Company Quick10K Filing
Quick10K
FleetCor
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$266.19 86 $22,940
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-08-06 Officers, Exhibits
8-K 2019-08-06 Earnings, Regulation FD, Exhibits
8-K 2019-06-12 Amend Bylaw, Shareholder Vote, Exhibits
8-K 2019-05-07 Earnings, Regulation FD, Exhibits
8-K 2019-02-06 Earnings, Regulation FD, Exhibits
8-K 2018-12-14 Other Events, Exhibits
8-K 2018-10-30 Earnings, Regulation FD, Exhibits
8-K 2018-08-02 Earnings, Regulation FD, Exhibits
8-K 2018-06-06 Amend Bylaw, Shareholder Vote, Exhibits
8-K 2018-05-03 Earnings, Regulation FD, Exhibits
8-K 2018-02-08 Earnings, Regulation FD, Exhibits
8-K 2018-02-07 Officers, Shareholder Vote, Exhibits
8-K 2018-01-25 Amend Bylaw, Exhibits
BA Boeing 199,240
PEN Penumbra 4,610
GDEN Golden Entertainment 402
ALLT Allot Communications 249
GNUS Genius Brands 20
CKX CKX Lands 20
INPX Inpixon 5
LMFA LM Funding America 4
BIIO Bionovate Technologies 0
LOXO Loxo Oncology 0
FLT 2019-06-30
Part I-Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part Ii-Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.5 fleetcorbaml-execution.htm
EX-31.1 d34595dex311q22019.htm
EX-31.2 d34595dex312q22019.htm
EX-32.1 d34595dex321q22019.htm
EX-32.2 d34595dex322q22019.htm

FleetCor Earnings 2019-06-30

FLT 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
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Table of Contents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 __________________________________________________________
FORM 10-Q
 __________________________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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: (770449-0479
 __________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      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      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
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  


Table of Contents

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 July 19, 2019
Common Stock, $0.001 par value
 
86,567,921
 

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 and Six Months Ended June 30, 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.
 
 
 

i

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)
 
 
June 30, 20191
 
December 31, 2018
 
 
(Unaudited)
 
 
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
1,170,339

 
$
1,031,145

Restricted cash
 
318,287

 
333,748

Accounts and other receivables (less allowance for doubtful accounts of $68,334 at June 30, 2019 and $59,963 at December 31, 2018)
 
1,727,183

 
1,425,815

Securitized accounts receivable—restricted for securitization investors
 
974,000

 
886,000

Prepaid expenses and other current assets
 
196,549

 
199,278

Total current assets
 
4,386,358


3,875,986

Property and equipment, net
 
190,215

 
186,201

Goodwill
 
4,720,471

 
4,542,074

Other intangibles, net
 
2,417,188

 
2,407,910

Investments
 
26,635

 
42,674

Other assets
 
234,725

 
147,632

Total assets
 
$
11,975,592


$
11,202,477

Liabilities and stockholders’ equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
1,523,862

 
$
1,117,649

Accrued expenses
 
269,913

 
261,594

Customer deposits
 
870,217

 
926,685

Securitization facility
 
974,000

 
886,000

Current portion of notes payable and lines of credit
 
958,394

 
1,184,616

Other current liabilities
 
152,824

 
118,669

Total current liabilities
 
4,749,210


4,495,213

Notes payable and other obligations, less current portion
 
2,676,374

 
2,748,431

Deferred income taxes
 
452,113

 
491,946

Other noncurrent liabilities
 
254,523

 
126,707

Total noncurrent liabilities
 
3,383,010


3,367,084

Commitments and contingencies (Note 13)
 

 

Stockholders’ equity:
 
 
 
 
Common stock, $0.001 par value; 475,000,000 shares authorized; 123,754,485 shares issued and 86,535,000 shares outstanding at June 30, 2019; and 123,035,859 shares issued and 85,845,344 shares outstanding at December 31, 2018
 
123

 
123

Additional paid-in capital
 
2,427,640

 
2,306,843

Retained earnings
 
4,251,414

 
3,817,656

Accumulated other comprehensive loss
 
(928,197
)
 
(913,858
)
Less treasury stock, 37,219,485 shares at June 30, 2019 and 37,190,515 shares at December 31, 2018
 
(1,907,608
)
 
(1,870,584
)
Total stockholders’ equity
 
3,843,372


3,340,180

Total liabilities and stockholders’ equity
 
$
11,975,592


$
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 a modified retrospective transition method. Under this method, financial results reported in periods prior to 2019 are unchanged. Refer to footnote 2.

1

Table of Contents

FLEETCOR Technologies, Inc. and Subsidiaries
Unaudited Consolidated Statements of Income
(In Thousands, Except Per Share Amounts)
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2019
 
2018¹
 
2019
 
2018¹
Revenues, net
 
$
647,094

 
$
584,985

 
$
1,268,919

 
$
1,170,484

Expenses:
 
 
 
 
 
 
 
 
Processing
 
120,458

 
111,201

 
249,572

 
227,686

Selling
 
51,856

 
44,009

 
101,117

 
91,120

General and administrative
 
106,784

 
96,431

 
199,568

 
186,800

Depreciation and amortization
 
70,908

 
68,610

 
138,353

 
140,112

Other operating, net
 
(229
)
 
(49
)
 
(1,184
)
 
(104
)
Operating income
 
297,317


264,783

 
581,493


524,870

Investment loss
 

 

 
15,660

 

Other expense, net
 
528

 
458

 
748

 
161

Interest expense, net
 
39,529

 
33,150

 
78,584

 
64,215

Total other expense
 
40,057


33,608

 
94,992


64,376

Income before income taxes
 
257,260

 
231,175

 
486,501

 
460,494

(Benefit from) provision for income taxes
 
(4,391
)
 
54,323

 
52,743

 
108,705

Net income
 
$
261,651


$
176,852

 
$
433,758


$
351,789

Basic earnings per share
 
$
3.03

 
$
1.98

 
$
5.03

 
$
3.93

Diluted earnings per share
 
$
2.90

 
$
1.91

 
$
4.84

 
$
3.78

Weighted average shares outstanding:
 
 
 
 
 
 
 
 
Basic shares
 
86,360

 
89,169

 
86,159

 
89,466

Diluted shares
 
90,131

 
92,702

 
89,694

 
92,970

See accompanying notes to unaudited consolidated financial statements.
1Reflects reclassifications from previously disclosed amounts to conform to current presentation.




2

Table of Contents

FLEETCOR Technologies, Inc. and Subsidiaries
Unaudited Consolidated Statements of Comprehensive Income (Loss)
(In Thousands)
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
Net income
 
$
261,651

 
$
176,852

 
$
433,758

 
$
351,789

Other comprehensive income (loss):
 
 
 
 
 
 
Foreign currency translation gains (losses), net of tax
 
31,662

 
(362,085
)
 
32,035

 
(318,831
)
Net change in derivative contracts, net of tax
 
(25,667
)
 

 
(46,374
)
 

Total other comprehensive income (loss)
 
5,995


(362,085
)

(14,339
)

(318,831
)
Total comprehensive income (loss)
 
$
267,646


$
(185,233
)

$
419,419


$
32,958

See accompanying notes to unaudited consolidated financial statements.


3

Table of Contents

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

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


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

 
$
2,214,224

 
$
2,958,921

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

Net income
 

 

 
174,937

 

 

 
174,937

Cumulative effect of change in accounting principle
 

 

 
47,252

 

 

 
47,252

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

 

 

 
43,254

 

 
43,254

Acquisition of common stock
 

 

 

 

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

 
14,403

 

 

 


14,403

Issuance of common stock
 
1

 
19,975

 

 

 

 
19,976

Balance at March 31, 2018
 
123

 
2,248,602

 
3,181,110

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

Net income
 

 

 
176,852

 

 

 
176,852

Other comprehensive loss from currency exchange, net of tax of $0
 

 

 

 
(362,085
)
 

 
(362,085
)
Acquisition of common stock
 

 

 

 
 
 
(292,359
)
 
(292,359
)
Share-based compensation
 

 
19,102

 

 

 

 
19,102

Issuance of common stock
 

 
9,523

 

 

 

 
9,523

Balance at June 30, 2018
 
$
123

 
$
2,277,227

 
$
3,357,962


$
(870,688
)

$
(1,325,539
)

$
3,439,085


See accompanying notes to unaudited consolidated financial statements.


4

Table of Contents

FLEETCOR Technologies, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
(In Thousands)
 
 
Six Months Ended
June 30,
 
 
2019¹
 
2018
Operating activities
 
 
 
 
Net income
 
$
433,758

 
$
351,789

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation
 
30,640

 
25,033

Stock-based compensation
 
30,847

 
33,505

Provision for losses on accounts receivable
 
40,142

 
26,495

Amortization of deferred financing costs and discounts
 
2,428

 
2,678

Amortization of intangible assets and premium on receivables
 
107,713

 
115,079

Deferred income taxes
 
(64,883
)
 
(6,473
)
Investment loss
 
15,660

 

Other non-cash operating income
 
(1,579
)
 
(104
)
Changes in operating assets and liabilities (net of acquisitions/dispositions):
 
 
 
 
Accounts and other receivables
 
(418,806
)
 
(519,527
)
Prepaid expenses and other current assets
 
8,154

 
(20,440
)
Other assets
 
(17,286
)
 
(15,418
)
Accounts payable, accrued expenses and customer deposits
 
383,233

 
282,472

Net cash provided by operating activities
 
550,021


275,089

Investing activities
 
 
 
 
Acquisitions, net of cash acquired
 
(250,926
)
 
(3,811
)
Purchases of property and equipment
 
(31,975
)
 
(34,614
)
Other
 

 
(11,192
)
Net cash used in investing activities
 
(282,901
)

(49,617
)
Financing activities
 
 
 
 
Proceeds from issuance of common stock
 
56,950

 
29,498

Repurchase of common stock
 
(4,024
)
 
(380,651
)
Borrowings on securitization facility, net
 
88,000

 
128,000

Deferred financing costs paid and debt discount
 
(352
)
 

Principal payments on notes payable
 
(64,875
)
 
(69,000
)
Borrowings from revolver
 
765,709

 
774,019

Payments on revolver
 
(1,027,468
)
 
(600,109
)
Borrowings on swing line of credit, net
 
34,639

 
13,632

Other
 
(125
)
 
(149
)
Net cash used in financing activities
 
(151,546
)

(104,760
)
Effect of foreign currency exchange rates on cash
 
8,159

 
(66,144
)
Net increase in cash and cash equivalents and restricted cash
 
123,733

 
54,568

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
 
$
1,488,626


$
1,185,438

Supplemental cash flow information
 
 
 
 
Cash paid for interest
 
$
90,559

 
$
73,303

Cash paid for income taxes
 
$
100,396

 
$
112,982

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.


5

Table of Contents

FLEETCOR Technologies, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
June 30, 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 period-end rates of exchange. The related translation adjustments are made directly to accumulated other comprehensive loss. Income and expenses are translated at the average monthly rates of exchange during the period. Gains and losses from foreign currency transactions of these subsidiaries are included in net income. The Company recognized foreign exchange losses of $0.3 million and $0.2 million for the three months ended June 30, 2019 and 2018, respectively. The Company recognized foreign exchange losses of $0.3 million and foreign exchange gains of $0.4 million for the six months ended June 30, 2019 and 2018, respectively. The Company recorded foreign currency gains on long-term intra-entity transactions of $43.7 million and foreign currency losses on long-term intra-entity transactions of $132.2 million for the three months ended June 30, 2019 and 2018, respectively, and losses of $33.3 million and $156.5 million for the six months ended June 30, 2019 and 2018 included as a component of foreign currency translation gains (losses), net of tax, on the Unaudited Consolidated Statements of Comprehensive Income (Loss).
Reclassification
The Company reclassified certain amounts on the Unaudited Consolidated Statements of Income from general and administrative to other operating, net in order to conform to current presentation.
Derivatives
The Company uses derivatives to (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 utilizes derivative instruments. Interest rate swap contracts designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
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. Cash flow hedges hedge a portion of the Company's variable rate debt. Derivative fair value changes that are recorded in accumulated other comprehensive income/loss are reclassified to earnings in the same period or periods that the hedged item affects earnings, to the extent the derivative is effective in offsetting the change in cash flows attributable to the hedged risk. The portions of the change in fair value that are either considered ineffective or are excluded from the measure of effectiveness are recognized immediately in interest expense, net in the Unaudited Consolidated Statements of Income.
At Cambridge Global Payments ("Cambridge"), the majority of revenue is from exchanges of currency at spot rates, which enables customers to make cross-currency payments. In addition, Cambridge also writes foreign currency forward and option contracts for its customers to facilitate future payments. Cambridge also uses derivatives to facilitate cross-currency corporate payments by writing derivatives to customers, which are not designated as hedging instruments. The duration of these derivative contracts at inception is generally less than one year. The Company aggregates its foreign exchange exposures arising from customer contracts, including forwards, options and spot exchanges of currency, and economically hedges the net currency risks by entering into offsetting derivatives with established financial institution counterparties. The changes in fair value related to these derivatives are recorded in revenues, net in the Unaudited Consolidated Statements of Income.

6

Table of Contents

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. Refer to footnote 14.

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 ASC 606, represent approximately 80% of total consolidated revenues, net, for the three and six months ended June 30, 2019. The Company accounts for remaining revenues comprised of late fees and finance charges, in jurisdictions where permitted under local regulations, primarily in the U.S. and Canada in accordance with ASC 310, "Receivables". Such fees are recognized net of a provision for estimated uncollectible amounts, at the time the fees and finance charges are assessed and services are provided. 
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 six months ended June 30 was as follows:
Revenues, net by Product*
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
%
 
2018
 
%
 
2019
 
%
 
2018
 
%
Fuel 1
295

 
45
%
 
278

 
48
%
 
578

 
46
%
 
544

 
46
%
Corporate Payments
127

 
20
%
 
100

 
17
%
 
237

 
19
%
 
194

 
17
%
Tolls 1
86

 
13
%
 
80

 
14
%
 
175

 
14
%
 
170

 
14
%
Lodging
50

 
8
%
 
45

 
8
%
 
92

 
7
%
 
84

 
7
%
Gift
36

 
6
%
 
33

 
6
%
 
84

 
7
%
 
82

 
7
%
Other1
53

 
8
%
 
49

 
8
%
 
102

 
8
%
 
97

 
8
%
Consolidated Revenues, net
647

 
100
%
 
585

 
100
%
 
1,269

 
100
%
 
1,170

 
100
%
1 Reflects certain reclassifications of revenue between product categories: 1) as the Company realigned its Brazil business into product lines, resulting in refinement of revenue classified as fuel versus tolls and 2) shifted the E-Cash/OnRoad product to fuel from other.
*Columns may not calculate due to rounding.
Revenue by geography (in millions) for the three and six months ended June 30 was as follows:
Revenues, net by Geography*
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
%
 
2018
 
%
 
2019
 
%
 
2018
 
%
United States
389

 
60
%
 
348

 
59
%
 
760

 
60
%
 
691

 
59
%
Brazil
103

 
16
%
 
96

 
16
%
 
209

 
16
%
 
203

 
17
%
United Kingdom
70

 
11
%
 
65

 
11
%
 
137

 
11
%
 
130

 
11
%
Other
85

 
13
%
 
76

 
13
%
 
163

 
13
%
 
146

 
12
%
Consolidated Revenues, net
647

 
100
%
 
585

 
100
%
 
1,269

 
100
%
 
1,170

 
100
%
*Columns may not calculate due to rounding.

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Table of Contents

Contract Liabilities
Deferred revenue contract liabilities for customers subject to ASC 606 were $72.4 million and $30.6 million as of June 30, 2019 and December 31, 2018, respectively. We expect to recognize substantially all of these amounts in revenues within approximately 12 months.  Revenue recognized in the three and six months ended June 30, 2019 that was included in the deferred revenue contract liability as of December 31, 2018 was approximately $6.7 million and $23.9 million, respectively.

Spot Trade Offsetting

The Company uses spot trades to facilitate cross-currency corporate payments in its Cambridge business. Timing in the receipt of cash from the customer results in intermediary balances in the receivable from the customer and the payment to the customer's counterparty. In accordance with ASC Subtopic 210-20, "Offsetting," the Company applies offsetting to spot trade assets and liabilities associated with contracts that include master netting agreements, as a right of setoff exists, which the Company believes to be enforceable. As such, the Company has netted the Company's exposure with these customer's counterparties, with the receivables from the customer. The Company recognizes all spot trade assets, net in accounts receivable and all spot trade liabilities, net in accounts payable, each net at the customer level, in its Consolidated Balance Sheets at their fair value. The following table presents the Company’s spot trade assets and liabilities at their fair value at June 30, 2019 and December 31, 2018, (in millions). 
 
June 30, 2019
 
December 31, 2018
 
Gross Assets
 
Offset on the Balance Sheet
 
Net Assets
 
Gross Assets
 
Offset on the Balance Sheet
 
Net Assets
Assets
 
 
 
 
 
 
 
 
 
 
 
Accounts Receivable
$
465.3

 
$
(421.2
)
 
$
44.1

 
$
815.7

 
$
(745.2
)
 
$
70.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Liabilities
 
Offset on the Balance Sheet
 
Net Liabilities
 
Gross Liabilities
 
Offset on the Balance Sheet
 
Net Liabilities
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Accounts Payable
$
452.0

 
$
(421.2
)
 
$
30.8

 
$
760.8

 
$
(745.2
)
 
$
15.6



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 hedge effectiveness assessment at each quarter end.
In October 2018, the FASB issued ASU 2018-16, "Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate, Overnight Index Swap Rate as a Benchmark Interest Rate for Hedge Accounting Purposes," which amends the hedge accounting to add overnight index swap rates based on the secured overnight financing rate as a fifth U.S. benchmark interest rate. The Company adopted this guidance on January 1, 2019, which did not have a material impact on the Company's results of operations, financial condition, or cash flows.

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Table of Contents

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

Pending Adoption of Recently Issued Accounting Standards
Cloud Computing Arrangements
On August 29, 2018, the FASB issued ASU 2018-15, "Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract", that provides guidance on implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract. The ASU, which was released in response to a consensus reached by the EITF at its June 2018 meeting, aligns the accounting for such costs with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in such a CCA. The guidance is effective for the Company for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted, 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.
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.

9

Table of Contents

In April 2019, the FASB issued ASU 2019-04, "Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments", which clarifies certain aspects of accounting for credit losses, hedging activities, and financial instruments. For clarifications around credit losses, the effective date will be the same as the effective date in ASU 2016-13. For entities that have adopted ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities", ASU 2019-04 is effective the first annual reporting period beginning after the date of issuance of ASU 2019-04 and may be early adopted. The amendments in ASU 2019-04 related to ASU 2016-01 are effective for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted in any interim period after issuance of ASU 2019-04 for those entities that have already adopted ASU 2016-01. The Company's adoption of this ASU is not expected to have a material impact on the results of operations, financial condition, or cash flows.
2. Leases
Effective January 1, 2019, the Company adopted Topic 842 using a modified retrospective method. Under this transition method, the Company has not restated comparative periods, and prior comparative periods will continue to be reported in conformity with ASC 840.  On January 1, 2019, based on the present value of the lease payments for the remaining lease term of the Company's existing leases, the Company recognized right-of-use (“ROU”) assets of $55.9 million and lease liabilities for operating leases of $65.5 million. At June 30, 2019, other assets includes a ROU asset of $74.5 million, other current liabilities includes short term operating lease liabilities of $15.2 million, and other non-current liabilities includes long term lease liabilities of $72.8 million. Finance leases are immaterial.
The Company primarily leases office space, data centers, vehicles, and equipment. Some of our leases contain variable lease payments, typically payments based on an index. The Company’s leases have remaining lease terms of one year to thirty years, some of which include options to extend from one to five years or more. The exercise of lease renewal options is typically at the Company's sole discretion; therefore, the majority of renewals to extend the lease terms are not reasonably certain to exercise and are not included in ROU assets and lease liabilities. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at lease commencement, for the purposes of transition, the rate in effect at January 1, 2019. Additional payments based on the change in an index or rate are recorded as a period expense when incurred. Lease modifications result in remeasurement of the lease liability as of the modification date.
For contracts entered into on or after the effective date or at the inception of a contract, the Company assessed whether the contract is, or contains, a lease. The assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether the Company has the right to direct the use of the asset. The Company elected the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs for all leases. Therefore, leases entered into prior to January 1, 2019, are accounted for under the prior accounting standard and were not reassessed. The Company has also elected not to recognize ROU assets and lease liabilities for short-term leases that have a term of twelve months or less. The effect of short-term leases would not be material to the ROU assets and lease liabilities.
Under ASC 842, a Company discounts future lease obligations by the rate implicit in the contract, unless the rate cannot be readily determined. As most of our leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. In determining the borrowing rate, the Company considered the applicable lease terms, the Company's cost of borrowing, and for leases denominated in a foreign currency, the collateralized borrowing rate that the Company would obtain to borrow in the same currency in which the lease is denominated.

Total lease costs for the three and six months ended June 30, 2019 were $5.1 million and $9.5 million, respectively.
The supplementary cash and non-cash disclosures for the six months ended June 30, 2019 are as follows (in thousands):
 
Six Months Ended June 30, 2019
Cash paid for operating lease liabilities
$
9,447

Right-of-use assets obtained in exchange for new operating lease obligations 1
$
82,814

Weighted-average remaining lease term (years)
7.7

Weighted-average discount rate
3.57
%
 1 Includes $55.9 million for operating leases existing on January 1, 2019


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Table of Contents

Maturities of lease liabilities as of June 30, 2019 were as follows (in thousands):
2020
 
$
17,487

2021
 
16,370

2022
 
12,499

2023
 
11,208

2024
 
9,946

Thereafter
 
35,059

Total lease payments
 
102,569

Less imputed interest
 
(14,535
)
Present value of lease liabilities
 
$
88,034


3. Accounts Receivable
The Company’s accounts receivable and securitized accounts receivable include the following at June 30, 2019 and December 31, 2018 (in thousands):  
 
 
June 30, 2019
 
December 31, 2018
Gross domestic accounts receivable
 
$
816,328

 
$
668,154

Gross domestic securitized accounts receivable
 
974,000

 
886,000

Gross foreign receivables
 
979,189

 
817,624

Total gross receivables
 
2,769,517


2,371,778

Less allowance for doubtful accounts
 
(68,334
)
 
(59,963
)
Net accounts and securitized accounts receivable
 
$
2,701,183


$
2,311,815


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, without recourse, 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.
A rollforward of the Company’s allowance for doubtful accounts related to accounts receivable for the six month period ended June 30 is as follows (in thousands):
 
 
2019
 
2018
Allowance for doubtful accounts beginning of period
 
$
59,963

 
$
46,031

Provision for bad debts
 
40,142

 
26,495

Write-offs
 
(31,771
)
 
(24,281
)
Allowance for doubtful accounts end of period
 
$
68,334

 
$
48,245



11

Table of Contents

4. Fair Value Measurements
Fair value is a market-based measurement that reflects assumptions that market participants would use in pricing an asset or liability. GAAP discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions.
As the basis for evaluating such inputs, a three-tier value hierarchy prioritizes the inputs used in measuring fair value as follows:
 
Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.
Level 2: Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The following table presents the Company’s financial assets and liabilities which are measured at fair values on a recurring basis at June 30, 2019 and December 31, 2018, (in thousands). 
 
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
June 30, 2019
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Repurchase agreements
 
$
716,155

 
$

 
$
716,155

 
$

Money market
 
51,151

 

 
51,151

 

Certificates of deposit
 
28,455

 

 
28,455

 

       Foreign exchange derivative contracts
 
44,513

 

 
44,513

 

Total assets
 
$
840,274

 
$

 
$
840,274

 
$

Cash collateral for foreign exchange derivative contracts
 
$
6,123

 
$

 
$

 
$