited consolidated financial statements reflect all adjustments considered necessary for fair presentation. These adjustments consist of normal recurring accruals and estimates that impact the carrying value of assets and liabilities. Actual results may differ from these estimates.
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, 2018.
Foreign Currency Translation
Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at the rates of exchange in effect at period-end. The related translation adjustments are made directly to accumulated other comprehensive income. Income and expenses are translated at the average monthly rates of exchange in effect during the period. Gains and losses from foreign currency transactions of these subsidiaries are included in net income. The Company recognized foreign exchange gains of $0.03 million and $0.5 million for the three months ended March 31, 2019 and 2018, respectively. The Company recorded foreign currency losses on long-term intra-entity transactions of $77.0 million and $24.4 million for the three months ended March 31, 2019 and 2018, respectively, included as a component of foreign currency translation (losses) gains, net of tax, on the Unaudited Consolidated Statements of Comprehensives Income.
Derivatives

The Company uses derivatives to (a) minimize its exposures related to changes in interest rates and (b) facilitate cross-currency
corporate payments by writing derivatives to customers.

The Company is exposed to the risk of increasing interest rates because our borrowings are subject to variable interest rates. In order to mitigate this risk, the Company has elected to engage in the use of derivative instruments. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in other assets or other liabilities and offset against accumulated other comprehensive income/loss, net of tax. Cash flow hedges consist of hedges a portion of the Company's variable rate debt. Derivative fair value changes that are captured in accumulated other comprehensive income/loss are reclassified to earnings in the same period or periods the hedged item affects earnings, to the extent the instrument is effective in offsetting the change in cash flows attributable to the risk being hedged. The portions of the change in fair value that are either considered ineffective or are excluded from the measure of effectiveness are recognized immediately in interest expense, net in the unaudited consolidated statements of income.
At Cambridge Global Payments ("Cambridge"), the Company uses derivatives to facilitate cross-currency corporate payments by writing derivatives to customers, which are not designated as hedging instruments. The majority of Cambridge's revenue is from exchanges of currency at spot rates, which enable customers to make cross-currency payments. In addition, Cambridge also 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, and economically hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties. The changes in fair value related to these contracts are recorded in revenues, net in the Unaudited Consolidated Statements of Income.
The Company recognizes all derivatives in "prepaid expenses and other current assets" and "other current liabilities" in the accompanying Unaudited Consolidated Balance Sheets at their fair value. All cash flows associated with derivatives are included in cash flows from operating activities in the Unaudited Consolidated Statements of Cash Flows.


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Cash, Cash Equivalents, and Restricted Cash

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

Revenue
The Company provides payment solutions to our business, merchant, consumer and payment network customers. Our payment solutions are primarily focused on specific commercial spend categories, including fuel, lodging, tolls, and general corporate payments, as well as gift card solutions (stored value cards). The Company provides products that help businesses of all sizes control, simplify and secure payment of various domestic and cross-border payables using specialized payment products. The Company also provides other payment solutions for fleet maintenance, employee benefits and long haul transportation-related services. Revenues from contracts with customers, within the scope of Topic 606, represent approximately 80% of total consolidated revenues, net, for the three months ended March 31, 2019.
Disaggregation of Revenues
The Company provides its services to customers across different payment solutions and geographies. Revenue by product (in millions) for the three months ended March 31 was as follows:
Revenues, net by Product Category
Three Months Ended March 31,
 
Three Months Ended March 31,
 
2019
 
%
 
2018 2
 
%
Fuel 1
283

 
45
%
 
265

 
45
%
Corporate Payments
110

 
18
%
 
95

 
16
%
Tolls 1
89

 
14
%
 
90

 
15
%
Lodging
42

 
7
%
 
39

 
7
%
Gift
48

 
8
%
 
49

 
8
%
Other1
49

 
8
%
 
48

 
8
%
Consolidated Revenues, net
622

 
100
%
 
586

 
100
%
Revenue by geography (in millions) for the three months ended March 31 was as follows:
Revenues, net by Geography
Three Months Ended March 31,
 
Three Months Ended March 31,
 
2019
 
%
 
2018
 
%
United States
371

 
60
%
 
344

 
59
%
Brazil
106

 
17
%
 
107

 
18
%
United Kingdom
68

 
11
%
 
64

 
11
%
Other
77

 
12
%
 
71

 
12
%
Consolidated Revenues, net
622

 
100
%
 
586

 
100
%
1Reflects certain reclassifications of revenue between product categories as the Company realigned its Brazil business into product lines, resulting in refinement of revenue classified as fuel versus tolls and the reclassification of the E-Cash/OnRoad product being realigned to fuel from other.
2 Reflects adjustments from previously disclosed amounts for the prior period to conform to current presentation.
Contract Liabilities
Deferred revenue contract liabilities for customers subject to ASC 606 were $76.1 million and $30.6 million as of March 31, 2019 and December 31, 2018, respectively. We expect to recognize substantially all of these amounts in revenues within approximately 12 months.  Revenue recognized in the three months ended March 31, 2019, that was included in the deferred revenue contract liability as of December 31, 2018 was approximately $16.2 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 the customer results in intermediary balances in the receivable from the customer and the payment to the customer's counterparty. In accordance with ASC Subtopic 210-20, "Offsetting," the Company applies offsetting to spot trade assets and liabilities associated with contracts that include master netting agreements, as a right of setoff exists, which the Company believes to be enforceable. As such, the Company has netted the Company's net exposure with these counterparties, with the receivables from the customer. The Company recognizes all spot trade assets, net in prepaid expense and other current assets and all spot trade liabilities, net in other current liabilities, each net at the customer level, in its Consolidated Balance Sheets at their fair value.
Adoption of New Accounting Standards
Accounting for Leases
In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842), which requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. This ASU also requires disclosures to provide additional information about the amounts recorded in the financial statements. Effective January 1, 2019, the Company adopted Topic 842 using a modified retrospective approach, as discussed further in Footnote 2.
Accounting for Derivative Financial Instruments
In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities", which amends the hedge accounting recognition and presentation requirements in ASC 815. The FASB issued accounting guidance to better align hedge accounting with a company’s risk management activities, simplify the application of hedge accounting and improve the disclosures of hedging arrangements. The guidance is effective for the Company for reporting periods beginning after December 15, 2018, and interim periods within those years. The Company adopted this guidance on January 1, 2019, which did not have a material impact on the Company's results of operations, financial condition, or cash flows. The guidance did simplify the Company's accounting for interest rate swap hedges allowing more time for the initial hedge effectiveness documentation and a qualitative assessment at each quarter end for continued effectiveness assessment.
In October 2018, the FASB issued ASU 2018-16, which amends ASC 2018-16, "Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate, Overnight Index Swap Rate as a Benchmark Interest Rate for Hedge Accounting Purposes," which amends the hedge accounting to add overnight index swap rates based on the secured overnight financing rate as a fifth U.S. benchmark interest rate. The Company adopted this guidance on January 1, 2019, which did not have a material impact on the Company's results of operations, financial condition, or cash flows.
Comprehensive Income Classification
In February 2018, the FASB issued ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income", that gives entities the option to reclassify to retained earnings tax effects related to items that have been stranded in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act (the "Tax Act"). An entity that elects to reclassify these amounts must reclassify stranded tax effects related to the Tax Act’s change in U.S. federal tax rate for all items accounted for in other comprehensive income. These entities can also elect to reclassify other stranded effects that relate to the Tax Act but do not directly relate to the change in the federal rate. The Company adopted this guidance on January 1, 2019 and elected to not reclassify any items to retained earnings.
Non-Employee Share-Based Payments
In June 2018, the FASB issued ASU 2018-07, "Compensation—Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting", that supersedes ASC 505-50 and expands the scope of ASC 718 to include all share-based payment arrangements related to the acquisition of goods and services from both non-employees and employees. Under the new guidance, the existing employee guidance will apply to non-employee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of non-employee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for non-employee awards. The Company adopted this guidance on January 1, 2019, which had no impact on the Company's results of operations, financial condition, or cash flows.

Pending Adoption of Recently Issued Accounting Standards
Cloud Computing Arrangements

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On August 29, 2018, the FASB issued ASU 2018-15, "Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract", that provides guidance on implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract. The ASU, which was released in response to a consensus reached by the EITF at its June 2018 meeting, aligns the accounting for such costs with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in such a CCA. The guidance is effective for the Company for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted, including in interim periods. The guidance should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company's adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.
Fair Value Measurement
On August 28, 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement", which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC 820. The guidance is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The guidance on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other guidance should be applied retrospectively to all periods presented upon their effective date. The Company is permitted to early adopt any removed or modified disclosures upon issuance of this guidance and delay adoption of the additional disclosures until their effective date. The Company's adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.
Credit Losses on Financial Instruments
In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which changes how companies measure and recognize credit impairment for many financial assets. The new expected credit loss model will require companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are in the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The ASU is effective for the Company on January 1, 2020. Early adoption is permitted for periods beginning on or after January 1, 2019. The Company is evaluating the effect of ASU 2016-13 on its consolidated financial statements.
2. Leases
Effective January 1, 2019, the Company adopted Topic 842 using a modified retrospective method. Under this transition method, the Company has not restated comparative periods, and prior comparative periods will be reported under the prior guidance, ASC 840.  On January 1, 2019, based on the present value of the lease payments for the remaining lease term of the Company's existing leases, the Company recognized right-of-use (“ROU”) assets of $55.9 million and lease liabilities for operating leases of $65.5 million. At March 31, 2019, other assets includes a ROU asset of $66.1 million, other current liabilities includes short term operating lease liabilities of $14.3 million, and other non-current liabilities includes long term lease liabilities of $64.6 million. Finance leases are immaterial.
The Company primarily leases office space, data centers, vehicles, and equipment. Some of our leases contain variable lease payments, typically payments based on an index. The Company’s leases have remaining lease terms of one year to thirty years, some of which include options to extend from one to five years or more. The exercise of lease renewal options is typically at the Company's sole discretion; therefore, the majority of renewals to extend the lease terms are not included in ROU assets and lease liabilities as they are not reasonably certain of exercise. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at lease commencement, for the purposes of transition, the rate in effect at January 1, 2019. Additional payments based on the change in an index or rate are recorded as a period expense when incurred. Lease modifications result in remeasurement of the lease liability as of the modification date.
For contracts entered into on or after the effective date or at the inception of a contract the Company assessed whether the contract is, or contains, a lease. The assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether the Company has the right to direct the use of the asset. The Company elected the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs for all leases. Therefore, leases entered into prior to January 1, 2019, are accounted for under the prior accounting standard and were not reassessed. The Company has also elected not to recognize ROU assets and lease liabilities for short-term leases that have a term of twelve months or less. The effect of short-term leases would not be material our ROU assets and lease liability.

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Under ASC 842, a Company discounts future lease obligations by the rate implicit in the contract, unless the rate cannot be readily determined. As most of our leases do not provide an implicit rate, the Company uses our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. In determining the borrowing rate, the Company considered the applicable lease terms, the Company's cost of borrowing, and for leases denominated in a foreign currency, the collateralized borrowing rate that the Company would obtain to borrow in the same currency in which the lease is denominated.

Total lease costs for the three months ended March 31, 2019 were $4.4 million.
The supplementary cash and non-cash disclosures for the three months ended March 31, 2019 are as follows (in millions):
 
Three Months Ended March 31, 2019
Cash paid for operating lease liabilities
$
4,607

Right-of-use assets obtained in exchange for new operating lease obligations 1
$
69,744

Weighted-average remaining lease term (years)
7.5

Weighted-average discount rate
3.73
%
 1 Includes $55.9 million for operating leases existing on January 1, 2019
Maturities of lease liabilities as of March 31, 2019 were as follows (in thousands):
2020
 
$
16,570

2021
 
14,540

2022
 
11,543

2023
 
9,720

2024
 
8,580

Thereafter
 
31,802

Total Lease Payments
 
92,755

Less imputed interest
 
(13,844
)
Present value of lease liabilities
 
$
78,911

3. Accounts Receivable
The Company maintains a $1.2 billion revolving trade accounts receivable Securitization Facility. Accounts receivable collateralized within our Securitization Facility relate to our U.S. trade receivables resulting from charge card activity. Pursuant to the terms of the Securitization Facility, the Company transfers certain of its domestic receivables, on a revolving basis, to FLEETCOR Funding LLC (Funding) a wholly-owned bankruptcy remote subsidiary. In turn, Funding transfers, on a revolving basis, up to $1.2 billion of undivided ownership interests in this pool of accounts receivable to a multi-seller, asset-backed commercial paper conduit (Conduit). Funding maintains a subordinated interest, in the form of over-collateralization, in a portion of the receivables sold to the Conduit. Purchases by the Conduit are financed with the sale of highly-rated commercial paper.
The Company utilizes proceeds from the 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 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 Unaudited Consolidated Balance Sheets and Statements of Income reflect the activity related to securitized accounts receivable and the corresponding securitized debt, including interest income, fees generated from late payments, provision for losses on accounts receivable and interest expense. The cash flows from borrowings and repayments, associated with the securitized debt, are presented as cash flows from financing activities.
The Company’s accounts receivable and securitized accounts receivable include the following at March 31, 2019 and December 31, 2018 (in thousands):  

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March 31, 2019
 
December 31, 2018
Gross domestic accounts receivable
 
$
746,954

 
$
668,154

Gross domestic securitized accounts receivable
 
942,000

 
886,000

Gross foreign receivables
 
974,699

 
817,624

Total gross receivables
 
2,663,653


2,371,778

Less allowance for doubtful accounts
 
(66,194
)
 
(59,963
)
Net accounts and securitized accounts receivable
 
$
2,597,459


$
2,311,815

A rollforward of the Company’s allowance for doubtful accounts related to accounts receivable for the three month period ended March 31 is as follows (in thousands):
 
 
2019
 
2018
Allowance for doubtful accounts beginning of period
 
$
59,963

 
$
46,031

Provision for bad debts
 
22,164

 
11,997

Write-offs
 
(15,933
)
 
(9,039
)
Allowance for doubtful accounts end of period
 
$
66,194

 
$
48,989

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

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The following table presents the Company’s financial assets and liabilities which are measured at fair values on a recurring basis at March 31, 2019 and December 31, 2018, (in thousands). 
 
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
March 31, 2019
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Repurchase agreements
 
$
625,926

 
$

 
$
625,926

 
$

Money market
 
50,891

 

 
50,891

 

Certificates of deposit
 
35,156

 

 
35,156

 

       Foreign exchange contracts
 
40,074

 

 
40,074

 

Total assets
 
$
752,047

 
$

 
$
752,047

 
$

Cash collateral for foreign exchange contracts
 
$
8,111

 
$

 
$

 
$

Liabilities:
 
 
 
 
 
 
 
 
Interest rate swaps
 
$
27,569

 
$

 
$
27,569

 
 
       Foreign exchange contracts
 
39,977

 

 
39,977

 

Total liabilities
 
$
67,546

 
$

 
$
67,546

 
$

Cash collateral obligation for foreign exchange contracts
 
$
40,832

 
$

 
$

 
$

 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Repurchase agreements
 
$
581,293

 
$

 
$
581,293

 
$

Money market
 
50,644

 

 
50,644

 

Certificates of deposit
 
22,412

 

 
22,412

 

Foreign exchange contracts
 
68,814

 
21

 
68,793

 

Total assets
 
$
723,163

 
$
21

 
$
723,141

 
$

Cash collateral for foreign exchange contracts
 
$
9,644

 
$

 
$

 
$

Liabilities:
 
 
 
 
 
 
 
 
Foreign exchange contracts
 
$
72,125

 
$

 
$
72,125

 
$

Total liabilities
 
$
72,125

 
$

 
$
72,125

 
$

Cash collateral obligation for foreign exchange contracts
 
$
73,140

 
$

 
$

 
$


The Company has highly-liquid investments classified as cash equivalents, with original maturities of 90 days or less, included in our Unaudited Consolidated Balance Sheets. The Company utilizes Level 2 fair value determinations derived from directly or indirectly observable (market based) information to determine the fair value of these highly liquid investments. The Company has certain cash and cash equivalents that are invested on an overnight basis in repurchase agreements, money markets and certificates of deposit. The value of overnight repurchase agreements is determined based upon the quoted market prices for the treasury securities associated with the repurchase agreements. The value of money market instruments is the financial institutions' month-end statement, as these instruments are not tradeable and must be settled directly by us with the respective financial institution. Certificates of deposit are valued at cost, plus interest accrued. Given the short-term nature of these instruments, the carrying value approximates fair value. Foreign exchange derivative contracts are carried at fair value, with changes in fair value recognized in the Unaudited Consolidated Statements of Income. The fair value of the Company's derivatives is derived with reference to a valuation from a derivatives dealer operating in an active market, which approximates the fair value of these instruments. The fair value represents what would be received and or paid by the Company if the contracts were terminated as of the reporting date. Cash collateral received for foreign exchange derivatives is recorded within customer deposits in the Company's Unaudited Consolidated Balance Sheet. Cash collateral paid for foreign exchange derivatives is recorded within restricted cash in the Company's Unaudited Consolidated Balance Sheet. The carrying value of interest rate swap contracts is at fair value, which is determined based on current and forward interest rates as of the balance sheet date and is classified within Level 2.
The level within the fair value hierarchy and the measurement technique are reviewed quarterly. Transfers between levels are deemed to have occurred at the end of the quarter. There were no transfers between fair value levels during the periods presented for 2019 and 2018.
The Company’s assets that are measured at fair value on a nonrecurring basis or are evaluated with periodic testing for impairment include property, plant and equipment, investments, goodwill and other intangible assets. Estimates of the fair

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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.
For derivatives that will be accounted for as hedging instruments, the Company formally designates and documents, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction. In addition, the Company formally assesses, both at the inception and at least quarterly thereafter, whether the financial instruments used in hedging transactions are effective at offsetting changes in cash flows of the related underlying exposures. Any ineffective portion of a financial instrument's change in fair value is immediately recognized into earnings. The Company determines the fair values of its derivatives based on quoted market prices or pricing models using current market rates. 
The notional amounts of the derivative financial instruments do not necessarily represent amounts exchanged by the parties and, therefore, are not a direct measure of our exposure to the financial risks described above. 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 straightforward over-the-counter instruments with liquid markets.
The Company regularly evaluates the carrying value of its investments and during the first quarter of 2019, determined that the fair value of its telematics investment was below cost and recorded an impairment of the investment of $15.7 million based on observable price changes. Since initial date of investments, the Company has recorded cumulative impairment losses of $136.3 million.
The 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.
5. Stockholders' Equity
The Company's Board of Directors has approved a stock repurchase program (the "Program") under which the Company may purchase up to an aggregate of $2.1 billion of its common stock over the following 18 month period. The Program was updated most recently on January 23, 2019, the Company's Board of Directors, with an authorized increase in the size of the program by an additional $500 million. With the increase and giving effect to the Company's $1.6 billion of previous repurchases, the Company may repurchase up to $545 million in shares of its common stock at any time prior to February 1, 2020.
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 December 14, 2018, as part of the Program, the Company entered an accelerated stock repurchase agreement ("2018 ASR Agreement") with a third-party financial institution to repurchase $220 million of its common stock. Pursuant to the 2018 ASR Agreement, the Company delivered $220 million in cash and received 1,057,035 shares based on a stock price of $176.91 on December 14, 2018. The 2018 ASR Agreement was completed on January 29, 2019, at which time the Company received 117,751 additional shares based on a final weighted average per share purchase price during the repurchase period of $187.27.

The Company accounted for the 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.
Since the beginning of the Program, 9,052,163 shares for an aggregate purchase price of $1.6 billion have been repurchased.
6. Stock-Based Compensation

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The Company has Stock Incentive Plans (the Plans) pursuant to which the Company’s board of directors may grant stock options or restricted stock to employees.

On February 7, 2018, the stockholders of the Company approved the FleetCor Technologies, Inc. Amended and Restated 2010 Equity Incentive Plan (the "Amended Plan") which was authorized and approved by the Company's Board of Directors on December 20, 2017. The Amended Plan amends the Company’s existing 2010 Equity Incentive Plan (as amended, the "Prior Plan") to, among other things, increase the number of shares of common stock available for issuance from 13,250,000 to 16,750,000 and make certain other amendments to the Prior Plan.
The table below summarizes the expense related to share-based payments recognized in the three months ended March 31 (in thousands): 
 
 
Three Months Ended
March 31,
 
 
2019
 
2018
Stock options
 
$
10,165

 
$
10,699

Restricted stock
 
2,376

 
3,704

Stock-based compensation
 
$
12,541


$
14,403

The tax benefits recorded on stock based compensation were $9.9 million and $8.1 million for the three months ended March 31, 2019 and 2018, respectively.
The following table summarizes the Company’s total unrecognized compensation cost related to stock-based compensation as of March 31, 2019 (cost in thousands):
 
 
Unrecognized
Compensation
Cost
 
Weighted Average
Period of Expense
Recognition
(in Years)
Stock options
 
$
53,415

 
1.21
Restricted stock
 
11,967

 
0.75
Total
 
$
65,382

 
 

Stock Options
Stock options are granted with an exercise price estimated to be equal to the fair market value 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 three months ended March 31, 2019 (shares/options and aggregate intrinsic value in thousands):
 
 
Shares
 
Weighted
Average
Exercise
Price
 
Options
Exercisable
at End of
Period
 
Weighted
Average
Exercise
Price of
Exercisable
Options
 
Weighted
Average Fair
Value of
Options
Granted 
During the Period
 
Aggregate
Intrinsic
Value
Outstanding at December 31, 2018
 
7,616

 
$
117.58

 
5,174

 
$
98.39

 
 
 
$
518,954

Granted
 
140

 
255.47

 
 
 
 
 
$
56.47

 
 
Exercised
 
(278
)
 
107.15

 
 
 
 
 
 
 
38,752

Forfeited
 
(18
)
 
153.37

 
 
 
 
 
 
 
 
Outstanding at March 31, 2019
 
7,460

 
$
119.91

 
4,987

 
$
98.80

 
 
 
$
945,049

Expected to vest as of March 31, 2019
 
2,473

 
$
162.48

 
 
 
 
 
 
 
 
The aggregate intrinsic value of stock options exercisable at March 31, 2019 was $737.0 million. The weighted average remaining contractual term of options exercisable at March 31, 2019 was 5.1 years.

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The fair value of stock option awards granted was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions for grants or modifications during the three months ended March 31, 2019 and 2018:
 
 
March 31,
 
 
2019
 
2018
Risk-free interest rate
 
2.49
%
 
2.46
%
Dividend yield
 

 

Expected volatility
 
26.64
%
 
27.11
%
Expected life (in years)
 
4.0

 
3.9

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 market conditions, or a combination of these. Shares vesting based on the passage of time have vesting provisions of one to three years.
The following table summarizes the changes in the number of shares of restricted stock and restricted stock units for the three months ended March 31, 2019 (shares in thousands): 
 
 
Shares
 
Weighted
Average
Grant Date
Fair Value
Outstanding at December 31, 2018
 
174

 
$
190.73

Granted
 
77

 
228.53

Vested
 
(104
)
 
201.05

Canceled or forfeited
 
(23
)
 
209.43

Outstanding at March 31, 2019
 
124

 
$
216.03

7. Acquisitions
2018 Acquisitions
On December 27, 2018, the Company completed an acquisition of an online gift card solution provider with an aggregate purchase price of $17.0 million, net of cash acquired of $11.0 million and made deferred payments of $3.9 million related to acquisitions occurring in prior years. The accounting for this acquisition is preliminary as the Company is still completing the valuation of goodwill, intangible assets, income taxes and evaluation of acquired contingencies. The following table summarizes the preliminary acquisition accounting for the acquisition (in thousands):

Trade and other receivables
$
10,214

Prepaid expenses and other
267

Property and equipment
161

Other long term assets
135

Goodwill
18,896

Customer relationships and other identifiable intangible assets
9,170

Liabilities assumed
(19,423
)
Deferred tax liabilities
(2,376
)
Aggregate purchase price
$
17,044


The estimated fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):
 
Useful Lives (in Years)
Value
Customer relationships and other identifiable intangible assets
10
$
9,170

 
 
$
9,170


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During 2018, the Company acquired other assets of $4.2 million and payments on a seller note for a prior acquisition of $1.6 million. The Company financed the acquisitions using a combination of existing cash and borrowings under its existing credit facility.
8. Goodwill and Other Intangible Assets
A summary of changes in the Company’s goodwill by reportable business segment is as follows (in thousands): 
 
 
December 31, 2018
 
Acquisition Accounting
Adjustments
 
Foreign
Currency
 
March 31, 2019
Segment
 
 
 
 
 
 
 
 
North America
 
$
3,087,875

 
$
2,711

 
$
4,574

 
$
3,095,160

International
 
1,454,199

 

 
(260
)
 
1,453,939

 
 
$
4,542,074

 
$
2,711


$
4,314


$
4,549,099


As of March 31, 2019 and December 31, 2018, other intangible assets consisted of the following (in thousands):
 
 
 
 
March 31, 2019
 
December 31, 2018
 
 
Weighted-
Avg
Useful
Lives
(Years)
 
Gross
Carrying
Amounts
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amounts
 
Accumulated
Amortization
 
Net
Carrying
Amount
Customer and vendor relationships
 
17.1
 
$
2,620,473

 
$
(818,268
)
 
$
1,802,205

 
$
2,625,270

 
$
(776,383
)
 
$
1,848,887

Trade names and trademarks—indefinite lived
 
N/A
 
479,421

 

 
479,421

 
479,555

 

 
479,555

Trade names and trademarks—other
 
14.3
 
4,959

 
(2,577
)
 
2,382

 
2,957

 
(2,501
)
 
456

Software
 
5.9
 
213,601

 
(159,491
)
 
54,110

 
212,733

 
(152,416
)
 
60,317

Non-compete agreements
 
4.1
 
47,971

 
(30,450
)
 
17,521

 
47,009

 
(28,314
)
 
18,695

Total other intangibles
 
 
 
$
3,366,425


$
(1,010,786
)

$
2,355,639


$
3,367,524


$
(959,614
)

$
2,407,910

Changes in foreign exchange rates resulted in a $4.3 million increase to the carrying values of other intangible assets in the three months ended March 31, 2019. Amortization expense related to intangible assets for the three months ended March 31, 2019 and 2018 was $51.2 million and $57.8 million, respectively.

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

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March 31, 2019
 
December 31, 2018
Term Loan A note payable (a), net of discounts
 
$
2,484,495

 
$
2,515,519

Term Loan B note payable (a), net of discounts
 
343,319

 
344,180

Revolving line of credit A Facility(a)
 
490,000

 
655,000

Revolving line of credit B Facility(a)
 
159,922

 
345,446

Revolving line of credit C Facility(a)
 
35,000

 
35,000

Revolving line of credit B Facility - foreign swing line (a)
 
30,749

 

Other debt(c)
 
30,084

 
37,902

Total notes payable and other obligations
 
3,573,569


3,933,047

Securitization Facility(b)
 
942,000

 
886,000

Total notes payable, credit agreements and Securitization Facility
 
$
4,515,569


$
4,819,047

Current portion
 
$
1,807,318

 
$
2,070,616

Long-term portion
 
2,708,251

 
2,748,431

Total notes payable, credit agreements and Securitization Facility
 
$
4,515,569


$
4,819,047

 ______________________
(a)
The Company has a Credit Agreement and provides for senior secured credit facilities consisting of a revolving credit facility in the amount of $1.285 billion, a term loan A facility in the amount of $2.525 billion and a term loan B facility in the amount of $350 million as of March 31, 2019. The revolving credit facility consists of (a) a revolving A credit facility in the amount of $800 million, with sublimits for letters of credit and swing line loans, (b) a revolving B facility in the amount of $450 million with borrowings in U.S. Dollars, Euros, British Pounds, Japanese Yen or other currency as agreed in advance, and a sublimit for swing line loans, and (c) a revolving C facility in the amount of $35 million for borrowings 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 A, term B, revolver A or revolver B debt. Proceeds from the credit facilities may be used for working capital purposes, acquisitions, and other general corporate purposes. The maturity date for the term A loan and revolving credit facilities is December 19, 2023. The maturity date for the term B loan is August 2, 2024.
Interest on amounts outstanding under the Credit Agreement (other than the term B loan) 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 B loan facility accrues based on the Eurocurrency Rate plus 2.00% for Eurocurrency Loans or the Base Rate plus 1.00% for Base Rate Loans. In addition, the Company pays a quarterly commitment fee at a rate per annum ranging from 0.20% to 0.40% of the daily unused portion of the credit facility.
At March 31, 2019, the interest rate on the term A loan and the revolving A facility was 4.00%, the interest rate on the the revolving B facility U.S. Dollar borrowings ($70 million) was 3.99%, the interest rate on the revolving B facility British Pounds borrowings ($90 million) was 2.23%, the interest rate on the term B loan was 4.50%, the interest rate on the revolving C facility was 4.00% and the interest rate on the foreign swing line loan was 2.17%. The unused credit facility fee was 0.30% for all revolving facilities at March 31, 2019.
(b)
The Company is party to a $1.2 billion receivables purchase agreement (Securitization Facility) that was amended on February 8, 2019 and April 22, 2019. There is a program fee equal to one month LIBOR plus 0.90% or the Commercial Paper Rate plus 0.80%. The program fee was 2.53% plus 0.88% as of March 31, 2019 and 2.52% plus 0.89% as of December 31, 2018. The unused facility fee is payable at a rate of 0.40% per annum as of March 31, 2019 and December 31, 2018.
(c)
Other debt includes the long-term portion of deferred payments associated with business acquisitions.
The Company was in compliance with all financial and non-financial covenants at March 31, 2019. The Company has entered into interest rate swap cash flow contracts with U.S. dollar notional amounts in order to reduce the variability of cash flows in the previously unhedged interest payments associated with $2.0 billion of variable rate debt. Refer to Footnote 14 for further details.

10. Income Taxes

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Our 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 we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. Our quarterly tax provision and our quarterly estimate of our annual effective tax rate, are subject to variation due to several factors, including variability in accurately predicting our pre-tax and taxable income and loss and the mix of jurisdictions to which they relate. Additionally, our 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 21% for 2019 and 2018 to income before income taxes for the three months ended March 31, 2019 and 2018 due to the following (in thousands):
 
 
2019
 
2018
Computed “expected” tax expense
 
$
48,141

 
21.0
 %
 
$
48,157

 
21.0
 %
Changes resulting from:
 
 
 
 
 
 
 
 
Foreign income tax differential
 
(4,692
)
 
(2.0
)%
 
2,016

 
0.9
 %
Excess tax benefit related to stock-based compensation
 
(6,385
)
 
(2.8
)%
 
(4,624
)
 
(2.0
)%
State taxes net of federal benefits
 
3,551

 
1.5
 %
 
3,373

 
1.5
 %
Foreign-sourced nontaxable income
 
(56
)
 
 %
 
(6,588
)
 
(2.9
)%
Foreign withholding
 
5,275

 
2.3
 %
 
5,471

 
2.4
 %
GILTI, net of foreign tax credits
 
2,433

 
1.1
 %
 
4,921

 
2.1
 %
Change in valuation allowance
 
3,289

 
1.4
 %
 

 
 %
Other
 
5,578

 
2.4
 %
 
1,656

 
0.7
 %
Provision for income taxes
 
$
57,134

 
24.9
 %
 
$
54,382

 
23.7
 %
11. Earnings Per Share
The Company reports basic and diluted earnings per share. Basic earnings per share is computed by dividing net income attributable to shareholders of the Company by the weighted average number of common shares outstanding during the reported period. Diluted earnings per share reflect the potential dilution related to equity-based incentives using the treasury stock method. The calculation and reconciliation of basic and diluted earnings per share for the three months ended March 31 follows (in thousands, except per share data):
 
 
 
Three Months Ended
March 31,
 
 
2019
 
2018
Net income
 
$
172,107

 
$
174,937

Denominator for basic earnings per share
 
85,941

 
89,765

Dilutive securities
 
3,303

 
3,485

Denominator for diluted earnings per share
 
89,244


93,250

Basic earnings per share
 
$
2.00

 
$
1.95

Diluted earnings per share
 
$
1.93

 
$
1.88

Diluted earnings per share for the three months ended March 31, 2019 and 2018 excludes the effect of 0.1 million shares of common stock, for both periods, that may be issued upon the exercise of employee stock options because such effect would be anti-dilutive. Diluted earnings per share also excludes the effect of 0.1 million and 0.2 million shares of performance based restricted stock for which the performance criteria have not yet been achieved for the three month periods ended March 31, 2019 and 2018, respectively.
12. Segments
The Company reports information about its operating segments in accordance with the authoritative guidance related to segments. The Company’s reportable segments represent components of the business for which separate financial information is evaluated regularly by the chief operating decision maker in determining how to allocate resources and in assessing performance. The Company operates in two reportable segments, North America and International. There were no inter-segment sales.

The Company’s segment results are as follows for the three month periods ended March 31 (in thousands): 

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Three Months Ended
March 31,
 
 
2019
 
2018
Revenues, net:
 
 
 
 
North America
 
$
396,899

 
$
364,270

International
 
224,926

 
221,230

 
 
$
621,825


$
585,500

Operating income:
 
 
 
 
North America
 
$
172,411

 
$
155,950

International
 
111,765

 
104,137

 
 
$
284,176


$
260,087

Depreciation and amortization:
 
 
 
 
North America
 
$
38,292

 
$
38,675

International
 
29,153

 
32,827

 
 
$
67,445


$
71,502

Capital expenditures:
 
 
 
 
North America
 
$
8,377

 
$
8,411

International
 
6,129

 
6,803

 
 
$
14,506


$
15,214

13. Commitments and Contingencies
In the ordinary course of business, the Company is involved in various pending or threatened legal actions, arbitration proceedings, claims, subpoenas, and matters relating to compliance with laws and regulations (collectively, legal proceedings).  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.
On July 10, 2017, a shareholder derivative complaint was filed against the Company and certain of the Company’s directors and officers in the United States District Court for the Northern District of Georgia seeking recovery on behalf of the Company. The derivative complaint alleges that the defendants issued a false and misleading proxy statement in violation of the federal securities laws; that defendants breached their fiduciary duties by causing or permitting the Company to make allegedly false and misleading public statements concerning the Company’s fee charges, and financial and business prospects; and that certain defendants breached their fiduciary duties through allegedly improper sales of stock. The complaint seeks unspecified monetary damages on behalf of the Company, corporate governance reforms, disgorgement of profits, benefits and compensation by the defendants, restitution, costs, and attorneys’ and experts’ fees. On September 20, 2018, the court entered an order deferring the case pending a ruling on the parties’ anticipated motions for summary judgment in the putative shareholder class action, or until otherwise agreed to by the parties. On January 9, 2019, a similar shareholder derivative complaint was filed in the Superior Court of Gwinnett County, Georgia, which is stayed pending a ruling on the parties' anticipated motions for summary judgment in the putative shareholder class action, or until otherwise agreed by the parties.  The defendants dispute the allegations in the derivative complaints and intend to vigorously defend against the claims.
On February 1, 2019, Schultz Transfer Systems, Inc. filed a complaint against Fleetcor Technologies Operating Company, LLC (“Fleetcor LLC”) in the United States District Court for the Northern District of Georgia.  The plaintiff alleges that it is a Fleetcor LLC customer and member of the Fuelman program, and that Fleetcor LLC overcharged the plaintiff for fees and fuel through the Fuelman program.  Based on these allegations, the plaintiff asserts claims for breach of contract, breach of the

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covenant of good faith and fair dealing, fraud, fraudulent concealment, money had and received, and unjust enrichment.  The plaintiff seeks to represent a class defined as all persons, including corporate entities, who were enrolled in the Fuelman program between June 2016 and the present.  On April 1, 2019, the Company filed a motion to compel arbitration and to dismiss the case, which is pending with the court. The Company disputes the allegations in the complaint and intends to vigorously defend against these claims.
Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, and are in the 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.
14. Derivative Financial Instruments and Hedging Activities
Foreign Currency Derivatives
The Company writes derivatives, primarily foreign currency forward contracts, option contracts, and swaps, mostly with small and medium size enterprises that are customers and derives a currency spread from this 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 credit risk inherent in derivative agreements represents the possibility that a loss may occur from the nonperformance of a counterparty to the agreements. The Company performs a review of the credit risk of these counterparties at the inception of the contract and on an ongoing basis. The Company also monitors the concentration of its contracts with any individual counterparty against limits at the individual counterparty level. The Company anticipates that the counterparties will be able to fully satisfy their obligations under the agreements, but takes action when doubt arises about the counterparties' ability to perform. These actions may include requiring customers to post or increase collateral, and for all counterparties, the possible termination of the related contracts. The Company does not designate any of its foreign exchange derivatives as hedging instruments in accordance with ASC 815.

The aggregate equivalent U.S. dollar notional amount of foreign exchange derivative customer contracts held by the Company as of March 31, 2019 and December 31, 2018 (in millions) is presented in the table below. 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.
 
Notional
 
March 31, 2019
 
December 31, 2018
Foreign exchange contracts:
 
 
 
  Swaps
$
552.9

 
$
929.5

  Futures, forwards and spot
3,886.7

 
3,249.9

  Written options
4,179.7

 
3,688.8

  Purchased options
3,420.6

 
2,867.2

Total
$
12,039.9

 
$
10,735.4


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


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The following table summarizes the fair value of foreign currency derivatives reported in the Unaudited Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018 (in millions):
 
March 31, 2019
 
December 31, 2018
 
Fair Value, Gross
 
Fair Value, Net
 
Fair Value, Gross
 
Fair Value, Net
 
Derivative Assets
 
Derivative Liabilities
 
Derivative Assets
 
Derivative Liabilities
 
Derivative Assets
 
Derivative Liabilities
 
Derivative Assets
 
Derivative Liabilities
Derivatives - undesignated:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
82.3

 
82.2

 
40.1

 
40.0

 
109.5

 
112.9

 
68.8

 
72.1

Cash collateral
8.1

 
40.8

 
8.1

 
40.8

 
9.6

 
73.1

 
9.6

 
73.1

Total net derivative assets and liabilities
$
74.2

 
$
41.4

 
$
32.0

 
$
(0.8
)
 
$
99.9

 
$
39.8

 
$
59.2

 
$
(1.0
)
The fair values of derivative assets and liabilities associated with contracts which include netting language that the Company believes to be enforceable have been netted to present the Company's net exposure with these counterparties. The Company recognizes all derivative assets, net in prepaid expense and other current assets and all derivative liabilities, net in other current liabilities, after netting at the customer level, as right of offset exists, in its Unaudited Consolidated Balance Sheets at their fair value. The gain or loss on the fair value is recognized immediately within revenues, net in the Unaudited Consolidated Statements of Income. The Company does not offset fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral. The derivative assets and derivative liabilities in the preceding table were recorded in other current assets and other current liabilities at each balance sheet date, respectively, in the Unaudited Consolidated Balance Sheet. The Company receives cash from customers as collateral for trade exposures, which is recorded within cash and cash equivalents and customer deposits in the Unaudited Consolidated Balance Sheet. The customer has the right to recall their collateral in the event exposures move in their favor, they unwind all outstanding trades or they cease to do business with the Company.
Cash Flow Hedges
On January 22, 2019, the Company entered into three interest rate swap cash flow contracts. The objective of these interest rate swaps is to reduce the variability of cash flows in the previously unhedged interest payments associated with $2.0 billion of variable rate debt, the sole source of which is due to changes in the LIBOR benchmark interest rate. As of March 31, 2019, the Company had the following outstanding interest rate derivatives that are designated as cash flow hedges of interest rate risk (in millions):
 
 
Notional Amount as of March 31, 2019
Fixed Rates
Maturity Date
Interest Rate Derivative:
 

 
 
Interest Rate Swap
 
$
1,000

2.56
%
January 31, 2022
Interest Rate Swap
 
500

2.56
%
January 31, 2023
Interest Rate Swap
 
500

2.55
%
December 19, 2023

These swap agreements qualify as hedging instruments and have been designated as cash flow hedges. For each of these swaps, the Company will pay a fixed monthly rate and receive 1-Month LIBOR.

The table below presents the fair value of the Company’s interest rate swap derivative financial instruments as well as their classification on the Unaudited Consolidated Balance Sheets as of March 31, 2019. See Note 4 for additional information on the fair value of the Company’s interest rate swaps.
 
 
As of March 31, 2019
 
 
Balance Sheet Location
 
Fair Value
Derivatives designated as cash flow hedges:
 
 
 
 
    Interest rate swap liabilities
 
Other liabilities
 
$
27.6



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The table below displays the effect of the Company’s derivative financial instruments in the Unaudited Consolidated Statement of Income and other comprehensive loss for the three months ended March 31, 2019 (in millions):
 
 
2019
Interest Rate Swaps:
 
 
Amount of loss recognized in other comprehensive income on derivatives, net of tax of $6.9 million                                                                                                    
 
$
20.7

Amount of loss reclassified from accumulated other comprehensive income into interest expense                                                                                                
 
0.2


The estimated net amount of the existing losses expected to be reclassified into earnings within the next 12 months is approximately $1.7 million at March 31, 2019.
15. Subsequent Events

On April 1, 2019, the Company completed two acquisitions. The Company acquired NvoicePay, a provider of full AP automation for businesses. The Company also made a small international acquisition. The aggregate purchase price of these acquisitions is approximately $255 million. These acquisitions are not material to the financial results of the Company.


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Table of Contents

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited consolidated financial statements and related notes appearing elsewhere in this report. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. See “Special Cautionary Notice Regarding Forward-Looking Statements”. All foreign currency amounts that have been converted into U.S. dollars in this discussion are based on the exchange rate as reported by OANDA for the applicable periods.
This management’s discussion and analysis should also be read in conjunction with the management’s discussion and analysis and consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2018.
General Business
FLEETCOR i is a leading global business payments company that simplifies the way businesses manage and pay their expenses. The FLEETCOR portfolio of brands help companies automate, secure, digitize and control payments to, or on behalf of, their employees and suppliers. FLEETCOR serves businesses, partners and merchants in North America, Latin America, Europe, and Asia Pacific. FLEETCOR’s predecessor company was organized in the United States in 1986, and FLEETCOR had its initial public offering in 2010.
FLEETCOR has two reportable segments, North America and International. We report these two segments as they align with our senior executive organizational structure, reflect how we organize and manage our employees around the world, manage operating performance, contemplate the differing regulatory environments in North America versus other geographies, and help us isolate the impact of foreign exchange fluctuations on our financial results.
Our payment solutions provide our customers with a payment method designed to be superior to and more robust and effective than what they use currently, whether they use a competitor’s product or another alternative method such as cash or check. Our solutions are comprised of payment products, networks and associated services.
FLEETCOR is a global payments company primarily focused on business to business payments. We simplify the way businesses manage and pay for expenses and operate in five categories: Fuel, Lodging, Tolls, Corporate Payments and Gift. Our products are focused on delivering a better, more efficient way to pay, through specialized products, systems, and payment and merchant networks. While the actual payment mechanisms vary from category to category, they are structured to afford control and reporting to the end user. The methods of payment generally function like a charge card, prepaid card, one-time use virtual card, and electronic RFID, etc. Each category is unique in its focus, customer base and target markets, but they also share a number of characteristics. Customers are primarily business to business, have recurring revenue models, specialized networks which create barriers to entry, have high EBITDA margins, and have similar selling systems, which can be leveraged in each business. Additionally, we provide other payment products including fleet maintenance, employee benefits and long haul transportation-related services. Our products are used in 82 countries around the world, with our primary geographies being the U.S., Brazil and the United Kingdom, which combined accounted for approximately 88% of our revenue in 2018.
FLEETCOR uses both proprietary and third-party networks to deliver our payment solutions. FLEETCOR owns and operates proprietary networks with well-established brands throughout the world, bringing incremental sales and loyalty to affiliated merchants. Third-party networks are used to broaden payment product acceptance and use. In 2018, we processed approximately 2.9 billion transactions within these networks, of which approximately 1.4 billion were related to our Gift product line.
FLEETCOR capitalizes on its products’ specialization with sales and marketing efforts by deploying product-dedicated sales forces to target specific customer segments. We market our products directly through multiple sales channels, including field sales, telesales and digital marketing, and indirectly through our partners, which include major oil companies, leasing companies, petroleum marketers, value-added resellers (VARs) and referral partners.
We believe that our size and scale, product breadth and specialization, geographic reach, proprietary networks, robust distribution capabilities and advanced technology contribute to our industry leading position.
Executive Overview
We operate in two segments, which we refer to as our North America and International segments. Our revenue is generally reported net of the cost for underlying products and services. In this report, we refer to this net revenue as “revenue". See “Results of Operations” for additional segment information.

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Revenues, net, by Segment. For the three months ended March 31, 2019 and 2018, our North America and International segments generated the following revenue (in millions):
 
 
Three Months Ended March 31,
 
 
2019
 
2018
(Unaudited)
 
Revenues, net
 
% of
total
revenues, net
 
Revenues, net
 
% of
total
revenues, net
North America
 
$
396.9

 
63.8
%
 
$
364.3

 
62.2
%
International
 
224.9

 
36.2
%
 
221.2

 
37.8
%
 
 
$
621.8

 
100.0
%
 
$
585.5

 
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 months ended March 31, 2019 and 2018 (in millions, except per share amounts).
 
 
 
Three Months Ended March 31,
(Unaudited)
 
2019
 
2018
Revenues, net
 
$
621.8

 
$
585.5

Net income
 
$
172.1

 
$
174.9

Net income per diluted share
 
$
1.93

 
$
1.88


Adjusted Net Income and Adjusted Net Income Per Diluted Share. Set forth below are adjusted net income and adjusted net income per diluted share for the three months ended March 31, 2019 and 2018 (in millions, except per share amounts).
 
 
 
Three Months Ended March 31,
(Unaudited)
 
2019
 
2018
Adjusted net income
 
$
238.4

 
$
233.5

Adjusted net income per diluted share
 
$
2.67

 
$
2.50

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” for more information and a reconciliation of the non-GAAP financial measure to the most directly comparable financial measure calculated in 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.
Sources of Revenue
Transactions. In both of our segments, we derive revenue from transactions. A transaction is defined as a purchase by a customer utilizing one of our payment products at a participating merchant. The following diagram illustrates a typical transaction flow, which is representative of many, but not all, of our businesses.
Illustrative Transaction Flow

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12898275&doc=26


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The revenue we derive from transactions is generated from both customers and merchants. Customers may include commercial businesses (obtained through direct and indirect channels), as well as partners for whom we manage payment programs. Merchants, who may also be customers under relevant accounting guidance, may include those merchants affiliated with our proprietary networks or those participating in the third-party networks we utilize.
From our customers and partners, we generate revenue through a variety of program fees, including transaction fees, card fees, network fees and charges. These fees may be charged as fixed amounts, costs plus a mark-up, or based on a percentage of the transaction purchase amounts, or a combination thereof. Our programs include other fees and charges associated with late payments and based on customer credit risk.
From our merchants and third-party networks, we generate revenue mostly from the difference between the amount charged to a customer and the amount paid to the merchant or network for a given transaction, as well as network fees and charges in certain businesses. The amount paid to a merchant or network may be calculated as (i) the merchant’s wholesale product cost plus a markup; (ii) the transaction purchase amount less a percentage discount; or (iii) the transaction purchase amount less a fixed fee per unit.
For a transaction involving the purchase of fuel where the amount paid to the merchant is calculated under the cost plus markup model, we refer to the difference between the amount charged to the customer and the amount paid to the merchant as revenue tied to fuel-price spreads. In all other cases, we refer to the difference between the amount charged to the customer and the amount paid to the merchant for a given transaction as interchange revenue.
The following table presents revenue and revenue per key performance metric by product for the three months ended March 31, 2019 and 2018 (in millions).*
 
 
As Reported
 
Pro Forma and Macro Adjusted4
 
 
Three Months Ended March 31,
 
Three Months Ended March 31,
(Unaudited)
 
2019
 
2018
2 
Change
 
% Change
 
2019
 
2018
 
Change
 
% Change
FUEL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
'- Revenues, net1
 
$
283.0

 
$
265.4

 
$
17.5

 
7
 %
 
$
279.1

 
$
254.8

 
$
24.4

 
10
 %
'- Transactions1
 
122.3

 
125.4

 
(3.1
)
 
(2
)%
 
119.8

 
118.7

 
1.1

 
1
 %
'- Revenues, net per transaction
 
$
2.31

 
$
2.12

 
$
0.20

 
9
 %
 
$
2.33

 
$
2.15

 
$
0.18

 
9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CORPORATE PAYMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
'- Revenues, net
 
$
110.3

 
$
94.8

 
$
15.5

 
16
 %
 
$
112.0

 
$
94.8

 
$
17.2

 
18
 %
'- Transactions
 
13.3

 
10.9

 
2.4

 
22
 %
 
13.3

 
10.9

 
2.4

 
22
 %
'- Revenues, net per transaction
 
$
8.30

 
$
8.69

 
$
(0.39
)
 
(5
)%
 
$
8.43

 
$
8.69

 
$
(0.27
)
 
(3
)%
'- Spend volume
 
15,529

 
13,398

 
2,131

 
16
 %
 
15,814

 
13,398

 
2,416

 
18
 %
'- Revenue, net per spend $
 
0.71
%
 
0.71
%
 
%
 
 %
 
0.71
%
 
0.71
%
 
%
 
 %
TOLLS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
'- Revenues, net1
 
$
88.9

 
$
89.5

 
$
(0.6
)
 
(1
)%
 
$
103.2

 
$
89.5

 
$
13.7

 
15
 %
'- Tags (average monthly)
 
5.0

 
4.7

 
0.3

 
6
 %
 
5.0

 
4.7

 
0.3

 
6
 %
'- Revenues, net per tag
 
$
17.94

 
$
19.11

 
$
(1.17
)
 
(6
)%
 
$
20.83

 
$
19.11

 
$
1.72

 
9
 %
LODGING
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
'- Revenues, net
 
$
41.8

 
$
39.4

 
$
2.4

 
6
 %