Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

			Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)			52
Consolidated Balance Sheets at December 31, 2021 and 2020			54
Consolidated Statements of Income for the Years Ended December 31, 2021, 2020 and 2019			55
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2021, 2020 and 2019			56
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2021, 2020 and 2019			57
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019			58
Notes to Consolidated Financial Statements			59

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of FLEETCOR Technologies, Inc. and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of FLEETCOR Technologies, Inc. and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

						Valuation of Goodwill
Description of the Matter						At December 31, 2021, the Company’s goodwill was $5.1 billion. As discussed in Note 2 to the consolidated financial statements, the Company completes an impairment test of goodwill at least annually or more frequently if facts and circumstances indicate that goodwill might be impaired. Goodwill is tested for impairment at the reporting unit level and involves estimating the fair value of each identified reporting unit which is measured based upon, among other factors, a discounted cash flow analysis, as well as market multiples for comparable companies. Auditing the Company's estimate of reporting unit fair value involved a high degree of subjectivity as estimates underlying the determination of reporting unit fair value using the discounted cash flow model were based on significant assumptions that are sensitive to change and are affected by expected future market and economic conditions. These assumptions included forecasts for Revenue, net, Earnings before Interest Taxes Depreciation and Amortization (EBITDA), and long-term growth rates as well as the discount rates, which reflected risk-based factors based on the reporting units’ geographical location and business risk.

How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls over management’s review of the significant assumptions described above. For example, we tested controls over management’s review of the reporting units’ long-term growth rates and discount rates used in the determination of the reporting units’ estimated fair values. To test the estimated fair value of the Company’s reporting units, our audit procedures included, among others, assessing the methodologies used by the Company and testing the significant assumptions discussed above, inclusive of the underlying data used by the Company in its development of these assumptions. We involved our valuation specialists to assist us with these procedures. Our valuation specialists evaluated management’s estimation of the discount rates used in the reporting units’ fair value calculations, performed a comparison of market multiples to observable transactions, and independently recalculated the discount rates for the respective reporting units. We also compared earnings forecasts to historical results and, for certain reporting units, to current industry and economic trends, and performed sensitivity analyses of the significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the significant assumptions.

						Accounting for Business Combinations
Description of the Matter						As discussed in Note 7 to the consolidated financial statements, on June 1, 2021 and September 1, 2021, the Company completed the acquisitions of Associated Foreign Exchange Holdings, Inc. (AFEX) and ALE Solutions, Inc. (ALE) for total estimated purchase consideration of $418.7 million and $421.8 million, respectively. The acquisitions were accounted for as business combinations. The Company recorded intangible assets from these acquisitions, including customer relationship intangible assets of $220.7 million in the AFEX acquisition and $117.7 million in the ALE acquisition. The Company used the excess earnings method to estimate the preliminary fair value of customer relationships, which is based on management’s estimates and assumptions. Auditing the preliminary fair values of the AFEX and ALE customer relationship intangible assets was complex and subjective due to the estimation uncertainty in determining customer attrition rates which had a significant impact on the estimated fair values. The customer attrition rates are forward-looking and could be affected by future economic and market conditions.
How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the accounting for the acquisitions, including valuation of customer relationship intangible assets. Our tests included controls over the estimation processes and models to estimate the fair values of the above identified intangible assets, as well as controls over management’s review of the valuation methodologies and significant assumptions discussed above. To test the estimated fair values of the customer relationship intangible assets, our audit procedures included, among others, evaluating the Company’s selection of the valuation methodologies, testing the significant assumptions, and testing the completeness and accuracy of underlying data. For example, we compared the fair value allocated to customer relationship intangible assets relative to the purchase price to publicly available comparable transactions. With the assistance of our valuation specialists, we evaluated the valuation methodologies, and the customer attrition rates used within the models. This included understanding and validating the source information underlying the determination of the attrition rates and testing the mathematical accuracy of the calculations. We also performed sensitivity analyses to evaluate the changes in the fair value of the intangible assets that would result from changes in customer attrition rates.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 2002.

Atlanta, Georgia

March 1, 2022

FLEETCOR Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share and Par Value Amounts)

						December 31,
						2021						2020
Assets
Current assets:
Cash and cash equivalents						$	1,520,027					$	934,900
Restricted cash						730,668						541,719
Accounts and other receivables (less allowance for credit losses of $98,719 at December 31, 2021 and $86,886 at December 31, 2020)						1,793,274						1,366,775
Securitized accounts receivable—restricted for securitization investors						1,118,000						700,000
Prepaid expenses and other current assets						326,079						412,924
Total current assets						5,488,048						3,956,318
Property and equipment, net						236,294						202,509
Goodwill						5,078,978						4,719,181
Other intangibles, net						2,335,385						2,115,882
Investments						52,016						7,480
Other assets						213,932						193,209
Total assets						$	13,404,653					$	11,194,579
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable						$	1,406,350					$	1,054,478
Accrued expenses						369,054						282,681
Customer deposits						1,788,705						1,175,322
Securitization facility						1,118,000						700,000
Current portion of notes payable and lines of credit						399,628						505,697
Other current liabilities						208,614						250,133
Total current liabilities						5,290,351						3,968,311
Notes payable and other obligations, less current portion1						4,460,039						3,097,580
Deferred income taxes						566,291						498,154
Other noncurrent liabilities1						221,392						275,123
Total noncurrent liabilities						5,247,722						3,870,857
Commitments and contingencies (Note 15)
Stockholders’ equity:
Common stock, $0.001 par value; 475,000,000 shares authorized; 127,113,023 shares issued and 78,879,551 shares outstanding at December 31, 2021; and 126,448,078 shares issued and 83,666,163 shares outstanding at December 31, 2020						127						126
Additional paid-in capital						2,878,751						2,749,900
Retained earnings						6,256,442						5,416,945
Accumulated other comprehensive loss						(1,464,616)						(1,363,158)
Less treasury stock (48,233,471 shares and 42,781,915 shares at December 31, 2021 and 2020, respectively)						(4,804,124)						(3,448,402)
Total stockholders’ equity						2,866,580						3,355,411
Total liabilities and stockholders’ equity						$	13,404,653					$	11,194,579

1Recast 2020 to reflect long term deferred revenue in other noncurrent liabilities, to conform to current year presentation.
See accompanying notes.

FLEETCOR Technologies, Inc. and Subsidiaries

Consolidated Statements of Income

(In Thousands, Except Per Share Amounts)

						Year Ended December 31,
						2021						2020						2019
Revenues, net						$	2,833,736					$	2,388,855					$	2,648,848
Expenses:
Processing						559,819						596,363						530,669
Selling						262,118						192,732						204,806
General and administrative						485,830						374,678						407,210
Depreciation and amortization						284,197						254,802						274,210
Other operating (income) expense, net						(784)						(1,985)						523
Operating income						1,242,556						972,265						1,231,430
Investment (gain) loss, net						(9)						(30,008)						3,470
Other expense (income), net						3,858						(10,055)						93
Interest expense, net						113,705						129,803						150,048
Loss on extinguishment of debt						16,194						—						—
Total other expense						133,748						89,740						153,611
Income before income taxes						1,108,808						882,525						1,077,819
Provision for income taxes						269,311						178,309						182,746
Net income						$	839,497					$	704,216					$	895,073
Basic earnings per share						$	10.23					$	8.38					$	10.36
Diluted earnings per share						$	9.99					$	8.12					$	9.94
Weighted average shares outstanding:
Basic shares						82,060						84,005						86,401
Diluted shares						84,061						86,719						90,070

See accompanying notes.

FLEETCOR Technologies, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In Thousands)

						Year Ended December 31,
						2021						2020						2019
Net income						$	839,497					$	704,216					$	895,073
Other comprehensive loss:
Foreign currency translation losses, net of tax						(144,543)						(367,249)						(15,855)
Net change in derivative contracts, net of tax						43,085						(23,444)						(42,752)
Total other comprehensive loss						(101,458)						(390,693)						(58,607)
Total comprehensive income						$	738,039					$	313,523					$	836,466

See accompanying notes.

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						—						—						895,073						—						—						895,073
Other comprehensive loss from currency exchange, net of tax of $0						—						—						—						(58,607)						—						(58,607)
Acquisition of common stock						—						(42,000)						—						—						(652,909)						(694,909)
Share-based compensation expense						—						60,953						—						—						—						60,953
Issuance of common stock						1						168,925						—						—						—						168,926
Balance at December 31, 2019						124						2,494,721						4,712,729						(972,465)						(2,523,493)						3,711,616
Net income						—						—						704,216						—						—						704,216
Other comprehensive loss from currency exchange, net of tax						—						—						—						(390,693)						—						(390,693)
Acquisition of common stock						—						75,000						—						—						(924,909)						(849,909)
Share-based compensation expense						—						43,384						—						—						—						43,384
Issuance of common stock						2						136,795						—						—						—						136,797
Balance at December 31, 2020						126						2,749,900						5,416,945						(1,363,158)						(3,448,402)						3,355,411
Net income						—						—						839,497						—						—						839,497
Other comprehensive loss, net of tax						—						—						—						(101,458)						—						(101,458)
Acquisition of common stock						—						—						—						—						(1,355,722)						(1,355,722)
Share-based compensation expense						—						80,071						—						—						—						80,071
Issuance of common stock						1						48,780						—						—						—						48,781
Balance at December 31, 2021						$	127					$	2,878,751					$	6,256,442					$	(1,464,616)					$	(4,804,124)					$	2,866,580

See accompanying notes.

FLEETCOR Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)

						Year Ended December 31,
						2021						2020						2019
Operating activities
Net income						$	839,497					$	704,216					$	895,073
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation						75,571						65,181						62,784
Stock based compensation						80,071						43,384						60,953
Provision for losses on accounts and other receivables						37,919						158,549						74,309
Amortization of deferred financing costs and discounts						6,831						6,486						5,106
Amortization of intangible assets and premium on receivables						208,625						189,620						211,426
Deferred income taxes						11,026						15,668						37,883
Loss on extinguishment of debt						16,194						—						—
Investment (gain) loss						(9)						(30,008)						3,470
Other non-cash operating income						(784)						(1,985)						522
Changes in operating assets and liabilities (net of acquisitions/disposition):
Accounts receivable and other receivables						(731,137)						264,140						(196,028)
Prepaid expenses and other current assets						186,268						(14,521)						(185,391)
Other assets						36,832						12,656						(6,792)
Accounts payable, accrued expenses and customer deposits						430,159						59,203						198,756
Net cash provided by operating activities						1,197,063						1,472,589						1,162,071
Investing activities
Acquisitions, net of cash acquired						(602,120)						(80,787)						(448,277)
Purchases of property and equipment						(111,530)						(78,425)						(75,170)
Proceeds from disposal of investment						—						52,963						—
Other						(2,281)						—						(255)
Net cash used in investing activities						(715,931)						(106,249)						(523,702)
Financing activities
Proceeds from issuance of common stock						48,781						136,797						168,925
Repurchase of common stock						(1,355,722)						(849,910)						(694,909)
Borrowings (payments) on securitization facility, net						418,000						(270,973)						84,973
Deferred financing costs paid and debt discount						(38,920)						(2,637)						(2,868)
Proceeds from issuance of notes payable						1,900,000						—						700,000
Principal payments on notes payable						(507,500)						(175,285)						(138,500)
Borrowings from revolver						1,910,000						1,243,500						1,811,509
Payments on revolver						(1,978,851)						(1,496,907)						(2,292,349)
(Payments) borrowings on swing line of credit, net						(51,049)						(1,042)						52,996
Other						(811)						(344)						52
Net cash provided by (used in) financing activities						343,928						(1,416,801)						(310,171)
Effect of foreign currency exchange rates on cash						(50,984)						(148,157)						(17,854)
Net increase (decrease) in cash and cash equivalents and restricted cash						774,076						(198,618)						310,344
Cash and cash equivalents and restricted cash, beginning of year						1,476,619						1,675,237						1,364,893
Cash and cash equivalents and restricted cash, end of year						$	2,250,695					$	1,476,619					$	1,675,237
Supplemental cash flow information
Cash paid for interest						$	132,504					$	126,460					$	178,417
Cash paid for income taxes						$	229,721					$	165,315					$	200,525

See accompanying notes.

FLEETCOR Technologies, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2021

1. Description of Business

FLEETCOR Technologies, Inc. (the "Company", "we", "us" and "our") is a leading global provider of digital payment solutions that enables businesses to control purchases and make payments more effectively and efficiently. Since its incorporation in 2000, FLEETCOR has continued to deliver on its mission: to provide businesses with “a better way to pay”. FLEETCOR has been a member of the S&P 500 since 2018 and trades on the New York Stock Exchange under the ticker FLT.

FLEETCOR’s vision is that every payment is digital, every purchase is controlled, and every related decision is informed. Digital payments are faster and more secure than paper-based methods such as checks, and provide timely and detailed data which can be utilized to effectively reduce unauthorized purchases and fraud, automate data entry and reporting, and eliminate reimbursement processes. Combining this payment data with analytical tools delivers insights, which managers can use to better run their businesses. The Company's wide range of digitized solutions generally provides control, reporting, and automation benefits over the payment methods businesses often used, such as cash, paper checks, general purpose credit cards, as well as employee pay and reclaim processes.

To help facilitate an understanding of our expansive range of solutions around the world, we describe them in two categories: Expense Management solutions and Corporate Payments solutions. Our Expense Management solutions can help control and monitor employee spending and includes Fuel, Tolls, and Lodging. These solutions are purpose-built to provide customers with greater control and visibility of employee spending when compared with less specialized payment methods, such as cash or general-purpose credit cards. Our Corporate Payments solutions, which simplify and automate payments, are designed to help businesses streamline the back-office operations associated with making outgoing payments. Companies can save time, cut costs, and manage B2B payment processing more efficiently with our suite of Corporate Payment solutions, including accounts payable (AP) automation, virtual cards, cross-border payments, purchasing and T&E cards. The Company also provides several other payments solutions, including Gift and other B2B payment solutions.

Our proprietary processing and card management solutions provide customers with capabilities including: customizable user-level controls, detailed transaction reporting, programmable alerts, configurable networks, contract price validation and audit, and tax management and reporting. Our customers can use these data, controls and tools to combat fraud and employee misuse, streamline expense administration and potentially lower their operating costs.

We utilize both proprietary and third-party payment acceptance networks to deliver our solutions. In our proprietary networks, which tend to be geographically distinct, transactions are processed on applications and operating systems owned and operated by us, and only at select participating merchants with whom we have contracted directly for acceptance. Third-party networks are operated by independent parties, and tend to be more broadly accepted, which is the primary benefit compared with our proprietary networks. Mastercard and VISA are our primary third-party network partners in North America and Europe, respectively.

We actively market and sell our solutions to current and prospective customers leveraging a multi-channel approach. This go-to-market strategy includes comprehensive digital channels, direct sales forces and strategic partner relationships. Our capabilities are also offered through indirect sales channels (e.g., major oil companies and fuel marketers for Fuel, and retail establishments for Tolls) and on a branded or “white label” basis, indirectly through a broad range of resellers and partners across Fuel, Lodging, and Corporate Payments. In doing so, we leverage their sales networks to expand our reach into new customer segments, new industry verticals, and new geographies faster and at a significantly lower cost.

The Company has three reportable segments, North America, International, and Brazil. The Company reports these three segments as they reflect how we organize and manage our global employee base, manage operating performance, contemplate the differing regulatory environments across geographies, and help us isolate the impact of foreign exchange fluctuations on our financial results.

2. Basis of Presentation and Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of FLEETCOR Technologies, Inc. and all of its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

The Company’s fiscal year ends on December 31. In certain of the Company’s U.K. businesses, the Company records the operating results using a 4-4-5 week accounting cycle with the fiscal year ending on the Friday on or immediately preceding December 31. Fiscal years 2021, 2020, and 2019 include 52 weeks for the businesses reporting using a 4-4-5 accounting cycle.

Financial Instruments-Credit Losses

The Company accounts for financial assets' expected credit losses in accordance with ASC 326. The Company’s financial assets subject to credit losses are primarily trade receivables. The Company utilizes a combination of aging and loss-rate methods to develop an estimate of current expected credit losses, depending on the nature and risk profile of the underlying asset pool, based on product, size of customer and historical losses. Expected credit losses are estimated based upon an assessment of risk characteristics, historical payment experience, and the age of outstanding receivables, adjusted for forward-looking economic conditions. The allowances for remaining financial assets measured at amortized cost basis are evaluated based on underlying financial condition, credit history, and current and forward-looking economic conditions. The estimation process for expected credit losses includes consideration of qualitative and quantitative risk factors associated with the age of asset balances, expected timing of payment, contract terms and conditions, changes in specific customer risk profiles or mix of customers, geographic risk, economic trends and relevant environmental factors. At December 31, 2021 and 2020, approximately 96% and 97%, respectively, of outstanding accounts receivable were current. Accounts receivable deemed uncollectible are removed from accounts receivable and the allowance for credit losses when internal collection efforts have been exhausted and accounts have been turned over to a third-party collection agency. Recoveries from the third-party collection agency are not significant.

Business Combinations

Business combinations completed by us have been accounted for under the acquisition method of accounting, which requires that the acquired assets and liabilities, including contingencies, be recorded at fair value determined as of the acquisition date. The excess of the purchase price over the fair values of the tangible and intangible assets acquired and liabilities assumed represents goodwill. The results of the acquired businesses are included in our results of operations beginning from the completion date of the transaction.

The estimates the Company uses to determine the fair value of long-lived assets, such as intangible assets, can be complex and require significant judgments. The Company uses information available to us to make fair value determinations and engages independent valuation specialists, when necessary, to assist in the fair value determination of significant acquired long-lived assets. The estimated fair values of customer-related and contract-based intangible assets are generally determined using the income approach, which is based on projected cash flows discounted to their present value using discount rates that consider the timing and risk of the forecasted cash flows. The discount rates used represented a risk adjusted market participant weighted-average cost of capital, derived using customary market metrics. These measures of fair value also require considerable judgments about future events, including forecasted revenue growth rates, forecasted customer attrition rates, contract renewal estimates and technology changes. Acquired technologies are generally valued using the replacement cost method, which requires us to estimate the costs to construct an asset of equivalent utility at prices available at the time of the valuation analysis, with adjustments in value for physical deterioration and functional and economic obsolescence. Trademarks and trade names are generally valued using the "relief-from-royalty" approach. This method assumes that trademarks and trade names have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. This method requires the Company to estimate the future revenues for the related brands, the appropriate royalty rate and the weighted-average cost of capital. This measure of fair value requires considerable judgment about the value a market participant would be willing to pay in order to achieve the benefits associated with the trade name.

While the Company uses our best estimates and assumptions to determine the fair values of the assets acquired and the liabilities assumed, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in our Consolidated Statements of Income. The Company also estimates the useful lives of intangible assets to determine the period over which to recognize the amount of acquisition-related intangible assets as an expense. Certain assets may be considered to have indefinite useful lives. The Company periodically reviews the estimated useful lives assigned to our intangible assets to determine whether such estimated useful lives continue to be appropriate.

Impairment of Long-Lived Assets, Goodwill, Intangibles and Investments

The Company regularly evaluates whether events and circumstances have occurred that indicate the carrying amount of property and equipment and finite-life intangible assets may not be recoverable. When factors indicate that these long-lived assets should be evaluated for possible impairment, the Company assesses the potential impairment by determining whether the carrying amount of such long-lived assets will be recovered through the future undiscounted cash flows expected from use of the asset and its eventual disposition. If the carrying amount of the asset is determined not to be recoverable, a write-down to fair value is recorded. Fair values are determined based on quoted market prices or discounted cash flow analysis as applicable. The Company regularly evaluates whether events and circumstances have occurred that indicate the useful lives of property and equipment and finite-life intangible assets may warrant revision.

The Company completes an impairment test of goodwill at least annually or more frequently if facts or circumstances indicate that goodwill might be impaired. Goodwill is tested for impairment at the reporting unit level. The Company first performs a

qualitative assessment of certain of its reporting units. Factors considered in the qualitative assessment include general macroeconomic conditions, industry and market conditions, cost factors, overall financial performance of our reporting units, events or changes affecting the composition or carrying amount of the net assets of our reporting units, sustained decrease in our share price, and other relevant entity-specific events. If the Company elects to bypass the qualitative assessment or if it determines, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, a quantitative test would be required. The Company then performs the goodwill impairment test for each reporting unit by comparing the reporting unit’s carrying amount, including goodwill, to its fair value which is measured based upon, among other factors, a discounted cash flow analysis, as well as market multiples for comparable companies. Estimates critical to the Company’s evaluation of goodwill for impairment include the discount rates, forecasts for revenues, net and earnings before interest, taxes, depreciation and amortization (EBITDA) growth, and long-term growth rates. If the carrying amount of the reporting unit is greater than its fair value, goodwill is considered impaired.

Based on the goodwill asset impairment analysis performed quantitatively as of October 1, 2021, the Company determined that the fair value of each of its reporting units was in excess of the carrying value. No events or changes in circumstances have occurred since the date of this most recent annual impairment test that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

The Company evaluates indefinite-lived intangible assets (primarily trademarks and trade names) for impairment annually. The Company tests for impairment if events and circumstances indicate that it is more likely than not that the fair value of an indefinite-lived intangible asset is below its carrying amount. Estimates critical to the Company’s evaluation of indefinite-lived intangible assets for impairment include the discount rate, royalty rates used in its evaluation of trade names, projected revenue growth and projected long-term growth rates in the determination of terminal values. An impairment loss is recorded if the carrying amount of an indefinite-lived intangible asset exceeds the estimated fair value on the measurement date.

The Company regularly evaluates the carrying value of its investments, which are not carried at fair value, for impairment. The company has elected to measure certain investments in equity instruments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes for similar investments of the issuer. Investments classified as trading securities are carried at fair value with any unrealized gain or loss recorded within investment (gain) loss in the Consolidated Statements of Income.

Property, Plant and Equipment and Definite-Lived Intangible Assets

Property, plant and equipment are stated at cost and depreciated on the straight-line basis. Definite-lived intangible assets, consisting primarily of customer relationships, are stated at fair value upon acquisition and are amortized over their estimated useful lives. Customer and merchant relationship useful lives are estimated using historical attrition rates.

The Company develops software that is used in providing processing and information management services to customers. A significant portion of the Company’s capital expenditures are devoted to the development of such internal-use computer software. Software development costs are capitalized once technological feasibility of the software has been established. Costs incurred prior to establishing technological feasibility are expensed as incurred. Technological feasibility is established when the Company has completed all planning, designing, coding and testing activities that are necessary to determine that the software can be produced to meet its design specifications, including functions, features and technical performance requirements. Capitalization of costs ceases when the software is ready for its intended use. Software development costs are amortized using the straight-line method over the estimated useful life of the software. The Company capitalized software costs of $76.7 million, $51.6 million and $49.8 million in 2021, 2020 and 2019, respectively. Amortization expense for software totaled $46.7 million, $40.2 million and $37.2 million in 2021, 2020 and 2019, respectively.

Income Taxes

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. The Company has elected to treat the Global Intangible Low Taxed Income (GILTI) inclusion as a current period expense.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the associated temporary differences become deductible. The Company evaluates on a quarterly basis whether it is more likely than not that its deferred tax assets will be realized in the future and concludes whether a valuation allowance must be established.

The Company accounts for uncertainty in income taxes recognized in an entity’s financial statements and prescribes threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. The impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50 percent likelihood of being sustained. The Company includes any estimated interest and penalties on tax related matters in income tax expense. See Note 13 for further information regarding income taxes.

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, as well as collateral received from customers for cross-currency transactions in our cross-border payments business, which are restricted from use other than to repay customer deposits, as well as secure and settle cross-currency transactions.

Foreign Currency

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 recorded to accumulated other comprehensive income. Income and expenses are translated at the average monthly rates of exchange in effect during the year. Gains and losses from foreign currency transactions of these subsidiaries are included in net income. The Company recognized foreign exchange (losses) gains, which are recorded within other (income) expense, net in the Consolidated Statements of Income for the years ended December 31 as follows (in millions):

						2021						2020						2019
Foreign exchange (losses) gains						$	(3.7)					$	2.9					$	0.7

The Company recorded foreign currency losses on long-term intra-entity transactions included as a component of foreign currency translation (losses) gains, net of tax, in the Consolidated Statements of Comprehensive Income for the years ended December 31 as follows (in millions):

						2021						2020						2019
Foreign currency losses on long-term intra-entity transactions						$	44.4					$	219.8					$	88.1

Derivatives

The Company uses derivatives to minimize its exposures related to changes in interest rates. The Company also uses derivatives to facilitate cross-currency corporate payments by writing derivatives to customers and enters into cross currency derivative contracts with banking partners to mitigate foreign exchange risk associated with customer derivative contracts.

The Company is exposed to the risk of changing interest rates because its borrowings are subject to variable interest rates. In order to mitigate this risk, the Company utilizes derivative instruments. Interest rate swap contracts designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company hedges a portion of its variable rate debt utilizing derivatives designated as cash flow hedges.

Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded to the derivative assets/liabilities and offset against accumulated other comprehensive income (loss), net of tax. Derivative fair value changes that are recorded in accumulated other comprehensive income (loss) are reclassified to earnings in the same period or periods that the hedged item affects earnings, to the extent the derivative is effective in offsetting the change in cash flows attributable to the 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 within earnings.

In the Company's cross-border payments business, it writes foreign currency forward and option contracts for its customers to facilitate future payments. The Company recognizes current cross-border payments derivatives in prepaid expenses and other current assets and other current liabilities and derivatives greater than one year in other assets and other noncurrent liabilities in the accompanying Consolidated Balance Sheets at their fair value. All cash flows associated with derivatives are included in cash flows from operating activities in the Consolidated Statements of Cash Flows. Refer to Note 17.

Spot Trade Offsetting

The Company uses spot trades to facilitate cross-currency corporate payments in its cross-border payments business. 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 spot trade liabilities against spot trade receivables at the counter-party level. 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 for the years ended December 31, 2021 and 2020 (in millions):

			December 31, 2021																		December 31, 2020
			Gross						Offset on the Balance Sheet						Net						Gross						Offset on the Balance Sheet						Net
Assets
Accounts Receivable			$	1,185.9					$	(1,057.7)					$	128.2					$	521.5					$	(478.2)					$	43.3
Liabilities
Accounts Payable			$	1,199.5					$	(1,057.7)					$	141.8					$	527.5					$	(478.2)					$	49.3

Stock Based Compensation

The Company routinely grants employee stock options and restricted stock awards/units as part of employee compensation plans. Stock options are granted with an exercise price equal to the fair market value on the date of grant. Options granted have vesting provisions ranging from one to five years and vesting of the options is generally based on the passage of time, performance or market conditions, or a combination of these. Stock option grants are subject to forfeiture if employment terminates prior to vesting. The Company has selected the Black-Scholes option pricing model for estimating the grant date fair value of stock option awards. The Company has considered the retirement and forfeiture provisions of the options and utilized its historical experience to estimate the expected life of the options. Option forfeitures are accounted for upon occurrence. The Company bases the risk-free interest rate on the yield of a zero coupon U.S. Treasury security with a maturity equal to the expected life of the option from the date of the grant.

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 generally have vesting provisions of one to four years. The fair value of restricted stock where the shares vest based on the passage of time or performance is based on the grant date fair value of the Company’s stock.

The fair value of stock options and restricted stock units granted with market based vesting conditions is estimated using the Monte Carlo simulation valuation model. The risk-free interest rate and volatility assumptions used within the Monte Carlo simulation valuation model are calculated consistently with those applied in the Black-Scholes options pricing model utilized in determining the fair value of the market based stock option awards.

For performance-based restricted stock awards/units and performance-based stock option awards, the Company must also make assumptions regarding the likelihood of achieving performance goals. If actual results differ significantly from these estimates, stock based compensation expense and the Company’s results of operations could be materially affected.

Stock based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the requisite service period based on the number of years over which the requisite service is expected to be rendered.

Deferred Financing Costs/Debt Discounts

Costs incurred to obtain financing are amortized over the term of the related debt, using the effective interest method and are included within interest expense. The Company capitalized additional debt issuance costs of $2.3 million associated with refinancing its Credit Facility and Securitization Facility in 2021 and $2.6 million in 2020. At December 31, 2021 and 2020, the Company had net deferred financing costs of $5.8 million and $6.4 million, respectively, related to the revolver under the Credit Facility and the Securitization Facility, each recorded within prepaid expenses and other current assets, on the Consolidated Balance Sheets. At December 31, 2021 and 2020, the Company had deferred financing costs of $16.7 million and $7.1 million, respectively, related to the term notes under the Credit Facility, recorded as a discount to the term debt outstanding within the current portion of notes payable and lines of credit and notes payable and other obligations, less current portion, respectively, in the Consolidated Balance Sheets.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the total of net income and all other changes in equity that result from transactions and other economic events of a reporting period other than transactions with owners.

Accounts Receivable

The Company maintains a $1.3 billion revolving trade accounts receivable Securitization Facility. Accounts receivable collateralized within our Securitization Facility relate to trade receivables resulting primarily from charge card activity in the U.S. 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, an undivided ownership interest in this pool of accounts receivable to multi-seller banks and asset-backed commercial paper conduits (Conduit). Funding maintains a subordinated interest, in the form of over-collateralization, in a portion of the receivables sold. 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 transferred asset as a form of credit enhancement. The residual interest’s fair value approximates carrying value due to its short-term nature. Funding determines the level of funding achieved by the sale of trade accounts receivable, subject to a maximum amount.

The Company’s Consolidated Balance Sheets 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 maturity date for the Company's Securitization Facility is March 29, 2024.

The Company’s accounts receivable and securitized accounts receivable include the following at December 31 (in thousands):

						2021						2020
Gross domestic unsecuritized accounts receivables						$	994,063					$	719,675
Gross domestic securitized accounts receivable						1,118,000						700,000
Gross foreign receivables						897,930						733,986
Total gross receivables						3,009,993						2,153,661
Less allowance for credit losses						(98,719)						(86,886)
Net accounts and securitized accounts receivable						$	2,911,274					$	2,066,775

The Company recorded a $90.1 million provision for credit losses and write-off related to a customer receivable in our cross-border payment business during the year ended December 31, 2020. The Company's estimated expected credit losses as of December 31, 2020, included estimated adjustments for economic conditions related to COVID-19. A rollforward of the Company’s allowance for credit losses related to accounts receivable for the years ended December 31 is as follows (in thousands):

						2021						2020						2019
Allowance for credit losses beginning of year						$	86,886					$	70,890					$	59,963
Provision for credit losses						37,919						158,549						74,309
Write-offs						(35,868)						(146,063)						(67,732)
Recoveries						13,459						9,603						4,798
Impact of foreign currency						(3,677)						(6,093)						(448)
Allowance for credit losses end of year						$	98,719					$	86,886					$	70,890

Advertising

The Company expenses advertising costs as incurred. Advertising expense was $54.8 million, $28.5 million and $33.7 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Earnings Per Share

The Company reports basic and diluted earnings per share. Basic earnings per share is calculated using the weighted average of common stock and non-vested, non-forfeitable restricted shares outstanding, unadjusted for dilution, and net income attributable to common shareholders.

Diluted earnings per share is calculated using the weighted average shares outstanding and contingently issuable shares less weighted average shares recognized during the period. The net outstanding shares have been adjusted for the dilutive effect of common stock equivalents, which consist of outstanding stock options and unvested forfeitable restricted stock units.

Reclassifications and Adjustments

During 2021, the Company identified and corrected an immaterial error in the presentation of Deferred income taxes and changes in Accounts payable, accrued expenses and customer deposits, both presented within Net cash provided by operating activities, in our prior year Consolidated Statement of Cash Flows. The impact of this correction for the year ended December 31, 2020 was an increase to the adjustment to reconcile net income to net cash provided by operating activities related to deferred income taxes of $30.8 million, with a corresponding decrease to changes in accounts payable, accrued expenses and customer deposits in operating activities of $30.8 million. The impact to net cash provided by operating activities in the Consolidated Statement of Cash Flows was $0.

Additionally, certain disclosures for prior periods have been reclassified to conform with current year presentation.

Adoption of New Accounting Standards

Income Taxes

On December 18, 2019, the Financial Accounting Standards Board (FASB) issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which removes certain exceptions to the general principles of ASC 740 and simplifies other areas. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, with early adoption permitted. The Company adopted this guidance on January 1, 2021, which did not have a material impact on the Company's results of operations, financial condition, or cash flows.

Reference Rate Reform

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" (“ASU 2020-04”). The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The adoption of ASU 2020-04 did not have a material impact on the Company's consolidated financial statements. The Company will transition from LIBOR to the Sterling Overnight Index Average Reference Rate (“SONIA”) plus a SONIA adjustment of 0.0326% for sterling borrowings, the Euro Interbank Offered Rate for euro borrowings, and the Tokyo Interbank Offer Rate for yen borrowings. The Company has availed itself to the practical expedients related to any changes in the reference rate related to our debt and interest rate swaps. Cross currency derivatives are not impacted by this ASU.

Pending Adoption of Recently Issued Accounting Standards

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the FASB issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805) ("ASU 2021-08"), which requires an acquirer to account for revenue contracts acquired in a business combination in accordance with Topic 606 as if it had originated the contracts. The acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired contracts. This update also provides certain practical expedients for acquirers when recognizing and measuring acquired contract assets and contract liabilities from revenue contracts in a

business combination. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years and should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. Adoption during an interim period requires retrospective application to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application. The Company will adopt this ASU on January 1, 2022, and the adoption is not expected to have a material impact on the Company's results of operations, financial condition, or cash flows.

3. 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 Corporate Payments, Fuel, Lodging, Tolls, as well as Gift solutions (stored value cards and e-cards). The Company provides solutions 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.

Payment Services

The Company’s primary performance obligation for the majority of its payment solutions (Corporate Payments, Fuel, Lodging, and Gift, among others) is to stand-ready to provide authorization and processing services (payment services) for an unknown or unspecified quantity of transactions and the consideration received is contingent upon the customer’s use (e.g., number of transactions submitted and processed) of the related payment services. Accordingly, the total transaction price is variable. Payment services involve a series of distinct daily services that are substantially the same, with the same pattern of transfer to the customer. As a result, the Company allocates and recognizes variable consideration in the period it has the contractual right to invoice the customer. For the tolls payment solution, the Company's primary performance obligation is to stand-ready each month to provide access to the toll network and process toll transactions. Each period of access is determined to be distinct and substantially the same as the customer benefits over the period of access.

The Company records revenue for its payment services net of (i) the cost of the underlying products and services; (ii) assessments and other fees charged by the credit and debit payment networks (along with any rebates provided by them); (iii) customer rebates and other discounts; and (iv) taxes assessed (e.g. VAT and VAT-like taxes) by a government, imposed concurrent with, a revenue producing transaction.

The majority of the transaction price the Company receives for fulfilling the Payment Services performance obligation are comprised of one or a combination of the following: 1) interchange fees earned from the payment networks; 2) discount fees earned from merchants; 3) fees calculated based on a number of transactions processed; 4) fees calculated based upon a percentage of the transaction value for the underlying goods or services (i.e. fuel, food, toll, lodging, and transportation cards and vouchers); and 5) monthly access fees.

The Company recognizes revenue when the underlying transactions are complete and its performance obligations are satisfied. Transactions are considered complete depending upon the related payment solution but generally when the Company has authorized the transaction, validated that the transaction has no errors and accepted and posted the data to the Company’s records.

In the Company's cross-border payments business, the majority of revenue is from exchanges of currency at spot rates, which enables customers to make cross-currency payments. The Company's performance obligation for its foreign exchange payment services is providing a foreign currency payment to a customer’s designated recipient and therefore, the Company recognizes revenue on foreign exchange payment services when the underlying payment is made. Revenues from foreign exchange payment services are primarily comprised of the difference between the exchange rate set by the Company to the customer and the rate available in the wholesale foreign exchange market.

Gift Card Products and Services

The Company’s Gift solutions deliver both stored value cards and e-cards (cards), and card-based services primarily in the form of gift cards to retailers. These activities each represent performance obligations that are separate and distinct. Revenue for stored valued cards is recognized (gross of the underlying cost of the related card, recorded in processing expenses within the Consolidated Statements of Income) at the point in time when control passes to the Company's customer, which is generally upon shipment.

Card-based services consist of transaction processing and reporting of gift card transactions where the Company recognizes revenue based on an output measure of elapsed time for an unknown or unspecified quantity of transactions. As a result, the Company allocates and recognizes variable consideration over the estimated period of time over which the performance obligation is satisfied.

Other

The Company accounts for revenue from late fees and finance charges, in jurisdictions where permitted under local regulations, primarily in the U.S. and Canada in accordance with ASC 310, "Receivables". Such fees are recognized net of a provision for estimated uncollectible amounts, at the time the fees and finance charges are assessed and services are provided. The Company ceases billing and accruing for late fees and finance charges approximately 30 - 40 days after the customer’s balance becomes delinquent.

In addition, in its cross-border payments business, the Company writes foreign currency forward and option contracts for its customers to facilitate future payments in foreign currencies. The duration of these derivative contracts at inception is generally less than one year. The Company aggregates its foreign exchange exposures arising from customer contracts, including

forwards, options and spot exchanges of currency, as necessary, and economically hedges the net currency risks by entering into offsetting derivatives with established financial institution counterparties. The changes in fair value related to these instruments are recorded in revenues, net in the Consolidated Statements of Income.

Revenue is also derived from the sale of equipment in certain of the Company’s businesses, which is recognized at the time the device is sold and control has passed to the customer. This revenue is recognized gross of the cost of sales related to the equipment in revenues, net within the Consolidated Statements of Income. The related cost of sales for the equipment is recorded in processing expenses within the Consolidated Statements of Income.

Revenues from contracts with customers, within the scope of Topic 606, represents approximately 75% of total consolidated revenues, net, for the year ended December 31, 2021.

Disaggregation of Revenues

The Company provides its services to customers across different payment solutions and geographies. Revenue, net by solution (in millions) as of and for the years ended December 31 (in millions):

Revenues by Solution Category*1						2021						2020						2019
Fuel						$	1,180.1					$	1,057.2					$	1,173.0
Corporate payments						600.0						434.0						450.0
Tolls						306.0						292.0						357.2
Lodging						309.6						207.0						212.6
Gift						179.5						154.4						180.2
Other						258.5						244.3						275.9
Consolidated revenues, net						$	2,833.7					$	2,388.9					$	2,648.8

*Columns may not calculate due to rounding.

1Reflects certain reclassifications of revenue between solution categories as the Company realigned its Corporate Payments solution, resulting in reclassification of Payroll Card revenue from Corporate Payments to Other.

The table below presents the Company's revenues, net by geography as of and for the years ended December 31 (in million).

Revenues by Geography						2021						2020						2019
United States (country of domicile)						$	1,785.2					$	1,467.5					$	1,595.3
Brazil						368.1						344.2						427.9
United Kingdom						321.8						262.9						275.2
Other						358.6						314.2						350.4
Consolidated revenues, net						$	2,833.7					$	2,388.9					$	2,648.8

Contract Liabilities

Deferred revenue contract liabilities for customers subject to ASC 606 were $73.7 million and $73.0 million as of December 31, 2021 and 2020, respectively. We expect to recognize approximately $43.3 million of these amounts in revenues within 12 months and the remaining $30.4 million over the next five years as of December 31, 2021. The amount and timing of revenue recognition is affected by several factors, including contract modifications and terminations, which could impact the estimate of amounts allocated to remaining performance obligations and when such revenues could be recognized. Revenue recognized for the year ended December 31, 2021, that was included in the deferred revenue contract liability as of January 1, 2021, was approximately $41.0 million.

Costs to Obtain or Fulfill a Contract

With the adoption of ASC 606, the Company began capitalizing the incremental costs of obtaining a contract with a customer if the Company expects to recover those costs. The incremental costs of obtaining a contract are those that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, a sales commission).

Costs incurred to fulfill a contract are capitalized if those costs meet all of the following criteria:

a.The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify.

b.The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future.

c.The costs are expected to be recovered.

In order to determine the appropriate amortization period for contract costs, the Company considered a combination of factors, including customer attrition rates, estimated terms of customer relationships, the useful lives of technology used by the Company to provide products and services to its customers, whether further contract renewals are expected and if there is any incremental commission to be paid on a contract renewal. Contract acquisition and fulfillment costs are amortized using the straight-line method over the expected period of benefit (ranging from five to ten years). Costs to obtain a contract with an expected period of benefit of one year or less are recognized as an expense when incurred. The amortization of contract acquisition costs associated with sales commissions that qualify for capitalization will be recorded as selling expense in the Company’s Consolidated Statements of Income. The amortization of contract acquisition costs associated with cash payments for client incentives is included as a reduction of revenues in the Company’s Consolidated Statements of Income. Amortization of capitalized contract costs recorded in selling expense was $16.0 million, $15.3 million and $14.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Costs to obtain or fulfill a contract are classified as contract cost assets within prepaid expenses and other current assets and other assets in the Company’s Consolidated Balance Sheets. The Company had capitalized costs to obtain a contract of $16.1 million and $15.1 million within prepaid expenses and other current assets and $38.9 million and $37.2 million within other assets in the Company’s Consolidated Balance Sheets, for the year ended December 31, 2021 and 2020, respectively.

The Company has recorded $76.6 million, $65.5 million and $76.4 million of expenses related to sales of equipment in processing expenses within the Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019, respectively.

Practical Expedients

ASC 606 requires disclosure of the aggregate amount of the transaction price allocated to unsatisfied performance obligations; however, as allowed by ASC 606, the Company elected to exclude this disclosure for any contracts with an original duration of one year or less and any variable consideration that meets specified criteria. As described above, the Company's most significant performance obligations consist of variable consideration under a stand-ready series of distinct days of service. Such variable consideration meets the specified criteria for the disclosure exclusion; therefore, the majority of the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied is variable consideration that is not required for this disclosure. The aggregate fixed consideration portion of customer contracts with an initial contract duration greater than one year is not material.

The Company elected to exclude all sales taxes and other similar taxes from the transaction price. Accordingly, the Company presents all collections from customers for these taxes on a net basis, rather than having to assess whether the Company is acting as an agent or a principal in each taxing jurisdiction.

In certain arrangements with customers, the Company has determined that certain promised services and products are immaterial in the context of the contract, both quantitatively and qualitatively.

As a practical expedient, the Company is not required to adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period between when the Company transfers a promised service or product to a customer and when the customer pays for the service or product will be one year or less. As of December 31, 2021, the Company’s contracts with customers did not contain a significant financing component.

4. Fair Value Measurements

Fair value is a market-based measurement that reflects assumptions that market participants would use in pricing an asset or liability. GAAP discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions.

As the basis for evaluating such inputs, a three-tier value hierarchy prioritizes the inputs used in measuring fair value as follows:

• Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.

• Level 2: Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

• Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The following table presents the Company’s financial assets and liabilities which are measured at fair values on a recurring basis as of December 31, 2021 and 2020, (in thousands):

						Fair Value						Level 1						Level 2						Level 3
December 31, 2021
Assets:
Repurchase agreements						$	477,069					$	—					$	477,069					$	—
Money market						43,023						—						43,023						—
Certificates of deposit						958						—						958						—
Foreign exchange contracts						120,859						—						120,859						—
Total assets						$	641,909					$	—					$	641,908					$	—
Cash collateral for foreign exchange contracts						$	25,881					$	—					$	—					$	—
Liabilities:
Interest rate swaps						$	(30,733)					$	—					$	(30,733)					$	—
Foreign exchange contracts						89,925						—						89,925						—
Total liabilities						$	59,192					$	—					$	59,192					$	—
Cash collateral obligation for foreign exchange contracts						$	24,803					$	—					$	—					$	—
December 31, 2020
Assets:
Repurchase agreements						$	446,116					$	—					$	446,116					$	—
Money market						48,227						—						48,227						—
Certificates of deposit						188						—						188						—
Foreign exchange contracts						155,846						—						155,846						—
Total assets						$	650,377					$	—					$	650,377					$	—
Cash collateral for foreign exchange contracts						$	18,229					$	—					$	—					$	—
Liabilities:
Interest rate swaps						$	87,873					—						$	87,873					—
Foreign exchange contracts						140,272						—						140,272						—
Total liabilities						$	228,145					$	—					$	228,145					$	—
Cash collateral obligation for foreign exchange contracts						$	38,569					$	—					$	—					$	—

The Company utilizes Level 1 fair value for financial assets designated as trading securities for which there are quoted market prices. During the year ended December 31, 2020, the Company recognized a $30.0 million gain on trading securities sold. Cash flow from trading securities sold was recognized within the Investing section of the Statement of Cash Flows based on the nature of the investment.

The Company has highly-liquid investments classified as cash equivalents, with original maturities of 90 days or less, included in our Consolidated Balance Sheets. The Company utilizes Level 2 fair value determinations derived from directly or indirectly observable (market based) information to determine the fair value of these highly liquid investments. The Company has certain cash and cash equivalents that are invested on an overnight basis in repurchase agreements, money markets and certificates of deposit. The value of overnight repurchase agreements is determined based upon the quoted market prices for the treasury securities associated with the repurchase agreements. The value of money market instruments is determined based upon the financial institutions' month-end statement, as these instruments are not tradable and must be settled directly by us with the respective financial institution. Certificates of deposit are valued at cost, plus interest accrued. Given the short-term nature of these instruments, the carrying value approximates fair value. Foreign exchange derivative contracts are carried at fair value, with changes in fair value recognized in the 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 the net settlement if the contracts were terminated as of the reporting date. Cash collateral received for foreign exchange derivatives is recorded within customer deposits in our Consolidated Balance Sheets. Cash collateral deposited for foreign exchange derivatives is recorded within restricted cash in our Consolidated Balance Sheet.

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 2021 and 2020.

The Company’s assets that are measured at fair value on a nonrecurring basis and are evaluated with periodic testing for impairment include property, plant and equipment, investments, goodwill and other intangible assets. Estimates of the fair value of assets acquired and liabilities assumed in business combinations are generally developed using key inputs such as management’s projections of cash flows on a held-and-used basis (if applicable), discounted as appropriate, management’s projections of cash flows upon disposition and discount rates. Accordingly, these fair value measurements are in Level 3 of the fair value hierarchy.

The Company determines the fair values of its derivatives based on quoted market prices or pricing models using current market rates. The amounts exchanged are calculated by reference to the notional amounts and by other terms of the derivatives, such as interest rates, foreign currency exchange rates, commodity rates or other financial indices. The Company's derivatives are over-the-counter instruments with liquid markets.

The Company regularly evaluates the carrying value of its investments and during the 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 the telematics investments, the Company has recorded cumulative impairment losses of $136.3 million. The Company sold its remaining investment in the second quarter of 2019. Refer to Note 16. The carrying amount of investments without readily determinable fair values is $52.0 million at December 31, 2021.

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 (the "Board") has approved a stock repurchase program (as updated from time to time, the "Program") authorizing the Company to repurchase its common stock from time to time until February 1, 2023. On July 27, 2021, the Board increased the aggregate size of the Program by $1.0 billion, to $5.1 billion. Since the beginning of the Program through December 31, 2021, 20,068,498 shares have been repurchased for an aggregate purchase price of $4.4 billion, leaving the Company up to $0.7 billion available under the Program for future repurchases in shares of its common stock. There were 5,451,556 common shares totaling $1.4 billion in 2021; 3,497,285 common shares totaling $940.8 million in 2020 and 2,211,866 common shares totaling $636.8 million in 2019; repurchased under the Program.

On January 25, 2022, the Board increased the aggregate size of the Program by $1.0 billion, to $6.1 billion. In January and February 2022, 1,510,027 shares were repurchased for an aggregate purchase price of $360.8 million, of which 1,066,015 shares with an aggregate purchase price of $256.5 million were repurchased pursuant to a 10b5-1 plan. As of March 1, 2022, the Company has up to $1.3 billion available under the Program for future repurchases of its common stock.

Any stock repurchases may be made at times and in such amounts as deemed appropriate. The timing and amount of stock repurchases, if any, will depend on a variety of factors including the stock price, market conditions, corporate and regulatory requirements, and any additional constraints related to material inside information the Company may possess. Any repurchases have been and are expected to be funded by a combination of available cash flow from the business, working capital and debt.

6. Stock Based Compensation

The Company accounts for stock based compensation pursuant to relevant authoritative guidance, which requires measurement of compensation cost for all stock awards at fair value on the date of grant and recognition of compensation, net of estimated forfeitures, over the requisite service period for awards expected to vest. The Company has a Stock Incentive Plan (the "Plan"), pursuant to which the Company's board of directors is permitted to grant equity to employees and directors. Under the Plan, a maximum of 16.75 million shares of our common stock is approved to be issued for grants of restricted stock and stock options. At December 31, 2021, there were 1.4 million shares available to be granted under the Plan.

The table below summarizes the expense recognized within general and administrative expenses in the Consolidated Statements of Income related to share-based payments recognized for the years ended December 31 (in thousands):

						2021						2020						2019
Stock options						$	30,057					$	23,407					$	32,736
Restricted stock						50,014						19,977						28,217
Stock-based compensation						$	80,071					$	43,384					$	60,953

The tax benefits recorded on stock based compensation expense and upon the exercises of options were $32.8 million, $70.6 million and $61.6 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The following table summarizes the Company’s total unrecognized compensation cost related to stock based compensation as of December 31, 2021 (cost in thousands):

						Unrecognized Compensation Cost						Weighted Average Period of Expense Recognition (in Years)
Stock options						$	80,305					1.60
Restricted stock						28,349						0.76
Total						$	108,654

Stock Options

The following summarizes the changes in the number of shares of common stock under option for the following periods (shares and aggregate intrinsic value in thousands):

						Shares						Weighted Average Exercise Price						Options Exercisable at End of Year						Weighted Average Exercise Price of Exercisable Options						Weighted Average Fair Value of Options Granted During the Year						Aggregate Intrinsic Value
Outstanding at December 31, 2018						7,616						$	117.58					5,174						$	98.39											$	518,954
Granted						431						244.35																		$	57.99
Exercised						(1,482)						115.53																								255,242
Forfeited						(302)						167.35
Outstanding at December 31, 2019						6,263						124.38						5,137						109.03												1,022,860
Granted						503						215.36																		$	53.18
Exercised						(1,681)						80.84																								322,823
Forfeited						(121)						194.61
Outstanding at December 31, 2020						4,964						146.69						3,994						130.37												626,107
Granted						1,097						261.85																		$	72.84
Exercised						(592)						82.50																								83,686
Forfeited						(22)						230.14
Outstanding at December 31, 2021						5,447						$	176.52					3,798						$	145.18											$	257,707
Expected to vest at December 31, 2021						1,648						$	248.75

The following table summarizes information about stock options outstanding at December 31, 2021 (shares in thousands):

Exercise Price						Options Outstanding						Weighted Average Remaining Vesting Life in Years						Options Exercisable
$35.04 – $196.18						3,618						0.13						3,444
$199.75 – $202.83						123						0.19						102
$205.28 – $216.18						90						1.52						42
$224.99 – $231.70						261						1.85						91
$248.28 – $252.50						233						1.24						109
$256.55 – $261.27						1,039						2.20						1
$263.21 – $319.55						83						3.00						9
						5,447												3,798

The aggregate intrinsic value of stock options exercisable at December 31, 2021 was $302.9 million. The weighted average remaining contractual term of options exercisable at December 31, 2021 was 4.3 years.

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 years ended December 31 as follows:

						2021						2020						2019
Risk-free interest rate						0.45		%				0.37		%				2.40		%
Dividend yield						—						—						—
Expected volatility						34.44		%				31.00		%				26.40		%
Expected life (in years)						4.0						3.9						3.7

The weighted-average remaining contractual life for options outstanding was 4.7 years at December 31, 2021.

The fair value of performance options granted with market based vesting conditions was estimated using the Monte Carlo simulation valuation model with the following assumptions during the year ended December 31 as follows. There were no performance options granted with market based vesting conditions in 2020 or 2019.

						2021
Risk-free interest rate						0.59		%
Dividend yield						—
Expected volatility						36.10		%
Expected life (in years)						3.3

Restricted Stock

The fair value of restricted stock units granted with market based vesting conditions was estimated using the Monte Carlo simulation valuation model with the following assumptions during 2019. There were no restricted stock shares granted with market based vesting conditions in 2021 or 2020.

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

The following table summarizes the changes in the number of shares of restricted stock and restricted stock units for the following periods (shares in thousands):

						Shares						Weighted Average Grant Date Fair Value
Outstanding at December 31, 2018						174						$	190.73
Granted						232						212.79
Cancelled						(49)						225.96
Issued						(114)						206.05
Outstanding at December 31, 2019						243						246.34
Granted						171						252.36
Cancelled						(100)						249.17
Issued						(140)						227.20
Outstanding at December 31, 2020						174						265.29
Granted						215						272.59
Cancelled						(38)						265.76
Issued						(73)						258.13
Outstanding at December 31, 2021						278						$	278.57

7. Acquisitions

Subsequent to 2021

In February 2022, the Company made two investments in an electric vehicle charging payments business and an electric vehicle data analytics business. In March 2022, the Company acquired a software business that streamlines disruption events for airline passengers. These acquisitions are not expected to be material to the financial results of the Company. The Company financed these acquisitions using a combination of available cash and borrowings under its existing Credit Facility.

2021 Acquisitions

ALE

On September 1, 2021, the Company completed the acquisition of ALE Solutions, Inc. (ALE), a U.S. based provider of lodging solutions to the insurance industry, for a net purchase price of $421.8 million. The purpose of this acquisition is to expand the Company's lodging business into the insurance vertical. The Company financed the acquisition using a combination of available cash and borrowings under its existing credit facility. The results from the acquisition are reported in the North America segment.

In connection with this acquisition, the Company signed noncompete agreements with certain parties affiliated with the business with an estimated fair value of $18.3 million. These noncompete agreements were accounted for separately from the business acquisition. Accounting for the preliminary fair values of the ALE customer relationship intangible asset was subjective due to the uncertainty in estimating customer attrition rates, which had a significant impact on the estimated fair values. The customer attrition rates are forward-looking and could be affected by future economic and market conditions. Specific assumptions that are still being evaluated include customer attrition rates, expected useful lives of definite lived intangible assets, and the measurement of uncertain tax positions.

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

Current assets			$	180,951
Long term assets			10,121
Goodwill			131,771
Intangibles			180,500
Current liabilities			(73,031)
Noncurrent liabilities			(8,479)
Aggregate purchase price			$	421,833

The estimated preliminary fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):

			Useful Lives (in Years)						Value
Trade Names and Trademarks			Indefinite						$	18,800
Proprietary Technology			4						14,400
Lodging Network			20						700
Customer Relationships			15						146,600
									$	180,500

AFEX

On June 1, 2021, the Company completed the acquisition of Associated Foreign Exchange (AFEX), a U.S. based, cross-border payment solutions provider, for $459.8 million. This includes $210.3 million of cash and cash equivalents and $178.7 million of restricted cash, resulting in a net purchase price of $70.7 million. The purpose of this acquisition is to further expand the Company's cross-border payment solutions. The Company financed the acquisition using a combination of available cash and borrowings under its existing credit facility. The results from the acquisition are reported in the North America segment.

In connection with this acquisition, the Company signed noncompete agreements with certain parties affiliated with the business with an estimated fair value of $4.1 million. These noncompete agreements were accounted for separately from the business acquisition. Accounting for the preliminary fair values of the AFEX customer relationship intangible asset was subjective due to the uncertainty in estimating customer attrition rates, which had a significant impact on the estimated fair values. The customer attrition rates are forward-looking and could be affected by future economic and market conditions. Specific assumptions that are still being evaluated include customer attrition rates, expected useful lives of definite lived intangible assets, and the measurement of uncertain tax positions.

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

Trade and other receivables			$	8,159
Prepaid expenses and other current assets			108,402
Property, plant and equipment			1,723
Other long term assets			51,074
Goodwill			254,399
Intangibles			242,300
Accounts payable and accrued expenses			(39,234)
Other current liabilities			(81,430)
Customer deposits			(375,049)
Other noncurrent liabilities			(99,614)
Aggregate purchase price			$	70,730

The estimated preliminary fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):

			Useful Lives (in Years)						Value
Trade Names and Trademarks			2						$	5,400
Proprietary Technology			4						11,800
Banking Relationships			20						1,800
Licenses			20						2,600
Customer Relationships			10						220,700
									$	242,300

Roger

On January 13, 2021, the Company completed the acquisition of Roger, rebranded Corpay One, a global accounts payable (AP) cloud software platform for small businesses, for $39.0 million, net of cash acquired. The Company financed the acquisition using a combination of available cash and borrowings under its existing credit facility. The results from the acquisition are reported in the North America segment.

The following table summarizes the final acquisition accounting for Roger (in thousands):

Accounts and other receivables			$	110
Prepaid expenses and other current assets			37
Other assets			28
Goodwill			34,359
Other intangibles			5,400
Current liabilities			(925)
Deferred income taxes			(6)
Aggregate purchase price			$	39,003

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
Proprietary Technology			10						$	4,800
Customer Relationships			9						600
									$	5,400

Other

On December 15, 2021, the Company acquired a mobile fuel payments solution in Russia for a net purchase price of $5.0 million. The results from the acquisition are reported in the International segment. During 2021, the Company made an investment of $37.8 million in a joint venture in Brazil with CAIXA. The Company made investments in other businesses of $6.8 million. The Company financed the investments using a combination of available cash and borrowings under its existing credit facility.

2020 Acquisitions

On August 10, 2020, the Company completed the acquisition of a business in the lodging space in the U.S. The results from the acquisition are reported in the North America segment. On November 30, 2020, the Company completed the acquisition of a fuel card provider in New Zealand. The results from the acquisition are reported in the International segment. The aggregate purchase price of these acquisitions was approximately $77.6 million, net of cash acquired. The Company financed these acquisitions using a combination of available cash and borrowings under its existing credit facility. The Company signed noncompete agreements with certain parties affiliated with the lodging business with an estimated fair value of $3.8 million. These noncompete agreements were accounted for separately from the business acquisitions.

The following table summarizes the final acquisition accounting for these combined acquisitions (in thousands):

Trade and other receivables						$	4,975
Prepaid expenses and other current assets						145
Property, plant and equipment						3,178
Other long term assets						1,049
Goodwill						28,038
Intangibles						42,144
Liabilities						(1,147)
Other noncurrent liabilities						(782)
Aggregate purchase price						$	77,600

The estimated fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):

						Useful Lives (in Years)						Value
Trade Name and Trademarks						5 - Indefinite						$	2,161
Licensed Software and Technology						10						4,400
Proprietary Technology						5						8,400
Supplier Network						10						783
Customer Relationships						9 - 16						26,400
												$	42,144

8. Goodwill and Other Intangible Assets

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

						December 31, 2020						Acquisitions												Acquisition Accounting Adjustments						Foreign Currency						December 31, 2021
Segment
North America						$	3,400,772					$	420,529											$	398					$	(7,441)					$	3,814,258
Brazil						585,861						—												—						(39,713)						546,148
International						732,548						3,286												(1,294)						(15,968)						718,572
						$	4,719,181					$	423,815											$	(896)					$	(63,122)					$	5,078,978

						December 31, 2019						Acquisitions												Acquisition Accounting Adjustments						Foreign Currency						December 31, 2020
Segment
North America						$	3,369,173					$	24,984											$	(1,908)					$	8,523					$	3,400,772
Brazil						756,975						—												—						(171,114)						585,861
International						706,899						3,950												—						21,699						732,548
						$	4,833,047					$	28,934											$	(1,908)					$	(140,892)					$	4,719,181

At December 31, 2021 and 2020, approximately $923.3 million and $793.8 million of the Company’s goodwill is deductible for tax purposes, respectively. Acquisition accounting adjustments recorded in 2021 and 2020 are a result of the Company completing its acquisition accounting and working capital adjustments for certain prior year acquisitions.

Other intangible assets consisted of the following at December 31 (in thousands):

												2021																		2020
						Weighted- Avg Useful Life (Years)						Gross Carrying Amounts						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amounts****1						Accumulated Amortization****1						Net Carrying Amount
Customer and vendor agreements						16.3						$	2,925,719					$	(1,167,218)					$	1,758,501					$	2,594,909					$	(1,011,815)					$	1,583,094
Trade names and trademarks—indefinite lived						N/A						466,327						—						466,327						455,632						—						455,632
Trade names and trademarks—other						7.2						12,093						(5,235)						6,858						6,720						(3,031)						3,689
Software						5.9						272,461						(198,628)						73,833						239,292						(182,448)						56,844
Non-compete agreements						4.3						78,145						(48,279)						29,866						56,493						(39,870)						16,623
Total other intangibles												$	3,754,745					$	(1,419,360)					$	2,335,385					$	3,353,046					$	(1,237,164)					$	2,115,882

1Recast 2020 to reflect changes between gross carrying amounts and accumulated amortization; net carrying amounts remain unchanged.

Changes in foreign exchange rates resulted in $32.7 million and $83.7 million decreases to the carrying values of other intangible assets in the years ended December 31, 2021 and 2020, respectively. Amortization expense related to intangible assets for the years ended December 31, 2021, 2020 and 2019 was $205.5 million, $184.2 million and $206.9 million, respectively.

The future estimated amortization of intangibles at December 31, 2021 is as follows (in thousands):

2022						$	213,678
2023						204,053
2024						196,009
2025						175,261
2026						152,363
Thereafter						927,694

9. Property, Plant and Equipment

Property, plant and equipment, net consisted of the following at December 31 (in thousands):

						Estimated Useful Lives (in Years)						2021						2020
Computer hardware and software						3 to 5						$	472,145					$	393,217
Card-reading equipment						4 to 6						36,829						25,427
Furniture, fixtures, and vehicles						2 to 10						22,650						19,575
Buildings and improvements						5 to 50						33,517						30,467
Property, plant and equipment, gross												565,141						468,686
Less: accumulated depreciation												(328,847)						(266,177)
Property, plant and equipment, net												$	236,294					$	202,509

Depreciation expense related to property and equipment for the years ended December 31, 2021, 2020, and 2019 was $75.6 million, $65.2 million and $62.8 million, respectively. Amortization expense includes $46.7 million, $40.2 million and $37.2 million for capitalized computer software costs for the years ended December 31, 2021, 2020 and 2019, respectively. At December 31, 2021 and 2020, the Company had unamortized computer software costs of $155.3 million and $129.9 million, respectively.

The Company recorded write-offs of property, plant and equipment of $0.2 million, $0.3 million and $1.8 million in other operating (income) expense, net within its Consolidated Statements of Income for the years ended December 31, 2021, 2020, and 2019, respectively.

10. Accrued Expenses

Accrued expenses consisted of the following at December 31 (in thousands):

						2021						2020
Accrued bonuses						$	26,950					$	15,903
Accrued payroll and severance						38,328						23,189
Accrued taxes						93,627						78,771
Accrued commissions/rebates						92,063						81,450
Other1						118,086						83,368
						$	369,054					$	282,681

1Other accrued expenses include several types of amounts due to our merchants, vendors, and other third parties.

11. Debt

The Company’s debt instruments at December 31 consist primarily of term notes, revolving lines of credit and a Securitization Facility as follows (in thousands):

						2021						2020
Term Loan A note payable (a), net of discounts						$	2,763,162					$	2,922,042
Term Loan B note payable (a), net of discounts						1,871,505						337,347
Revolving line of credit A Facility(a)						225,000						280,000
Revolving line of credit B Facility(a)						—						13,650
Revolving line of credit B Facility —foreign swing line(a)						—						50,028
Other obligations(c)						—						211
Total notes payable, credit agreements, and other obligations						4,859,667						3,603,277
Securitization Facility(b)						1,118,000						700,000
Total debt						$	5,977,667					$	4,303,277
Current portion						$	1,517,628					$	1,205,697
Long-term portion						4,460,039						3,097,580
Total debt						$	5,977,667					$	4,303,277

---

(a)The Company has a Credit Agreement, which has been amended multiple times and provides for senior secured credit facilities (collectively, the "Credit Facility") consisting of a revolving credit facility in the amount of $1.285 billion, a term loan A facility in the amount of $3.225 billion and a term loan B facility in the amount of $1.9 billion as of December 31, 2021. 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 foreign swing line loans, and (c) a revolving C facility in the amount of $35 million with 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 loan A, term loan B, revolver A or revolver B debt and an unlimited amount when the leverage ratio on a pro-forma basis is less than 3.00 to 1.00. Proceeds from the credit facilities may be used for working capital purposes, acquisitions, and other general corporate purposes. The maturity date for the term loan A and revolving credit facilities A, B and C is December 19, 2023. On April 30, 2021, the Company entered into the ninth amendment to the Credit Agreement. The amendment provided for a new seven-year $1.15 billion term loan B. The existing term loan B was paid off with proceeds from the new term loan B. On November 16, 2021, the Company entered into the tenth amendment to the Credit Agreement to provide for LIBOR replacement rates for Euros, British Pounds and Japanese Yen borrowings. On December 22, 2021, the Company entered into the eleventh amendment to the Credit Agreement. The amendment increased the amount of the term loan B facility by $750 million. The new term loan B has a maturity date of April 30, 2028, and interest rates remain unchanged.

Interest on amounts outstanding under the Credit Agreement (other than the term loan B) accrues as follows: For loans denominated in U.S. Dollars, Australian Dollars or New Zealand Dollars, based on the British Bankers Association LIBOR Rate (the “Eurocurrency Rate”), in British Pounds, based on the Sterling Overnight Index Average Reference Rate (“SONIA”) plus a SONIA adjustment of 0.0326%, in Euros, based on the Euro Interbank Offered Rate (“EURIBOR”), or in Japanese Yen, at the Tokyo Interbank Offer Rate (“TIBOR”) plus a margin based on a leverage ratio, or our option (for U.S. Dollar borrowings only), the Base Rate (defined as the rate equal to the highest of (a) the Federal Funds Rate plus 0.50%, (b) the prime rate announced by Bank of America, N.A., or (c) the Eurocurrency Rate plus 1.00%) plus a margin based on a leverage ratio. Interest on the term loan B facility accrues based on the Eurocurrency Rate plus 1.75% for Eurocurrency Loans and at the Base Rate plus 0.75% for Base Rate Loans. In addition, the Company pays a quarterly commitment fee at a rate per annum ranging from 0.25% to 0.35% of the daily unused portion of the credit facility.

The interest rates at December 31, 2021 are as follows:

Term loan A			1.60		%
Revolving A facility			1.61		%
Term loan B			1.85		%
Unused credit facility fee			0.30		%

The term loans are payable in quarterly installments due on the last business day of each March, June, September, and December with the final principal payment due on the respective maturity date. Borrowings on the revolving line of credit are repayable at the option of one, three or six months after borrowing, depending on the term of the borrowing on the facility. Borrowings on the foreign swing line of credit are due no later than twenty business days after such loan is made.

The Company has unamortized debt issuance costs of $3.3 million related to the revolving credit facility at December 31, 2021.

The Company has unamortized debt costs at December 31, 2021 as follows (in thousands):

			Unamortized Debt Discounts			Deferred Financing Costs
Term loan A			$	4,339		$	—
Term loan B			$	12,391		$	8,479

The effective interest rate incurred on term loans was 1.79% during 2021 related to the discount on debt. Principal payments of $507.5 million were made on the term loans during 2021.

(b)The Company is party to a $1.3 billion receivables purchase agreement (Securitization Facility). On September 15, 2021, the Company entered into the ninth amendment to the Securitization Facility. The amendment increased the Securitization Facility commitment from $1.0 billion to $1.3 billion. There is a program fee equal to one month LIBOR plus 1.00% or the Commercial Paper Rate plus 0.90% as of December 31, 2021 and one month LIBOR plus 0.90% or the Commercial Paper Rate plus 0.80% as December 31, 2020. The program fee was 0.12% plus 0.98% as of December 31, 2021 and 0.34% plus 1.23% as of December 31, 2020. The unused facility fee is payable at a rate of 0.40% as of December 31, 2021 and 2020. The Company has unamortized debt issuance costs of $2.5 million and $1.4 million related to the Securitization Facility as of December 31, 2021 and December 31, 2020, respectively, recorded in other assets within the Consolidated Balance Sheets. On March 29, 2021, the Company entered into the eighth amendment to the Securitization Facility. The amendment included a new three year maturity date, reduced the LIBOR floor to 0 bps, improved margins, and increased the swing line from $100 million to $250 million. The maturity date for the Company's Securitization Facility is March 29, 2024.

The Securitization Facility provides for certain termination events, which includes nonpayment, upon the occurrence of which the administrator may declare the facility termination date to have occurred, may exercise certain enforcement rights with respect to the receivables, and may appoint a successor servicer, among other things.

(c)Other debt includes the long-term portion of deferred payments associated with business acquisitions. Prior year amounts were recast to reflect long term deferred revenue in other noncurrent liabilities, to conform to current year presentation.

The Company was in compliance with all financial and non-financial covenants at December 31, 2021. 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. The $1.0 billion interest rate swap matured in January 2022. Refer to Note 17 for further details.

The contractual maturities of the Company’s total debt at December 31, 2021 are as follows (in thousands):

2022						$	1,517,628
2023						2,619,795
2024						15,682
2025						15,716
2026						15,750
Thereafter						1,793,095

12. Accumulated Other Comprehensive Loss (AOCI)

The changes in the components of AOCI for the years ended December 31, 2021, 2020 and 2019 are as follows (in thousands):

						Cumulative Foreign Currency Translation						Unrealized (Losses) Gains on Derivative Instruments						Total Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2018						$	(913,858)					$	—					$	(913,858)
Other comprehensive loss before reclassifications						(15,855)						(68,928)						(84,783)
Amounts reclassified from AOCI						—						5,828						5,828
Tax effect						—						20,348						20,348
Other comprehensive loss						(15,855)						(42,752)						(58,607)
Balance at December 31, 2019						(929,713)						(42,752)						(972,465)
Other comprehensive loss before reclassifications						(367,249)						(70,719)						(437,968)
Amounts reclassified from AOCI						—						39,264						39,264
Tax effect						—						8,011						8,011
Other comprehensive loss						(367,249)						(23,444)						(390,693)
Balance at December 31, 2020						(1,296,962)						(66,196)						(1,363,158)
Other comprehensive (loss) income before reclassifications						(144,543)						7,394						(137,149)
Amounts reclassified from AOCI						—						49,747						49,747
Tax effect						—						(14,056)						(14,056)
Other comprehensive (loss) gain						(144,543)						43,085						(101,458)
Balance at December 31, 2021						$	(1,441,505)					$	(23,111)					$	(1,464,616)

13. Income Taxes

Income before the provision for income taxes is attributable to the following jurisdictions for years ended December 31 (in thousands):

						2021						2020						2019
United States						$	515,041					$	457,090					$	505,818
Foreign						593,767						425,435						572,001
Total						$	1,108,808					$	882,525					$	1,077,819

The provision for income taxes for the years ended December 31 consists of the following (in thousands):

						2021						2020						2019
Current:
Federal						$	118,861					$	71,123					$	50,145
State						31,674						19,597						10,285
Foreign						107,751						71,921						84,433
Total current						258,286						162,641						144,863
Deferred:
Federal						(12,165)						143						(10,479)
State						(4,540)						(4,323)						3,745
Foreign						27,730						19,848						44,617
Total deferred						11,025						15,668						37,883
Total provision						$	269,311					$	178,309					$	182,746

The provision for income taxes differs from amounts computed by applying the U.S. federal tax rate of 21% for 2021, 2020, and 2019, respectively, to income before income taxes for the years ended December 31, 2021, 2020 and 2019 due to the following (in thousands):

						2021												2020												2019
Computed “expected” tax expense						$	232,850					21.0		%				$	185,330					21.0		%				$	226,342					21.0		%
Changes resulting from:
Change in valuation allowance						1,378						0.1						25,932						2.9						(28,614)						(2.7)
Foreign income tax differential						(10,326)						(0.9)						(20,852)						(2.3)						(15,816)						(1.4)
State taxes net of federal benefits						18,352						1.7						7,489						0.8						12,482						1.2
Increase in tax expense due to uncertain tax positions						8,185						0.7						14,848						1.7						—						—
Foreign withholding tax						9,143						0.8						15,630						1.8						20,360						1.9
Excess tax benefits related to stock-based compensation						(16,304)						(1.5)						(58,942)						(6.7)						(38,156)						(3.5)
Revaluation of capital loss deferred tax asset						—						—						—						—						(24,279)						(2.3)
Sub-part F Income/GILTI						72,449						6.5						34,990						4.0						49,859						4.6
Foreign tax credits						(63,926)						(5.8)						(30,497)						(3.5)						(38,657)						(3.6)
Other						17,510						1.6						4,381						0.5						19,225						1.8
Provision for income taxes						$	269,311					24.3		%				$	178,309					20.2		%				$	182,746					17.0		%

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31 are as follows (in thousands):

						2021						2020
Deferred tax assets:
Accounts receivable, principally due to the allowance for doubtful accounts						$	13,987					$	10,515
Accrued expenses not currently deductible for tax						6,252						3,442
Lease deferral						20,349						23,506
Interest rate swap						7,621						21,792
Stock based compensation						39,658						36,015
Income tax credits						51,264						51,264
Net operating loss carry forwards						76,988						83,372
Accrued escheat						3,170						3,567
Other						10,078						11,711
Deferred tax assets before valuation allowance						229,367						245,184
Valuation allowance						(94,601)						(90,340)
Deferred tax assets, net						134,766						154,844
Deferred tax liabilities:
Intangibles—including goodwill						(520,349)						(481,388)
Basis difference in investment in subsidiaries						(42,938)						(42,313)
Lease deferral						(17,739)						(19,977)
Accrued Expense Liability						(795)						(513)
Prepaid expenses						(1,788)						(2,126)
Withholding taxes						(38,704)						(30,488)
Property and equipment and other						(76,810)						(71,342)
Deferred tax liabilities						(699,123)						(648,147)
Net deferred tax liabilities						$	(564,357)					$	(493,303)

The Company’s deferred tax balances are classified in its balance sheets as of December 31 as follows (in thousands):

						2021						2020
Long term deferred tax assets and liabilities:
Long term deferred tax assets						$	1,934					$	4,851
Long term deferred tax liabilities						(566,291)						(498,154)
Net deferred tax liabilities						$	(564,357)					$	(493,303)

The valuation allowances relate to capital loss carryforwards, income tax credits, foreign net operating loss carryforwards and state net operating loss carryforwards. The net change in the total valuation allowance for the year ended December 31, 2021, was an increase of $4.3 million. The valuation increase was primarily due to net operating losses generated in certain states where the Company and its subsidiaries file on a separate company basis as well as an increase in foreign net operating losses where significant negative evidence on future utilization was considered.

As of December 31, 2021, the Company had a net operating loss carryforward for U.S. federal income tax purposes of approximately $4.0 million gross of tax that is available to offset U.S. federal taxable income indefinitely. The Company had a net operating loss carryforward for state income tax purposes of approximately $837.2 million gross of tax that is available to offset future state taxable income indefinitely, and in some cases subject to expiration in 15 or 20 years. Additionally, the Company had $93.9 million net operating loss carryforwards gross of tax that are available to offset future foreign taxable income. Most foreign net operating loss carryforwards will not expire in future years. The Company has provided a valuation allowance against $42.0 million of its deferred tax asset related to the net operating losses as it does not anticipate utilizing the losses in the foreseeable future.

In addition, the Company has foreign tax credits for foreign income purposes in the amount of $51.2 million. The Company has provided a valuation allowance against $51.2 million of the tax credits as it does not anticipate utilizing the credits in the foreseeable future.

During 2021 and 2020, the Company had recorded accrued interest and penalties related to the unrecognized tax benefits of $5.6 million and $5.7 million, respectively. Accumulated interest and penalties were $18.1 million and $12.5 million on the Consolidated Balance Sheets at December 31, 2021 and 2020, respectively. In accordance with the Company's accounting policy, interest and penalties related to unrecognized tax benefits are included as a component of income tax expense.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits excluding interest and penalties for the years ended December 31, 2021, 2020 and 2019 is as follows (in thousands):

Unrecognized tax benefits at December 31, 2018						$	34,152
Additions based on tax provisions related to the current year						4,284
Additions based on tax provisions related to the prior year						11,679
Deductions based on settlement/expiration of prior year tax positions						(7,342)
Unrecognized tax benefits at December 31, 2019						42,773
Additions based on tax provisions related to the current year						6,412
Additions based on tax provisions related to the prior year						13,532
Deduction of cumulative interest and penalties						(12,508)
Deductions based on expiration of prior year tax positions						(14,460)
Unrecognized tax benefits at December 31, 2020						35,749
Additions based on tax provisions related to the current year						8,543
Additions based on tax provisions related to the prior year						5,909
Deductions based on settlement of prior year tax positions						(2,122)
Deductions based on expiration of prior year tax positions						(1,058)
Unrecognized tax benefits at December 31, 2021						$	47,021

In prior years, the Company included interest and penalties related to unrecognized tax benefits in its tabular reconciliation above. A cumulative adjustment was made in 2020 to remove interest and penalties from the above tabular disclosure.

As of December 31, 2021, the Company had total unrecognized tax benefits of $47.0 million all of which, if recognized, would affect its effective tax rate. It is not anticipated that there are any unrecognized tax benefits that will significantly increase or decrease within the next twelve months.

The Company files numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The statute of limitations for the Company’s U.S. federal income tax returns has expired for years prior to 2014. The statute of limitations for most state income tax returns has expired for years prior to 2018. The statute of limitations has expired for years prior to 2018 for the Company’s Russian income tax returns, 2016 for the Company’s Mexican income tax returns, and 2016 for the Company’s Luxembourg income tax returns.

14. Leases

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 Right of Use (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.

Other assets include ROU assets, other current liabilities include short-term operating lease liabilities, and other non-current liabilities include long-term lease liabilities at December 31, 2021 and 2020 is as follows (in thousands):

						2021						2020
ROU assets						$	84,777					$	76,797
Short term lease liabilities						$	20,296					$	17,047
Long term lease liabilities						$	79,905					$	75,350

The Company does not 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 year ended December 31, 2021 and 2020 were $22.6 million and $20.7 million, respectively.

The supplementary cash and non-cash disclosures for the year ended December 31, 2021 and 2020 are as follows (in thousands):

						2021						2020
Cash paid for operating lease liabilities						$	23,803					$	20,068
ROU assets obtained in exchange for new operating lease obligations						$	29,428					$	7,134
Weighted-average remaining lease term (years)						5.99						7.07
Weighted-average discount rate						3.80%						4.18%

Maturities of lease liabilities as of December 31, 2021 were as follows (in thousands):

2022						$	1,535
2023						22,924
2024						20,725
2025						19,101
2026						16,734
Thereafter						31,989
Total lease payments						113,008
Less imputed interest						12,807
Present value of lease liabilities						$	100,201

15. 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.

Derivative Lawsuits

On July 10, 2017, a shareholder derivative complaint was filed against the Company and certain of the Company’s directors and officers in the United States District Court for the Northern District of Georgia (“Federal Derivative Action”) seeking recovery on behalf of the Company. The Federal Derivative Action alleges that the defendants issued a false and misleading

proxy statement in violation of the federal securities laws; that defendants breached their fiduciary duties by causing or permitting the Company to make allegedly false and misleading public statements concerning the Company’s fee charges and financial and business prospects; and that certain defendants breached their fiduciary duties through allegedly improper sales of stock. The complaint seeks unspecified monetary damages on behalf of the Company, corporate governance reforms, disgorgement of profits, benefits and compensation by the defendants, restitution, costs, and attorneys’ and experts’ fees. On September 20, 2018, the court entered an order deferring the Federal Derivative Action pending a ruling on motions for summary judgment in the then-pending shareholder class action, notice a settlement has been reached in the shareholder class action, or until otherwise agreed to by the parties. After preliminary approval of the proposed settlement of the shareholder class action was granted, the stay on the Federal Derivative Action was lifted. Plaintiffs amended their complaint on February 22, 2020. FLEETCOR filed a motion to dismiss the amended complaint in the Federal Derivative Action on April 17, 2020, which the court granted without leave to amend on October 21, 2020. Plaintiffs filed a notice of appeal to the United States Court of Appeals for the Eleventh Circuit on November 18, 2020. The appeal is pending, and the court heard oral argument in the case on February 10, 2022.

On January 9, 2019, a similar shareholder derivative complaint was filed in the Superior Court of Gwinnett County, Georgia (“State Derivative Action”), which was stayed pending a ruling on motions for summary judgment in the shareholder class action, notice a settlement has been reached in the shareholder class action, or until otherwise agreed by the parties. On the parties’ joint motion, the court has continued the stay of the State Derivative Action “pending further developments in the first-filed Federal Derivative Action.” The defendants dispute the allegations in the derivative complaints and intend to vigorously defend against the claims.

FTC Investigation

In October 2017, the Federal Trade Commission (“FTC”) issued a Notice of Civil Investigative Demand to the Company for the production of documentation and a request for responses to written interrogatories. After discussions with the Company, the FTC proposed in October 2019 to resolve potential claims relating to the Company’s advertising and marketing practices, principally in its U.S. direct fuel card business within its North American Fuel Card business. The parties reached impasse primarily related to what the Company believes are unreasonable demands for redress made by the FTC.

On December 20, 2019, the FTC filed a lawsuit in the Northern District of Georgia against the Company and Ron Clarke. See FTC v. FLEETCOR and Ronald F. Clarke, No. 19-cv-05727 (N.D. Ga.). The complaint alleges the Company and Clarke violated the FTC Act’s prohibitions on unfair and deceptive acts and practices. The complaint seeks among other things injunctive relief, consumer redress, and costs of suit. The Company continues to believe that the FTC’s claims are without merit. On April 17, 2021, the FTC filed a motion for summary judgment. On April 22, 2021, the United States Supreme Court held unanimously in AMG Capital Management v. FTC that the FTC does not have authority under current law to seek monetary redress by means of Section 13(b) of the FTC Act, which is the means by which the FTC has sought such redress in this case. FLEETCOR cross-moved for summary judgment regarding the FTC’s ability to seek monetary or injunctive relief on May 17, 2021; the briefing on both parties’ summary judgment motions was completed on July 12, 2021. On August 13, 2021, the FTC filed a motion to stay or to voluntarily dismiss without prejudice the case pending in the Northern District of Georgia in favor of a parallel administrative action under Section 5 of the FTC Act that it filed on August 11, 2021 in the FTC’s administrative process. Apart from the jurisdiction and statutory change, the FTC’s administrative complaint makes the same factual allegations as the FTC’s original complaint filed in December 2019. The Company opposed the FTC’s motion for a stay or to voluntarily dismiss, and the court denied the FTC’s motion on February 7, 2022. The court also set a tentative trial date of June 7, 2022. In the meantime, the FTC’s administrative action is stayed. The Company has incurred and continues to incur legal and other fees related to this complaint. Any settlement of this matter, or defense against the lawsuit, could involve costs to the Company, including legal fees, redress, penalties, and remediation expenses. At this time, in view of the complexity and ongoing nature of the matter, we are unable to estimate a reasonably possible loss or range of loss that we may incur to settle this matter or defend against the lawsuit brought by the FTC.

16. Dispositions

Telematics Businesses

As part of the Company's plans to exit the telematics business, the Company sold its investment in Masternaut to Michelin Group during the second quarter of 2019. The Company impaired its investments in Masternaut by an additional $15.7 million during 2019, resulting in no gain or loss when the investment was sold. The Company has recorded cumulative impairment losses associated with its former investment in Masternaut of $136.3 million.

17. Derivative Financial Instruments

The Company uses derivatives to facilitate cross-currency corporate payments by writing derivatives to customers within its cross-border solution. 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 associated with the Company's cross-border solution 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. Concentrations of credit and performance risk may exist with counterparties, which includes customers and banking partners, as we are engaged in similar activities with similar economic characteristics related to fluctuations in foreign currency rates. The Company performs a review of the credit risk of these counterparties at the inception of the contract and on an ongoing basis. The Company also monitors the concentration of its contracts with any individual counterparty against limits at the individual counterparty level. The Company anticipates that the counterparties will be able to fully satisfy their obligations under the agreements, but takes action when doubt arises about the counterparties' ability to perform. These actions may include requiring customers to post or increase collateral, and for all counterparties, if the counterparty does not perform under the term of the contract, the contract may be terminated. The Company does not designate any of its foreign exchange derivatives as hedging instruments in accordance with ASC 815.

For derivatives 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. 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 in earnings.

The aggregate equivalent U.S. dollar notional amount of foreign exchange derivative customer contracts held by the Company as of December 31, 2021 and 2020 (in millions) is presented in the table below.

			Notional
			2021						2020
Foreign exchange contracts:
Swaps			$	2,670.4					$	684.5
Futures, forwards and spot			7,818.3						5,467.8
Written options			11,221.9						5,578.1
Purchased options			10,614.0						5,195.0
Total			$	32,324.5					$	16,925.4

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.

The following table summarizes the fair value of derivatives reported in the Consolidated Balance Sheets as of December 31, 2021 and 2020 (in millions):

December 31, 2021			Fair Value, Gross												Fair Value, Net
			Derivative Assets												Derivative Assets
Derivatives - undesignated:
Foreign exchange contracts			$	338.8					$	307.8					$	120.9					$	89.9
Less: Cash collateral			25.9						24.8						25.9						24.8
Total net derivative assets and liabilities			$	312.9					$	283.0					$	95.0					$	65.1

December 31, 2020			Fair Value, Gross												Fair Value, Net
			Derivative Assets												Derivative Assets
Derivatives - undesignated:
Foreign exchange contracts			$	326.1					310.5						155.8						140.3
Less: Cash collateral			18.2						38.6						18.2						38.6
Total net derivative assets and liabilities			$	307.9					$	271.9					$	137.6					$	101.7

The fair values of derivative assets and liabilities associated with contracts, which include netting terms that the Company believes to be enforceable, have been recorded net within the Consolidated Balance Sheets. The Company receives cash from customers as collateral for trade exposures, which is recorded within cash and cash equivalents and customer deposits in the Consolidated Balance Sheets. The customer has the right to recall their collateral in the event exposures move in their favor, they perform on all outstanding contracts and have no outstanding amounts due to the Company, or they cease to do business with the Company. The Company has trading lines with several banks, most of which require collateral to be posted if certain MTM thresholds are exceeded. Cash collateral posted with banks is recorded within restricted cash and can be recalled in the event that exposures move in the company’s favor or move below the collateral posting thresholds. The Company does not offset fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral. The table below presents the fair value of the Company’s derivative assets and liabilities, as well as their classification on the accompanying Consolidated Balance Sheets, as of December 31, 2021 and December 31, 2020 (in millions).

												2021						2020
						Balance Sheet Classification						Fair Value
Derivative Asset						Other current assets						$	94.0					$	139.3
Derivative Asset						Other noncurrent assets						$	26.9					$	16.6
Derivative Liability						Other current liabilities						$	66.9					$	127.7
Derivative Liability						Other noncurrent liabilities						$	23.0					$	12.5

Cash Flow Hedges

On January 22, 2019, the Company entered into three interest rate swap cash flow contracts (the "swap contracts"). The objective of these swap contracts is to reduce the variability of cash flows in the previously unhedged interest payments associated with $2.0 billion of variable rate debt, the sole source of which is due to changes in the LIBOR benchmark interest rate. As of December 31, 2021, the Company had the following outstanding interest rate derivatives that qualify as hedging instruments and are designated as cash flow hedges of interest rate risk (in millions):

						Notional Amount as of						Fixed Rates						Maturity Date
						December 31, 2021
Interest Rate Derivative:
Interest Rate Swap						$	1,000					2.56%						1/31/2022
Interest Rate Swap						$	500					2.56%						1/31/2023
Interest Rate Swap						$	500					2.55%						12/19/2023

For each of these swap contracts, the Company pays a fixed monthly rate and receives one month LIBOR.

The table below presents the fair value of the Company’s interest rate swap contracts, as well as their classification on the Consolidated Balance Sheets, as of December 31, 2021 and 2020 (in millions). See Note 4 for additional information on the fair value of the Company’s swap contracts.

						Balance Sheet Location						2021						2020
Derivatives designated as cash flow hedges:
Swap contracts						Other current liabilities						$	(23.4)					$	(49.3)
Swap contracts						Other noncurrent liabilities						$	(7.3)					$	(38.6)

The table below displays the effect of the Company’s derivative financial instruments in the Consolidated Statements of Income and other comprehensive loss for the twelve months ended December 31, 2021 and 2020 (in millions):

						2021						2020
Interest Rate Swaps:
Amount of loss recognized in other comprehensive income (loss) on derivatives, net of tax of $(14.1) million and $8.0 million for 2021 and 2020, respectively						$	6.7					$	62.7
Amount of loss reclassified from accumulated other comprehensive loss into interest expense						$	49.7					$	39.3

The $1.0 billion interest rate swap matured in January 2022. The estimated net amount of the existing losses expected to be reclassified into earnings within the next 12 months is approximately $23.4 million at December 31, 2021.

18. 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 years ended December 31 (in thousands, except per share data) follows:

						2021						2020						2019
Net income						$	839,497					$	704,216					$	895,073
Denominator for basic earnings per share						82,060						84,005						86,401
Dilutive securities						2,001						2,714						3,669
Denominator for diluted earnings per share						84,061						86,719						90,070
Basic earnings per share						$	10.23					$	8.38					$	10.36
Diluted earnings per share						$	9.99					$	8.12					$	9.94

Diluted earnings per share for the years ended December 31, 2021 and 2020 excludes the effect of 1.4 million and 0.1 million shares, respectively, of common stock that may be issued upon the exercise of employee stock options because such effect would be antidilutive. For 2019, the antidilutive effect was immaterial. Diluted earnings per share also excludes the effect of 0.1 million shares of performance based restricted stock for which the performance criteria have not yet been achieved for the years ended December 31, 2020 and 2019, respectively. For 2021, the impact was immaterial.

19. Segments

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

and reportable segments defined by geographic regions: North America, Brazil and International, which aligns with how the CODM allocates resources, assesses performance and reviews financial information. This change in reporting segments did not impact our determination of reporting units.

The Company’s segment results are as follows as of and for the years ended December 31 (in thousands):

						2021						2020						2019
Revenues, net:
North America						$1,921,077						$1,581,547						$1,708,546
Brazil						368,080						344,248						427,921
International						544,579						463,060						512,381
						$2,833,736						$2,388,855						$2,648,848
Operating income:
North America						$762,620						$547,912						$754,528
Brazil						154,265						148,055						175,642
International						325,671						276,298						301,260
						$1,242,556						$972,265						$1,231,430
Depreciation and amortization:
North America						$184,876						$156,417						$160,246
Brazil						50,020						51,364						64,936
International						49,301						47,021						49,028
						$284,197						$254,802						$274,210
Capital expenditures:
North America						$67,533						$48,426						$44,238
Brazil						24,431						17,116						18,330
International						19,566						12,883						12,602
						$111,530						$78,425						$75,170
Long-lived assets (excluding goodwill and investments):
North America						$2,117,244						$1,790,661						$1,860,708
Brazil						291,203						341,242						487,464
International						348,265						379,697						418,311
						$2,756,712						$2,511,600						$2,766,483

The following table presents the Company's long-lived assets (excluding goodwill and investments) at December 31 (in thousands).

						2021						2020
Long-lived assets (excluding goodwill):
United States (country of domicile)						$	1,848,923					$	1,547,423
Brazil						291,203						341,242
United Kingdom						245,654						269,556

More than 10% of our revenues in 2021, 2020 and 2019 were derived through our relationship with our open-loop network partner in our North America segment.

20. Selected Quarterly Financial Data (Unaudited)

Fiscal Quarters Year Ended December 31, 2021						First						Second						Third						Fourth
Revenues, net						$	608,623					$	667,381					$	755,477					$	802,255
Operating income						265,965						297,612						338,687						340,292
Net income						184,239						196,247						234,007						225,004
Earnings per share:
Basic earnings per share						$	2.21					$	2.36					$	2.86					$	2.80
Diluted earnings per share						2.15						2.30						2.80						2.74
Weighted average shares outstanding:
Basic shares						83,475						83,141						81,836						80,228
Diluted shares						85,764						85,295						83,716						81,981

Fiscal Quarters Year Ended December 31, 2020						First						Second						Third						Fourth
Revenues, net						$	661,093					$	525,146					$	585,283					$	617,333
Operating income						200,983						212,811						264,532						293,939
Net income						147,060						158,488						188,817						209,851
Earnings per share:
Basic earnings per share						$	1.73					$	1.89					$	2.26					$	2.51
Diluted earnings per share						1.67						1.83						2.19						2.44
Weighted average shares outstanding:
Basic shares						84,902						83,895						83,719						83,514
Diluted shares						88,205						86,570						86,273						85,846

The sum of the quarterly earnings per common share amounts for 2021 and 2020 may not equal the earnings per common share due to rounding.