Business Acquisitions

9 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

Business Acquisitions

3. Business Acquisitions

Esso Card Program

During the fourth quarter of 2013, the Company announced that it plans to acquire the assets of ExxonMobil’s European commercial fuel card program through a majority owned subsidiary, WEX Europe Services Limited. The anticipated Esso Card program transaction is expected to close late in the fourth quarter of 2014 or in the first quarter of 2015. During the third quarter of 2014, the Company made an advance payment to ExxonMobil of approximately $80,000 for a portion of the acquisition consideration, per the terms of the purchase agreement. Of this amount, 25 percent of the total was paid by the minority shareholder.

Acquisition of Evolution1

On July 16, 2014, the Company acquired all of the outstanding stock of Evolution1, a leading provider of cloud-based technology and payment solutions within the healthcare industry, for approximately $532,200 in cash. The transaction was financed through the Company’s cash on hand and existing credit facility. Evolution1 developed and operates an all-in-one, multi-tenant technology platform, card products, and mobile offering that supports a full range of healthcare account types. This includes consumer-directed payments for health savings accounts, health reimbursement arrangements, flexible spending accounts, voluntary employee beneficiary associations, and defined contribution and wellness programs. The Company acquired Evolution1 to advance the Company's capabilities in the healthcare market and enhance the Company's positioning and exposure to this growing market.

During the third quarter of 2014, the Company obtained preliminary information to assist in determining the fair values of certain tangible and intangible assets acquired and liabilities assumed in the Evolution1 acquisition. Based on such information, the Company recorded intangible assets and goodwill in accordance with the estimates described below. The Company is still reviewing the valuation of all assets and liabilities and has not finalized the purchase accounting.

The operations of Evolution1 contributed net revenues of approximately $16,540 and net losses of approximately $2,080 from July 16, 2014, through September 30, 2014, which includes finance costs. Evolution1 had previously recorded goodwill on its financial statements from prior acquisition, some of which is expected to be deductible for tax purposes. The Company has incurred $6,059 in acquisition costs. The results of operations for Evolution1 are presented in the Company's Other Payment Solutions segment.

The following is a summary of the preliminary allocation of the purchase price to the assets and liabilities acquired:

Consideration paid (net of cash)	$	532,174
Less:
Accounts receivable	8,417
Accounts payable	(174		)
Deferred tax liabilities, net	(71,101		)
Other tangible assets and liabilities, net	(3,736		)
Acquired software(a)	70,000
Customer relationships(b)	211,000
Trademarks and trade name(c)	18,900
Recorded goodwill	$	298,868

^(a)  Weighted average life – 6.4 years.

^(b)  Weighted average life – 9.7 years.

^(c)  Weighted average life – 9.9 years.

The following represents unaudited pro forma operational results as if Evolution1 had been included in the Company’s unaudited consolidated statements of operations as of the beginning of the fiscal periods ended:

	Three months ended September 30,				Nine months ended September 30,
	2014		2013		2014		2013
Revenue	$	225,181	$	207,905	$	653,192	$	589,123
Net income attributable to WEX Inc.	$	69,889	$	37,309	$	141,206	$	98,303
Pro forma net income attributable to WEX Inc. per common share:
Net income per share – basic	$	1.80	$	0.96	$	3.63	$	2.52
Net income per share – diluted	$	1.79	$	0.95	$	3.62	$	2.51

The pro forma financial information assumes that the companies were combined as of January 1, 2013, and includes the business combination accounting impact from the acquisition, including amortization charges from acquired intangible assets, interest expense for debt incurred in the acquisition and net income tax effects. The pro forma results of operations do not include any cost savings or other synergies that may result from the acquisition or any estimated integration costs that have been or will be incurred by the Company. The pro forma information as presented above is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal year 2014 or fiscal year 2013.

Acquisition of FastCred

On October 15, 2013, UNIK acquired all of the stock of FastCred, a provider of fleet cards to the heavy truck or over-the-road segment of the Brazilian fleet market, for approximately $12,309, net of cash acquired. The Company purchased FastCred to expand its Fleet Payment Solutions segment. During the fourth quarter of 2013, the Company preliminarily allocated $4,282 of the cost of the acquisition to goodwill and $12,594 to other intangible assets, primarily customer relationships and acquired software. During the first quarter of 2014, the Company obtained additional information to assist in determining the fair values of certain tangible and intangible assets acquired and liabilities assumed as of the FastCred acquisition date. Based on such information, the Company retrospectively adjusted the fiscal year 2013 comparative information resulting in an increase in goodwill of $1,490, a decrease in intangible assets of $2,253, a decrease in property, equipment and capitalized software of $2, and a decrease in deferred income tax liabilities of $765. There were no changes to the previously reported consolidated statements of operations or statements of cash flows. The valuation of all assets and liabilities have been finalized. The total weighted average useful life of the intangible assets acquired from FastCred is four years for customer relationships and three years for acquired software. Goodwill recorded as a result of the FastCred acquisition is not currently deductible for income tax purposes. No pro forma information has been included in these financial statements as the operations of FastCred for the period that they were not part of the Company are not material to the Company’s revenues, net income or earnings per share.