UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 _________________________________________

FORM 10-Q

  _________________________________________

(Mark One)

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

For the quarterly period ended September 30, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-32426

 _________________________________________

WEX INC.

(Exact name of registrant as specified in its charter)

 _________________________________________

Delaware	01-0526993
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
97 Darling Avenue, South Portland, Maine	04106
(Address of principal executive offices)	(Zip Code)

(207) 773-8171

(Registrant’s telephone number, including area code)

 _________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ý  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ý  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	ý	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

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

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

Class	Outstanding at October 27, 2015
Common Stock, $0.01 par value per share	38,642,308 shares

TABLE OF CONTENTS

		Page
PART I-FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41
PART II-OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 6.	Exhibits	45
SIGNATURE

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for statements that are forward-looking and are not statements of historical facts. This Quarterly Report includes forward-looking statements including, but not limited to, statements about management’s plan and goals. Any statements in this Quarterly Report that are not statements of historical facts are forward-looking statements. When used in this Quarterly Report, the words “may,” “could,” “anticipate,” “plan,” “continue,” “project,” “intend,” “estimate,” “believe,” “expect” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. Forward-looking statements relate to our future plans, objectives, expectations and intentions and are not historical facts and accordingly involve known and unknown risks and uncertainties and other factors that may cause the actual results or performance to be materially different from future results or performance expressed or implied by these forward-looking statements. The following factors, among others, could cause actual results to differ materially from those contained in forward-looking statements made in this Quarterly Report, in press releases and in oral statements made by our authorized officers: the effects of general economic conditions on fueling patterns, payments, transaction processing activity and the commercial activity of fleets; the effects of the Company’s business expansion and acquisition efforts; the ability to consummate previously announced acquisitions; the Company’s failure to successfully integrate the businesses it has acquired; the failure of corporate investments to result in anticipated strategic value; the impact and size of credit losses; the impact of changes to the Company's credit standards; breaches of the Company’s technology systems and any resulting negative impact on our reputation, or liabilities, or loss of relationships with customers or merchants; fuel price volatility and changes in fleet fuel efficiency; the Company’s failure to maintain or renew key agreements; failure to expand the Company’s technological capabilities and service offerings as rapidly as the Company’s competitors; the actions of regulatory bodies, including banking and securities regulators, or possible changes in banking regulations impacting the Company’s industrial bank and the Company as the corporate parent; the impact of foreign currency exchange rates on the Company’s operations, revenue and income; changes in interest rates; the impact of the Company’s outstanding notes on its operations; financial loss if the Company determines it necessary to unwind its derivative instrument position prior to the expiration of a contract; the incurrence of impairment charges if our assessment of the fair value of certain of our reporting units changes; the uncertainties of litigation; as well as other risks and uncertainties identified in Item 1A of our Annual Report for the year ended December 31, 2014, filed on Form 10-K with the Securities and Exchange Commission on February 26, 2015. Our forward-looking statements and these factors do not reflect the potential future impact of any, alliance, merger, acquisition, disposition or stock repurchases. The forward-looking statements speak only as of the date of the initial filing of this Quarterly Report and undue reliance should not be placed on these statements. We disclaim any obligation to update any forward-looking statements as a result of new information, future events or otherwise.

2

PART I

Item 1. Financial Statements.

WEX INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

	September 30, 2015			December 31, 2014
Assets
Cash and cash equivalents	$	533,626		$	284,763
Accounts receivable (less reserve for credit losses of $11,535 in 2015 and $13,919 in 2014)	1,791,681			1,865,538
Securitized accounts receivable, restricted	91,756			—
Income taxes receivable	—			6,859
Available-for-sale securities	18,738			18,940
Fuel price derivatives, at fair value	13,417			40,969
Property, equipment and capitalized software (net of accumulated depreciation of $184,159 in 2015 and $169,382 in 2014)	124,632			105,596
Deferred income taxes, net	9,675			5,764
Goodwill	1,068,455			1,116,902
Other intangible assets, net	443,027			497,297
Other assets	253,497			175,506
Total assets	$	4,348,504		$	4,118,134
Liabilities and Stockholders’ Equity
Accounts payable	$	518,892		$	425,956
Accrued expenses	184,927			137,358
Income taxes payable	8,911			—
Deposits	1,189,314			979,553
Securitized debt	78,303			—
Revolving line-of-credit facilities and term loan	709,219			901,564
Deferred income taxes, net	70,565			44,004
Notes outstanding	400,000			400,000
Other debt	50,340			52,975
Amounts due under tax receivable agreement	60,319			69,637
Other liabilities	10,793			12,776
Total liabilities	3,281,583			3,023,823
Commitments and contingencies (Note 14)
Redeemable non-controlling interest	—			16,590
Stockholders’ Equity
Common stock $0.01 par value; 175,000 shares authorized; 43,077 shares issued in 2015 and 43,021 in 2014; 38,745 shares outstanding in 2015 and 38,897 in 2014	431			430
Additional paid-in capital	172,788			179,077
Non-controlling interest	12,332			17,396
Retained earnings	1,162,733			1,081,730
Accumulated other comprehensive income	(109,021		)	(50,581		)
Less treasury stock at cost; 4,428 shares in 2015 and 4,218 shares in 2014	(172,342		)	(150,331		)
Total stockholders’ equity	1,066,921			1,077,721
Total liabilities and stockholders’ equity	$	4,348,504		$	4,118,134

See notes to unaudited condensed consolidated financial statements.

3

WEX INC.

CONDENSED CONSOLIDATED STATEMENTS OF

INCOME

(in thousands, except per share data)

(unaudited)

	Three months ended  September 30,						Nine months ended  September 30,
	2015			2014			2015			2014
Revenues
Fleet payment solutions	$	140,672		$	144,497		$	404,682		$	425,760
Other payment solutions	85,385			77,637			237,313			180,023
Total revenues	226,057			222,134			641,995			605,783
Expenses
Salary and other personnel	57,174			55,392			174,682			142,720
Restructuring	(45		)	—			8,514			—
Service fees	36,924			34,024			100,935			88,160
Provision for credit losses	6,635			7,261			14,532			23,154
Technology leasing and support	10,157			8,006			29,612			22,184
Occupancy and equipment	5,240			5,362			15,271			13,489
Depreciation, amortization and impairment	20,778			19,600			62,924			49,794
Operating interest expense	1,483			1,860			4,419			4,747
Cost of hardware and equipment sold	706			1,830			2,499			5,033
Other	19,260			13,438			50,919			39,275
Gain on divestiture	—			(27,169		)	(1,215		)	(27,169		)
Total operating expenses	158,312			119,604			463,092			361,387
Operating income	67,745			102,530			178,903			244,396
Financing interest expense	(11,330		)	(9,840		)	(35,334		)	(24,472		)
Net foreign currency gain (loss)	6,525			(7,560		)	(12		)	(5,289		)
Net realized and unrealized gain on fuel price derivative instruments	7,922			14,773			4,671			9,057
Non-cash adjustments related to tax receivable agreement	1,634			(1,356		)	1,634			(1,356		)
Income before income taxes	72,496			98,547			149,862			222,336
Income taxes	30,714			24,697			61,647			69,557
Net income	41,782			73,850			88,215			152,779
Less: Net gain (loss) attributable to non-controlling interests	203			(593		)	(2,201		)	(1,539		)
Net earnings attributable to WEX Inc.	41,579			74,443			90,416			154,318
Accretion of non-controlling interest	(9,413		)	—			(9,413		)	—
Net earnings attributable to shareholders	$	32,166		$	74,443		$	81,003		$	154,318
Net earnings attributable to shareholders per share:
Basic	$	0.83		$	1.92		$	2.09		$	3.97
Diluted	$	0.83		$	1.91		$	2.08		$	3.96
Weighted average common shares outstanding:
Basic	38,745			38,867			38,780			38,896
Diluted	38,808			38,961			38,852			39,004

See notes to unaudited condensed consolidated financial statements.

4

WEX INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

	Three months ended  September 30,						Nine months ended  September 30,
	2015			2014			2015			2014
Net income	$	41,782		$	73,850		$	88,215		$	152,779
Changes in available-for-sale securities, net of tax effect of $59 and $(15) for the three months ended September 30, 2015 and 2014 and $29 and $116 for the nine months ended September 30, 2015 and 2014	99			(26		)	50			200
Foreign currency translation	(34,948		)	(33,832		)	(55,265		)	(11,170		)
Comprehensive income	6,933			39,992			33,000			141,809
Less: comprehensive loss attributable to non-controlling interests	(2,255		)	(3,571		)	(8,084		)	(3,261		)
Comprehensive income attributable to WEX Inc.	$	9,188		$	43,563		$	41,084		$	145,070

See notes to unaudited condensed consolidated financial statements.

5

WEX INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

	Common Stock
	Shares		Amount at par		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Retained Earnings			Non-controlling interest in subsidiaries			Total Stockholders’ Equity
Balance at December 31, 2013	38,987		$	429	$	168,891		$	(15,495	)	$	(130,566	)	$	879,519		$	519		$	903,297
Stock issued upon exercise of stock options	17		—		236			—			—			—			—			236
Tax benefit from stock option and restricted stock units	—		—		1,432			—			—			—			—			1,432
Stock issued upon vesting of restricted and deferred stock units	77		1		(1		)	—			—			—			—			—
Stock-based compensation, net of share repurchases for tax withholdings	—		—		6,747			—			—			—			—			6,747
Purchase of shares of treasury stock	(211	)	—		—			—			(19,765		)	—			—			(19,765		)
Changes in available-for-sale securities, net of tax effect of $116	—		—		—			200			—			—			—			200
Foreign currency translation	—		—		—			(9,448		)	—			—			(1,007		)	(10,455		)
Non-controlling interest investment	—		—		—			—			—			—			21,267			21,267
Net income (loss)	—		—		—			—			—			154,318			(1,508		)	152,810
Balance at September 30, 2014	38,870		$	430	$	177,305		$	(24,743	)	$	(150,331	)	$	1,033,837		$	19,271		$	1,055,769
Balance at December 31, 2014	38,897		$	430	$	179,077		$	(50,581	)	$	(150,331	)	$	1,081,730		$	17,396		$	1,077,721
Stock issued upon exercise of stock options	2		—		24			—			—			—			—			24
Tax from stock option and restricted stock units	—		—		(230		)	—			—			—			—			(230		)
Stock issued upon vesting of restricted and deferred stock units	56		1		(1		)	—			—			—			—			—
Stock-based compensation, net of share repurchases for tax withholdings			—		7,845			—			—			—			—			7,845
Purchase of shares of treasury stock	(210	)	—		—			—			(22,011		)	—			—			(22,011		)
Changes in available-for-sale securities, net of tax effect of ($29)	—		—		—			50			—			—			—			50
Foreign currency translation	—		—		—			(49,382		)	—			—			(1,673		)	(51,055		)
Adjustment of redeemable non-controlling interest	—		—		(13,927		)	(9,108		)	—			(9,413		)	—			(32,448		)
Net income (loss)	—		—		—			—			—			90,416			(3,391		)	87,025
Balance at September 30, 2015	38,745		$	431	$	172,788		$	(109,021	)	$	(172,342	)	$	1,162,733		$	12,332		$	1,066,921

See notes to unaudited condensed consolidated financial statements.

6

WEX INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine months ended  September 30,
	2015			2014
Cash flows from operating activities
Net income	$	88,215		$	152,779
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Fair value change of fuel price derivatives	27,552			(14,140		)
Stock-based compensation	10,227			10,089
Depreciation, amortization and impairment	65,243			51,658
Gain on divestiture	(1,215		)	(27,169		)
Deferred taxes	24,057			25,190
Foreign currency remeasurement	17,074			—
Restructuring charge	8,514			—
Provision for credit losses	14,532			23,154
Loss on disposal of property, equipment and capitalized software	298			1,138
Changes in operating assets and liabilities:
Accounts receivable	(78,951		)	(389,339		)
Other assets	(82,133		)	(42,455		)
Accounts payable	107,884			201,506
Accrued expenses	40,539			19,203
Income taxes	17,288			(6,757		)
Other liabilities	(2,221		)	(1,724		)
Amounts due under tax receivable agreement	(9,318		)	(5,772		)
Net cash provided by (used for) operating activities	247,585			(2,639		)
Cash flows from investing activities
Purchases of property, equipment and capitalized software	(47,117		)	(39,403		)
Purchases of available-for-sale securities	(263		)	(2,740		)
Maturities of available-for-sale securities	544			279
Acquisitions and investments, net of cash	—			(591,791		)
Proceeds from divestitures	17,265			46,890
Net cash used for investing activities	(29,571		)	(586,765		)
Cash flows from financing activities
Excess tax benefits from equity instrument share-based payment arrangements	658			1,432
Repurchase of share-based awards to satisfy tax withholdings	(2,382		)	(3,342		)
Proceeds from stock option exercises	24			235
Net change in deposits	211,015			379,812
Other debt	155			47,798
Loan origination fee	—			(3,309		)
Net activity on 2014 revolving credit facility	(168,752		)	190,700
Net change in securitized debt	85,658			—
Payments on term loan	(20,625		)	(14,375		)
Borrowings on 2014 term loan	—			222,500
Purchase of redeemable non-controlling interest	(46,018		)	—
Purchase of shares of treasury stock	(22,011		)	(19,765		)
Net cash provided by financing activities	37,722			801,686
Effect of exchange rate changes on cash and cash equivalents	(6,873		)	2,938
Net change in cash and cash equivalents	248,863			215,220
Cash and cash equivalents, beginning of period	284,763			361,486
Cash and cash equivalents, end of period	$	533,626		$	576,706
Supplemental cash flow information
Interest paid	$	41,292		$	31,757
Income taxes paid	$	19,899		$	49,504

See notes to unaudited condensed consolidated financial statements.

7

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data)

(unaudited)

1. Basis of Presentation

The acronyms and abbreviations identified below are used in the accompanying unaudited condensed consolidated financial statements and the notes thereto. The following is provided to aid the reader and provide a reference point when reviewing the unaudited condensed consolidated financial statements.

2011 Credit Agreement	Credit agreement entered into on May 23, 2011 among the Company, as borrower, WEX Card Holdings Australia Pty Ltd, a wholly-owned subsidiary of the Company, as specified designated borrower, Bank of America, N.A., as administrative agent and letter of credit issuer, and the other lenders party thereto
2013 Credit Agreement	Amended and restated credit agreement entered into on January 18, 2013 by and among the Company and certain of our subsidiaries, as borrowers, and WEX Card Holdings Australia Pty Ltd, as specified designated borrower, with a lending syndicate
2014 Amendment Agreement	Amendment and restatement agreement entered into on August 22, 2014, among the Company, the lenders party thereto, and Bank of America, N.A., as administrative agent
2014 Credit Agreement	Second amended and restated credit agreement entered into on August 22, 2014, by and among the Company and certain of our subsidiaries, as borrowers, and WEX Card Holding Australia
Adjusted Net Income or ANI	A non-GAAP metric that adjusts net earnings attributable to WEX Inc. to exclude fair value changes of fuel-price related derivative instruments, the amortization of purchased intangibles, the impact of net foreign currency remeasurement gains and losses, the expense associated with stock-based compensation, acquisition related expenses, the net impact of tax rate changes on the Company’s deferred tax asset and related changes in the tax-receivable agreement, deferred loan costs associated with the extinguishment of debt, certain non-cash asset impairment charges, restructuring charges, gains on the extinguishment of a portion of the tax receivable agreement, regulatory reserves, gains or losses on divestitures and adjustments attributable to non-controlling interests, including adjustments to the redemption value of a non-controlling interest, as well as the related tax impacts of the adjustments
ASU 2014-09	Accounting Standards Update No. 2014-09 Revenue from Contracts with Customers (Topic 606)
ASU 2015-03	Accounting Standards Update No. 2015-03 Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs
ASU 2015-04	Accounting Standards Update No. 2015-04 Compensation—Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets
Company	WEX Inc. and all entities included in the unaudited condensed consolidated financial statements
European fleet business	Consists primarily of our European commercial fleet card portfolio acquired by the Company from ExxonMobil on December 1, 2014 ("Esso portfolio in Europe")
Evolution1	EB Holdings Corp. and its subsidiaries which includes Evolution1, Inc., acquired by the Company on July 16, 2014
FASB	Financial Accounting Standards Board
FDIC	Federal Deposit Insurance Corporation
GAAP	Generally Accepted Accounting Principles in the United States
Indenture	Indenture dated as of January 30, 2013 among the Company, the guarantors listed therein, and The Bank of New York Mellon Trust Company, N.A., as trustee
NCI	Non-controlling interests
Notes	$400 million notes with a 4.75% fixed rate, issued on January 30, 2013
NOW deposits	Negotiable order of withdrawal deposits
Pacific Pride	Pacific Pride Services, LLC, previously a wholly owned subsidiary, sold on July 29, 2014
rapid! PayCard	rapid! PayCard, previously a line of business of the Company, sold on January 7, 2015
SaaS	Software-as-a-service
SEC	Securities and Exchange Commission
Securitization Subsidiary	Southern Cross WEX 2015-1 Trust, a bankruptcy-remote subsidiary consolidated by the Company
UNIK	UNIK S.A., the Company's Brazilian subsidiary
WEX	WEX Inc.

8

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by GAAP for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the consolidated financial statements included in the Annual Report on Form 10-K of WEX Inc. for the year ended December 31, 2014. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements that are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on February 26, 2015. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for any future quarter(s) or the year ending December 31, 2015.

Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other liabilities approximate their respective fair values due to the short-term nature of such instruments. The carrying values of certificates of deposit, interest-bearing money market deposits, borrowed federal funds and credit agreement borrowings approximate their respective fair values as the interest rates on these financial instruments are variable. All other financial instruments are reflected at fair value on the unaudited condensed consolidated balance sheets.

2. New Accounting Standards

In May 2014, the FASB issued ASU 2014-09 related to revenue recognition, which will supersede most existing revenue recognition guidance under U.S. GAAP. The new revenue recognition standard requires entities to recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard permits the use of either the retrospective or cumulative effect transition method. On July 9, 2015, the the Board voted to defer the effective date by one year to interim and annual reporting periods beginning after December 15, 2017, and permitted early adoption of the standard, but not for periods beginning on or before the original effective date of December 15, 2016. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method.

In April 2015, the FASB issued ASU 2015-03 related to the simplification of the presentation of debt issuance costs. The standard requires entities to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. The new standard is effective for interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. Entities would apply the new guidance retrospectively to all prior periods and provide the applicable disclosures for a change in accounting principal: (i) the nature of and reason for the change in accounting principle; (ii) the transition method; (iii) a description of the prior-period information that has been retrospectively adjusted; and, (iv) the effect of the change on the financial statement line item. The adoption of this standard affects presentation only and, as such, is not expected to have a material impact on the Company's consolidated financial statements.

In April 2015, the FASB issued ASU 2015-04 related to using a practical expedient for the measurement date of an employer’s defined benefit obligation and plan assets.The new standard gives an entity with a fiscal year-end that does not coincide with a calendar month-end the ability, as a practical expedient, to measure its defined benefit retirement obligations and related plan assets as of the month-end that is closest to its fiscal year-end. Additionally, the new standard provides guidance on accounting for (i) contributions to the plan and (ii) significant events that require a remeasurement (e.g., a plan amendment, settlement, or curtailment) that occur during the period between a month-end measurement date and the employer’s fiscal year-end. An entity should reflect the effects of those contributions or significant events in the measurement of the retirement benefit obligations and related plan assets. As a separate practical expedient, an entity may elect to measure the effects of a significant event as of the calendar month-end closest to the date of the significant event. The new standard is effective for interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted and the new standard should be applied prospectively. The Company does not believe that the adoption of ASU 2014-05 will have a material impact on its results of operations.

In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments.” This standard replaces the requirement that an acquirer in a business combination account for measurement period adjustments retrospectively with a requirement that an acquirer recognize adjustments to the provisional amounts that

9

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The acquirer is required to record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The pronouncement is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. The guidance is to be applied prospectively to adjustments to provisional amounts that occur after the effective date of the guidance. The Company is currently evaluating the impact the pronouncement will have on the consolidated financial statements and related disclosures.

3. Business Acquisitions

Acquisition of remaining 49% of UNIK

On August 31, 2015, the Company acquired the remaining 49 percent ownership in UNIK for $46,018. See Note 12 Non-controlling interests for further information.

Esso portfolio in Europe

On December 1, 2014, the Company acquired certain assets of the Esso portfolio in Europe through a majority owned subsidiary, WEX Europe Services Limited. The Company formed this entity during 2013 and has 75 percent ownership. The Company paid $379,458 in cash, which includes an $80,000 advance payment made in the third quarter of 2014. The transaction was financed through the Company’s cash on hand and existing credit facility. Under the terms of the transaction, WEX purchased ExxonMobil’s commercial fleet fuel card program which includes operations, funding, pricing, sales and marketing in nine countries in Europe. As part of the transaction, both parties have agreed to enter into a long term supply agreement to serve the current and future Esso Card customers and to grow the business. The Company entered into this transaction in order to expand its presence in the European market and to broaden its international footprint, while laying the foundation for further expansion.

During the fourth 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 Esso portfolio in Europe transaction. During the first nine months of 2015, 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 acquisition date. Based on such information, the Company retrospectively adjusted the fiscal year 2014 comparative information resulting in an increase in goodwill of $537, a decrease in accounts receivable of $2, a decrease in the customer relationship intangible asset of $374, a decrease in the licensing agreements intangible asset of $374, and an increase in other tangible assets and liabilities, net, including consideration receivable of $213. The Company recorded intangible assets and goodwill as described below. The Company is still reviewing the valuation as well as performing procedures to verify the completeness and accuracy of the data used in the independent valuation of all assets and liabilities. The Company has not finalized the purchase accounting. Goodwill related to this transaction is expected to be deductible for income tax purposes. The results of operations for the Esso portfolio in Europe are presented in the Company's Fleet 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 acquired)	$	379,458
Less:
Accounts receivable	303,376
Other tangible assets and liabilities, net	(8,497		)
Licensing agreements(a)	36,605
Customer relationships(b)	7,346
Recorded goodwill	$	40,628

^(a)  Weighted average life – 4.6 years.

^(b)  Weighted average life – 7.2 years.

Supplemental pro forma financial information related to the Esso portfolio in Europe acquisition has not been provided as it would be impracticable to do so. Historical financial information regarding the acquired assets is not accessible and, thus, the amounts would require estimates to be significant and render the disclosure irrelevant.

10

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

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 $532,174 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 enhance the Company's capabilities and positioning in the growing healthcare 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. During the fourth quarter of 2014 and the first half of 2015, 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 acquisition date. Based on such information, the Company retrospectively adjusted the fiscal year 2014 comparative information resulting in an increase in goodwill of $379, an increase in other tangible assets and liabilities of $127, and an increase in deferred income tax liabilities of $252. 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. Evolution1 had previously recorded goodwill on its financial statements from a prior acquisition, some of which is expected to be deductible for tax purposes. The results of operations for Evolution1 are presented in the Company's Other Payment Solutions segment.

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

Consideration paid (net of cash acquired)	$	532,174
Less:
Accounts receivable	8,418
Accounts payable	(175		)
Deferred tax liabilities, net	(68,768		)
Other tangible assets and liabilities, net	(3,712		)
Acquired software and developed technology(a)	70,000
Customer relationships(b)	211,000
Trade name(c)	7,900
Trade name(d)	11,000
Recorded goodwill	$	296,511

^(a)  Weighted average life – 6.4 years.

^(b)  Weighted average life – 9.7 years.

^(c)  Weighted average life – 9.9 years.

^(d)  Indefinite-lived

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

	Three Months Ended  September 30, 2014		Nine months Ended  September 30, 2014
Revenue	$	225,181	$	653,192
Net income attributable to WEX Inc.	$	69,889	$	141,206
Pro forma net income attributable to WEX Inc. per common share:
Net income per share – basic	$	1.80	$	3.63
Net income per share – diluted	$	1.79	$	3.62

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 acquisition related expenses, 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

11

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

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.

4. Sale of Subsidiary and Assets

rapid! PayCard

On January 7, 2015, the Company sold the assets of its operations of rapid! PayCard for $20,000, which resulted in a pre-tax gain of approximately $1,215. The Company's primary focus in the U.S. continues to be in the fleet, travel, and healthcare industries. As such, the Company divested the operations of rapid! PayCard. The operations of rapid! PayCard were not material to the Company's annual revenue, net income or earnings per share. The Company does not view this divestiture as a strategic shift in its Other Payment Solution segment.

Pacific Pride

On July 29, 2014, the Company sold its wholly owned subsidiary Pacific Pride for $49,664, which resulted in a pre-tax gain of $27,490. The transfer of the operations of Pacific Pride occurred on July 31, 2014. The Company decided to sell the operations of Pacific Pride as it did not align with the long-term strategy of the core fleet business. The operations of Pacific Pride were not material to the Company's annual revenue, net income or earnings per share. Simultaneously with the sale, the Company entered into a multi-year agreement with the buyer that will continue to allow WEX branded card acceptance at Pacific Pride locations. The Company does not view this divestiture as a strategic shift in its Fleet Payment Solution segment.

The following is a summary of the allocation of the assets and liabilities sold:

Consideration received	$	49,664
Less:
Expenses associated with the sale	1,340
Accounts receivable	48,699
Accounts payable	(53,001		)
Other tangible assets and liabilities, net	828
Customer relationships	3,727
Trademarks and trade name	1,444
Goodwill	19,137
Gain on sale	$	27,490

5. Reserves for Credit Losses

In general, the Company’s trade receivables provide for payment terms of 30 days or less. The portfolio of receivables consists of a large group of smaller balance homogeneous amounts that are collectively evaluated for impairment. No customer made up more than ten percent of the outstanding receivables at September 30, 2015.

Receivables are generally written off when they are 150 days past due or upon declaration of bankruptcy by the customer. The reserve for credit losses is calculated by an analytic model that also takes into account other factors, such as the actual charge-offs for the preceding reporting periods, expected charge-offs and recoveries for the subsequent reporting periods, a review of accounts receivable balances which become past due, changes in customer payment patterns, known fraudulent activity in the portfolio, as well as leading economic and market indicators.

As of September 30, 2015, approximately 98 percent of the outstanding balance of total trade accounts receivable was less than 60 days past due. As of September 30, 2014, approximately 99 percent of the total trade accounts receivable outstanding balance was less than 60 days past due.

12

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

The following table presents changes in reserves for credit losses related to accounts receivable:

	Nine months ended September 30,
	2015			2014
Balance, beginning of period	$	13,919		$	10,396
Provision for credit losses	14,532			23,154
Charge-offs	(20,667		)	(25,776		)
Recoveries of amounts previously charged-off	3,965			5,730
Currency translation	(214		)	(58		)
Balance, end of period	$	11,535		$	13,446

6. Goodwill and Other Intangible Assets

Goodwill

The changes in goodwill during the first nine months of 2015 were as follows:

	Fleet Payment Solutions Segment			Other Payment Solutions Segment			Total
Gross goodwill, January 1, 2015	$	759,986		$	374,424		$	1,134,410
Impact of foreign currency translation	(29,235		)	(6,679		)	(35,914		)
Disposal of certain assets	(147		)	(12,386		)	(12,533		)
Gross goodwill, September 30, 2015	730,604			355,359			1,085,963
Accumulated impairment, September 30, 2015	(1,337		)	(16,171		)	(17,508		)
Net goodwill, September 30, 2015	$	729,267		$	339,188		$	1,068,455

As described in Note 3, the Company adjusted the amount of goodwill as of December 31, 2014 in the accompanying unaudited condensed consolidated balance sheet to account for the measurement period adjustments to the Esso portfolio in Europe purchase price allocation.

The Company had no impairments to goodwill during the nine months ended September 30, 2015.

Management is currently evaluating its internal reporting structure and is in the process of determining the impact of the changes on the Company’s segment and goodwill reporting.

13

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

Other Intangible Assets

The changes in other intangible assets during the first nine months of 2015 were as follows:

	Net Carrying Amount, January 1, 2015		Amortization			Disposals			Impact of foreign currency translation			Net Carrying Amount, September 30, 2015
Definite-lived intangible assets
Acquired software and developed technology	$	119,509	$	(8,195	)	$	—		$	(4,289	)	$	107,025
Customer relationships	309,450		(23,506		)	(2,329		)	(6,977		)	276,638
Licensing agreements	35,341		(3,159		)	(164		)	(2,701		)	29,317
Patent	1,245		(67		)	—			(282		)	896
Trade names	15,373		(849		)	(723		)	(338		)	13,463
Indefinite-lived intangible assets
Trademarks and trade names	16,379		—			—			(691		)	15,688
Total	$	497,297	$	(35,776	)	$	(3,216	)	$	(15,278	)	$	443,027

The following table presents the estimated amortization expense related to the definite-lived intangible assets listed above for the remainder of 2015 and for each of the five succeeding fiscal years:

Remaining 2015	$	11,910
2016	$	46,534
2017	$	46,348
2018	$	43,050
2019	$	39,901
2020	$	36,621

Other intangible assets, net consist of the following:

	September 30, 2015							December 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Definite-lived intangible assets
Acquired software and developed technology	$	144,857	$	(37,832	)	$	107,025	$	150,458	$	(30,949	)	$	119,509
Customer relationships	373,099		(96,461		)	276,638		393,942		(84,492		)	309,450
Licensing agreements	33,054		(3,737		)	29,317		35,726		(385		)	35,341
Patent	2,307		(1,411		)	896		2,697		(1,452		)	1,245
Trademarks and trade names	16,420		(2,957		)	13,463		17,786		(2,413		)	15,373
	$	569,737	$	(142,398	)	427,339		$	600,609	$	(119,691	)	480,918
Indefinite-lived intangible assets
Trademarks and trade names						15,688							16,379
Total						$	443,027						$	497,297

14

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

7. Earnings per Share

The following is a reconciliation of the income and share data used in the basic and diluted earnings per share computations for the three and nine months ended September 30, 2015 and 2014:

	Three months ended  September 30,				Nine months ended  September 30,
	2015		2014		2015		2014
Net earnings attributable to WEX Inc. available for common stockholders – Basic and Diluted	$	32,166	$	74,443	$	81,003	$	154,318
Weighted average common shares outstanding – Basic	38,745		38,867		38,780		38,896
Unvested restricted stock units	46		74		55		85
Stock options	17		20		17		23
Weighted average common shares outstanding – Diluted	38,808		38,961		38,852		39,004

For the three and nine month periods ended September 30, 2015, certain potential outstanding stock options and restricted stock units were excluded from the computation of diluted earnings per share because the effect of including these options and restricted stock units would be anti-dilutive. No material amount of shares were considered anti-dilutive during the periods reported.

8. Derivative Instruments

The Company is exposed to certain market risks relating to its ongoing business operations. Derivative instruments are utilized to manage the Company's commodity price risk. The Company enters into put and call option contracts related to the Company’s commodity price risk, which are based on the wholesale price of gasoline and the retail price of diesel fuel and settle on a monthly basis. These put and call option contracts, or fuel price derivative instruments, are designed to reduce the volatility of the Company’s cash flows associated with its fuel price-related earnings exposure in North America.

During the fourth quarter of 2014, the Company suspended purchases under its fuel derivatives program due to unusually low prices in the commodities market. Management will continue to monitor the fuel price market and evaluate its alternatives as it relates to this hedging program. For the fourth quarter of 2015, the Company holds fuel price sensitive derivative instruments to hedge approximately 40 percent of our anticipated U.S. fuel-price related earnings exposure. For the first quarter of 2016, the amount hedged declines to 20 percent. At this time, there are no hedges beyond the first quarter of 2016.

Beginning in April 2014, the Company initiated a partial foreign currency exchange hedging program. The Company used currency forward contracts to offset the foreign currency impact of balance sheet translation. Prior to the first quarter of 2015, the Company managed foreign currency exchange exposure on an intra-quarter basis. Beginning in the first quarter of 2015, the Company held foreign currency exchange contracts that were outstanding over the quarter-end period, sought to minimize foreign cash balances, and expanded the scope of its hedging program to include additional currencies. During the third quarter of 2015, the Company terminated this foreign currency hedging program.

Beginning in September of 2015, the Company initiated a new limited foreign currency exchange hedging program, entering into short-term foreign currency swaps to convert the foreign currency exposures of certain foreign currency denominated intercompany loans and investments to U.S. dollars.

The realized and unrealized gains or losses on the currency forward contracts and swaps are reported in earnings within the same unaudited condensed consolidated statement of income line as the impact of the foreign currency translation, net foreign currency gain (loss).

Accounting guidance requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the unaudited condensed consolidated balance sheet. The Company’s fuel price derivative instruments and foreign currency instruments do not qualify for hedge accounting treatment, and therefore, no such hedging designation has been made.

15

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

Derivatives Not Designated as Hedging Instruments

For derivative instruments that are not designated as hedging instruments, the gain or loss on the derivative is recognized in current earnings.

As of September 30, 2015, the Company had the following put and call option contracts related to the Company's commodity fuel price derivatives, which are not designated as hedging contracts and settle on a monthly basis:

	Aggregate Notional Amount (gallons) (a)
Fuel price derivative instruments – unleaded fuel
Option contracts settling October 2015 – March 2016	7,769
Fuel price derivative instruments – diesel
Option contracts settling October 2015 – March 2016	3,848
Total fuel price derivative instruments	11,617

^(a)  The settlement of the put and call option contracts is based upon the New York Mercantile Exchange’s New York Harbor Reformulated Gasoline Blendstock for Oxygenate Blending and the U.S. Department of Energy’s weekly retail on-highway diesel fuel price for the month.

As of September 30, 2015, the Company had the following contracts related to its foreign currency swaps, which are not designated as hedging contracts and settle in U.S. dollars at various dates within 2 days:

	Aggregate Notional Amount
Australian dollar	A$	9,500
Euro	€	1,700
Pound sterling	£	17,000

The following table presents information on the location and amounts of derivative fair values in the unaudited condensed consolidated balance sheets:

Derivatives Classified as Assets

Derivatives Classified as Liabilities

September 30, 2015

December 31, 2014

September 30, 2015

December 31, 2014

Derivatives Not Designated as Hedging Instruments

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Commodity contracts

Fuel price derivatives, at fair value

$

13,417

Fuel price derivatives, at fair value

$

40,969

Fuel price derivatives, at fair value

$

—

Fuel price derivatives, at fair value

$

—

Foreign currency swaps

Accounts receivable

$

15

Accounts receivable

$

—

Accounts payable

$

115

Accounts payable

$

—

The following table presents information on the location and amounts of derivative gains and losses in the unaudited condensed consolidated statements of income:

16

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

		Amount of Gain or (Loss) Recognized in Income on  Derivative
Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in	Three months ended September 30,					Nine months ended  September 30,
	Income on Derivative	2015			2014		2015			2014
Commodity contracts	Net realized and unrealized gain on fuel price derivative instruments	$	7,922		$	14,773	$	4,671		$	9,057
Foreign currency forward exchanges	Net foreign currency gain (loss)	$	—		$	8,177	21,967			$	6,893
Foreign currency swaps	Net foreign currency gain (loss)	$	(100	)	$	—	$	(100	)	$	—

9. Financing and Other Debt

2014 Credit Agreement

As of September 30, 2015, the Company has $243,594 of borrowings against its $700,000 revolving credit facility. The outstanding debt under the Company's amortizing term loan arrangement, which expires in January of 2018, totaled $465,625 at September 30, 2015 and $486,250 at December 31, 2014. As of September 30, 2015, amounts outstanding under the amortizing term loan bear interest at a rate of LIBOR plus 200 basis points. The revolving credit facility currently bears interest at a rate equal to, at our option, (a) LIBOR plus 200 basis points, (b) the prime rate plus 100 basis points for our domestic borrowings; and the Eurocurrency rate plus 200 basis points for our international borrowings.

Borrowed Federal Funds

In the second quarter of 2015, the Company increased its federal funds lines of credit by $135,000 to $260,000. As of September 30, 2015, the Company had $0 outstanding on its $260,000 federal funds lines of credit. As of December 31, 2014 the Company had no outstanding balance on its $125,000 of available credit on these lines.

UNIK debt

UNIK had approximately $5,340 of debt as of September 30, 2015, and $7,975 of debt as of December 31, 2014. UNIK's debt is comprised of various credit facilities held in Brazil, with various maturity dates. The weighted average annual interest rate was 14.1 percent as of September 30, 2015, and 13.9 percent as of December 31, 2014. This debt is classified in Other debt on the Company’s unaudited condensed consolidated balance sheets for the periods presented.

Participation debt

During the second quarter of 2014, WEX Bank entered into an agreement with a third party bank to fund a customer balance that exceeded WEX Bank's lending limit to an individual customer. This borrowing carries a variable interest rate of 3-month LIBOR plus a margin of 2.25 percent.  The balance of the debt as of both September 30, 2015 and December 31, 2014, was $45,000. The participation debt balance will fluctuate on a daily basis based on customer funding needs, and will range from $0 to $45,000. The participation debt agreement will mature on April 1, 2016. This debt is classified in Other debt on the Company’s unaudited condensed consolidated balance sheets for the periods presented. 

Securitization facility

On April 28, 2015, the Company entered into a one year securitized debt agreement with a bank. Under the terms of the agreement, each month, on a revolving basis, the Company sells certain of its Australian receivables to a bankruptcy-remote subsidiary consolidated by the Company ("Securitization Subsidiary"). The Securitization Subsidiary, in turn, uses the receivables as collateral to issue asset-backed commercial paper ("securitized debt") for approximately 85 percent of the securitized receivables. The amount collected on the securitized receivables is restricted to pay the securitized debt and is not available for general corporate purposes.

The Company pays a variable interest rate on the outstanding balance of the securitized debt, based on the Australian Bank Bill Rate plus an applicable margin. The interest rate as of September 30, 2015, was 2.91 percent. As of September 30, 2015, the Company had $78,303 of securitized debt.

17

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

10. Fair Value

The Company holds mortgage-backed securities, fixed income and equity securities, derivatives (see Note 8, Derivative Instruments) and certain other financial instruments which are carried at fair value. The Company determines fair value based upon quoted prices when available or through the use of alternative approaches, such as model pricing, when market quotes are not readily accessible or available. In determining the fair value of the Company’s obligations, various factors are considered, including: closing exchange or over-the-counter market price quotations; time value and volatility factors underlying options and derivatives; price activity for equivalent instruments; and the Company’s own credit standing.

These valuation techniques may be based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy:

• Level 1 – Quoted prices for identical instruments in active markets.

• Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

• Level 3 – Instruments whose significant value drivers are unobservable.

The following table presents the Company’s assets that are measured at fair value and the related hierarchy levels as of September 30, 2015:

			Fair Value Measurements at Reporting Date Using
	September 30, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Mortgage-backed securities	$	656	$	—	$	656	$	—
Asset-backed securities	892		—		892		—
Municipal bonds	423		—		423		—
Equity securities	16,767		16,767		—		—
Total available-for-sale securities	$	18,738	$	16,767	$	1,971	$	—
Executive deferred compensation plan trust (a)	$	5,446	$	5,446	$	—	$	—
Fuel price derivatives – unleaded fuel (b)	$	8,972	$	—	$	8,972	$	—
Fuel price derivatives – diesel (b)	4,445		—		—		4,445
Total fuel price derivatives	$	13,417	$	—	$	8,972	$	4,445
Foreign currency swaps (c)	$	15	$	—	$	15	$	—
Liabilities:
Foreign currency swaps (d)	$	115	—		$	115	—

^(a)  The fair value of these instruments is recorded in Other assets.

^(b)  The balance sheet presentation combines unleaded fuel and diesel fuel positions.

^(c)  The fair value of these instruments is recorded in Accounts receivable.

^(d)  The fair value of these instruments is recorded in Accounts payable.

18

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

The following table presents the Company’s assets and liabilities that are measured at fair value and the related hierarchy levels as of December 31, 2014:

			Fair Value Measurements at Reporting Date Using
	December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Mortgage-backed securities	$	810	$	—	$	810	$	—
Asset-backed securities	1,165		—		1,165		—
Municipal bonds	554		—		554		—
Equity securities	16,411		16,411		—		—
Total available-for-sale securities	$	18,940	$	16,411	$	2,529	$	—
Executive deferred compensation plan trust (a)	$	5,927	$	5,927	$	—	$	—
Fuel price derivatives – unleaded fuel (b)	$	29,120	$	—	$	29,120	$	—
Fuel price derivatives – diesel (b)	11,849		—		—		11,849
Total fuel price derivatives	$	40,969	$	—	$	29,120	$	11,849

^(a)  The fair value of these instruments is recorded in Other assets.

^(b)  The balance sheet presentation combines unleaded fuel and diesel fuel positions.

The following table presents a reconciliation of the beginning and ending balances for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended:

	September 30, 2015			September 30, 2014
	Fuel Price Derivatives – Diesel			Fuel Price Derivatives – Diesel
Beginning balance	$	6,078		$	(1,925	)
Total gains and (losses) – realized/unrealized
Included in earnings (a)	(1,633		)	4,211
Included in other comprehensive income	—			—
Purchases, issuances and settlements	—			—
Transfers (in)/out of Level 3	—			—
Ending balance	$	4,445		$	2,286

(a)Gains and losses (realized and unrealized) associated with fuel price derivatives, included in earnings for the three months ended September 30, 2015 and 2014, are reported in net realized and unrealized gain on fuel price derivative instruments on the unaudited condensed consolidated statements of income.

19

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

The following table presents a reconciliation of the beginning and ending balances for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended:

	September 30, 2015			September 30, 2014
	Fuel Price Derivatives – Diesel			Fuel Price Derivatives – Diesel
Beginning balance	$	11,848		$	(2,142	)
Total gains and (losses) – realized/unrealized
Included in earnings (a)	(7,403		)	4,428
Included in other comprehensive income	—			—
Purchases, issuances and settlements	—			—
Transfers (in)/out of Level 3	—			—
Ending balance	$	4,445		$	2,286

(a)Gains and losses (realized and unrealized) associated with fuel price derivatives, included in earnings for the nine months ended September 30, 2015 and 2014, are reported in net realized and unrealized gain on fuel price derivative instruments on the unaudited condensed consolidated statements of income.

$400 Million Notes outstanding

The Notes outstanding as of September 30, 2015, have a carrying value of $400,000 and fair value of $384,000. As of December 31, 2014, the carrying value of the $400,000 in Notes outstanding had a fair value of $388,000. The fair value is based on market rates for the issuance of our debt. The Company determined the fair value of its Notes outstanding are classified as Level 2 in the fair value hierarchy.

Available-for-sale securities and executive deferred compensation plan trust

When available, the Company uses quoted market prices to determine the fair value of available-for-sale securities; such items are classified in Level 1 of the fair-value hierarchy. These securities primarily consist of exchange-traded equity securities.

For mortgage-backed and asset-backed debt securities and bonds, the Company generally uses quoted prices for recent trading activity of assets with similar characteristics to the debt security or bond being valued. The securities and bonds priced using such methods are generally classified as Level 2. The obligations related to the deferred compensation plan trust are classified as Level 1 in the fair value hierarchy because the fair value is determined using quoted prices for identical instruments in active markets.

Foreign currency contracts

Derivatives include foreign currency forward and swap contracts. Our foreign currency forward and swap contracts are valued using an income approach (Level 2) based on the spot rate less the contract rate multiplied by the notional amount. We consider counterparty credit risk in the valuation of our derivatives. However, counterparty credit risk did not impact the valuation of our derivatives during 2015 and 2014.

Fuel price derivative instruments

The majority of fuel price derivative instruments entered into by the Company are executed over-the-counter and are valued using internal valuation techniques, as no quoted market prices exist for such instruments. The valuation technique and inputs depend on the type of derivative and the nature of the underlying instrument. The principal technique used to value these instruments is a comparison of the spot price of the underlying instrument to its related futures curve adjusted for the Company’s assumptions of volatility and present value, where appropriate. The fair values of derivative contracts reflect the expected cash the Company will pay or receive upon settlement of the respective contracts.

The key inputs depend upon the type of derivative and the nature of the underlying instrument and include interest rate yield curves, the spot price of the underlying instruments, volatility, and correlation. The item is placed in either Level 2 or Level 3 depending on the observability of the significant inputs to the model. Correlation and inputs with longer tenures are generally less observable.

20

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

Fuel price derivative instruments – diesel. The assumptions used in the valuation of the diesel fuel price derivative instruments use both observable and unobservable inputs. There is a lack of price transparency with respect to forward prices for diesel fuel. Such unobservable inputs are significant to the diesel fuel derivative contract valuation methodology.

Quantitative Information About Level 3 Fair Value Measurements. The significant unobservable inputs used in the fair value measurement of the Company’s diesel fuel price derivative instruments designated as Level 3 as of September 30, 2015, are as follows:

	Fair Value		Valuation Technique	Unobservable Input	Range $ per gallon
Fuel price derivatives – diesel	$	4,445	Option model	Future retail price of diesel fuel after September 30, 2015	$3.72 – 3.85

Sensitivity to Changes in Significant Unobservable Inputs. As presented in the table above, the significant unobservable inputs used in the fair value measurement of the Company’s diesel fuel price derivative instruments are the future retail price of diesel fuel from the third quarter of 2015 through the first quarter of 2016. Significant changes in these unobservable inputs in isolation would result in a significant change in the fair value measurement.

11. Accumulated Other Comprehensive Income

A reconciliation of accumulated other comprehensive income (loss) for the three month periods ended September 30, 2015 and 2014, is as follows:

	2015						2014
	Unrealized Gains and Losses on Available- for-Sale Securities			Foreign Currency Items			Unrealized Gains and Losses on Available- for-Sale Securities			Foreign Currency Items
Beginning balance	$	(178	)	$	(67,344	)	$	(207	)	$	6,344
Other comprehensive income (loss)	99			(32,490		)	(26		)	(30,854		)
Purchase of redeemable non-controlling interest	—			(9,108		)	—			—
Ending balance	$	(79	)	$	(108,942	)	$	(233	)	$	(24,510	)

A reconciliation of accumulated other comprehensive income for the nine month periods ended September 30, 2015 and 2014, is as follows:

	2015						2014
	Unrealized Gains and Losses on Available- for-Sale Securities			Foreign Currency Items			Unrealized Gains and Losses on Available- for-Sale Securities			Foreign Currency Items
Beginning balance	$	(129	)	$	(50,452	)	$	(433	)	$	(15,062	)
Other comprehensive (loss) income	50			(49,382		)	200			(9,448		)
Purchase of redeemable non-controlling interest	—			(9,108		)	—			—
Ending balance	$	(79	)	$	(108,942	)	$	(233	)	$	(24,510	)

No amounts were reclassified from accumulated other comprehensive income in the periods presented.

The change in foreign currency items is primarily due to the foreign currency translation of non-cash assets such as goodwill and other intangible assets related to the Company's foreign subsidiaries.

The total tax effect on accumulated unrealized losses, as of September 30, 2015, was $1,414, and the total tax effect on accumulated unrealized net gain, as of September 30, 2014, was $943.

21

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

12. Non-controlling interests

On August 30, 2012, the Company acquired a 51 percent ownership interest in UNIK. The redeemable non-controlling interest was measured at fair value at the date of acquisition and was reported on the Company’s unaudited condensed consolidated balance sheets as “Redeemable non-controlling interest." On August 31, 2015, the Company acquired the remaining 49 percent ownership in UNIK for $46,018. Due to the put rights associated with the Company's original investment, the non-controlling interest was previously reported as a liability in other than permanent equity. The Company agreed to cancel this put option in conjunction with the acquisition. The value of the redeemable non-controlling interest was adjusted to the redemption value at date of purchase and the Company recorded the adjustment to retained earnings. This adjustment to retained earnings reduces the Earnings Per Share to shareholders. The Company recorded the amount paid in excess of the redemption value in additional paid-in capital and the impact related to foreign currency in accumulated other comprehensive income. The Company's overall purchase price was less than the fair value of UNIK.

A reconciliation of redeemable non-controlling interest for the three and nine month periods ended September 30, 2015 and September 30, 2014, is as follows:

	Three months ended  September 30,						Nine months ended  September 30,
	2015			2014			2015			2014
Balance, beginning of period	$	14,992		$	19,732		$	16,590		$	18,729
Net gain (loss) attributable to redeemable non-controlling interest	531			218			1,190			(31		)
Currency translation adjustment	(1,953		)	(1,967		)	(4,210		)	(715		)
Adjustment to redemption value	9,413			—			9,413			—
Excess purchase amount over redemption value	23,035			—			23,035			—
Purchase of non-controlling interest	(46,018		)	—			(46,018		)	—
Ending balance	$	—		$	17,983		$	—		$	17,983

On December 1, 2014, WEX acquired the assets of ExxonMobil's Esso portfolio in Europe through its majority owned subsidiary, WEX Europe Services Limited. The Company formed this entity during 2013 and has 75 percent ownership.

A reconciliation of non-controlling interest for the three and nine month periods ended September 30, 2015 and September 30, 2014 is as follows:

	Three months ended  September 30,						Nine months ended  September 30,
	2015			2014			2015			2014
Balance, beginning of period	$	13,165		$	859		$	17,396		$	519
Non-controlling interest investment	—			20,234			—			21,267
Net loss attributable to non-controlling interest	(328		)	(811		)	(3,391		)	(1,508		)
Currency translation adjustment	(505		)	(1,011		)	(1,673		)	(1,007		)
Ending balance	$	12,332		$	19,271		$	12,332		$	19,271

13. Income Taxes

Undistributed earnings of certain foreign subsidiaries of the Company amounted to $11,760 at September 30, 2015, and $7,733 at December 31, 2014. These earnings are considered to be indefinitely reinvested, and accordingly, no U.S. federal and state income taxes have been provided thereon. Upon distribution of these earnings in the form of dividends or otherwise, the Company would be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. The Company has determined that the amount of taxes attributable to these undistributed earnings is not practicably determinable.

During the third quarter of 2015, the Company incurred nondeductible expenses of approximately $3,000 and recorded discrete tax items primarily related to foreign dividends and tax return true-ups which resulted in an increase in the effective tax rate to 42.4 percent for the third quarter of 2015.

22

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

During the third quarter of 2014, the Company completed a strategic tax review project which resulted in a change in estimate to reflect the tax impacts of the domestic production activities deduction and research and development credits in the Company's income tax provision. The Company has amended prior year tax returns as a result of this change in estimate which reduced the third quarter's tax expense by approximately $11,300. In addition, the current year to date tax provision was reduced by $1,700 as a result of the change in estimate which was also recorded in the third quarter. These items reduced the effective tax rate during the third quarter of 2014 to 25.1 percent.

14. Commitments and Contingencies

Legal Matters

On September 24, 2015, the FDIC delivered to WEX Bank, a wholly owned subsidiary of WEX Inc. (the “Bank”), drafts of a Consent to Entry of an Order and a draft Consent Order to Cease and Desist alleging that the Bank violated Section 5 of the Federal Trade Commission Act. The alleged violation relates to the marketing and fee disclosure practices used in connection with negotiable order of withdrawal (“NOW”) account deposits associated with the Bank’s deposit program partner, Higher One. Higher One provides electronic financial disbursements and payment services to the higher education industry. Among these services, Higher One offers to facilitate opening a deposit account at participating banks for students receiving financial aid, with the Bank being one of those participating institutions. Upon a student’s opening of an account and receipt of funds in excess of their financial obligation to their education institution, the Bank holds the funds for the student but does not receive any of the fees at issue. Higher One services the accounts, pays related processing costs and receives all of the fees at issue. The proposed consent order, if agreed to by the Bank, would, among other things, require the Bank to pay restitution for certain fees collected by Higher One in connection with these NOW accounts and require the Bank to pay a civil money penalty (collectively, the “Proposed Order”). The Bank is reviewing its options at this time, which include (among others): contesting the allegations in the Proposed Order; disputing the FDIC’s authority to seek reimbursement or impose a civil money penalty; negotiating possible changes in the Proposed Order; or, consenting to entry of the Proposed Order without dispute.

The civil money penalty in the Proposed Order is $2,250. In response to the Proposed Order, the Bank recorded a liability, with a corresponding expense recorded in Other expense on the Condensed Consolidated Statement of Income, of this amount during the third quarter of 2015. However, the Bank may dispute the penalty and the amount could be reduced following the presentation of further evidence to the FDIC.

In addition to a civil money penalty, the Proposed Order would require the Bank to pay restitution of approximately $31,000 as a result of the alleged violations. The ultimate costs could be less than this amount if the Bank successfully contests the proposed restitution calculation or if the FDIC agrees to modify the amount of restitution. Additionally, the program agreement between the Bank and Higher One provides for indemnification by Higher One for certain costs and expenses incurred by the Bank. That indemnification obligation extends to any restitution the Bank may be ultimately required to pay but does not include the amount of any civil money penalty. Higher One’s ability to fulfill its indemnity obligations may be adversely affected by, among other developments, future regulatory changes or proceedings, its contractual indemnity obligations to other program participants, or other events affecting its business and financial condition. Moreover, Higher One has disclosed in its SEC filings that proposed rules from the Department of Education could alter, restrict or prohibit Higher One’s ability to offer and provide services in the current manner, and their business, financial condition and results of operations could be materially and adversely affected. This, in turn, could affect Higher One’s ability to fulfill any indemnification obligations it may have to the Bank. The estimated time that these rules would go into effect is July 1, 2016.

Because of the nature of the alleged violations and inherent difficulty in predicting the outcome of ongoing discussions and negotiations involving the FDIC, Higher One and other banks participating in this program, the Bank is unable to estimate a final resolution at this time. However, due to the receipt of the Proposed Order, the Company has recorded a liability for the proposed amount of financial restitution and a corresponding asset for the contractual indemnification of $31,000 (which amount does not include the civil money penalty mentioned above), respectively, during the third quarter of 2015.

Litigation

The Company is involved in pending litigation in the ordinary course of business. In the opinion of management, such litigation will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

23

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

15. Restructuring

During the first nine months of 2015, the Company recorded initial restructuring costs of approximately $8,514 related to the Company's global review of operations. This global review identified certain initiatives to further streamline the business, improve the Company's efficiency, and to globalize the Company's operations, all with an objective to improve scale and increase profitability going forward. The costs related to this initiative are employee termination benefits. No payments were made during the first nine months of 2015. These costs are expected to be paid during the remainder of 2015 and 2016. The Company has determined that the amount of expense related to this program is probable and estimable and has recorded the impact on the unaudited condensed consolidated statements of income and in Accrued expenses on the unaudited condensed consolidated balance sheet.

The following table presents the Company’s restructuring liability for the three and nine months ended September 30, 2015:

	Three months ended  September 30,					Nine months ended  September 30,
	2015			2014		2015			2014
Beginning balance	$	8,822		$	—	$	—		$	—
Restructuring charges	—			—		8,559			—
Reserve release	(45		)	—		(45		)	—
Cash paid	—			—		—			—
Impact of foreign currency translation	(304		)	—		(41		)	—
Ending balance	$	8,473		$	—	$	8,473		$	—

16. Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. The operating segments are reviewed separately because each operating segment represents a strategic business unit that generally offers different products and serves different markets. The operating segments are aggregated into the two reportable segments as described below.

The Company’s chief operating decision maker evaluates the operating results of the Company’s operating and reportable segments based upon revenues and adjusted pre-tax income before NCI which adjusts income before income taxes to exclude fair value changes of fuel price derivative instruments, net foreign currency remeasurement gains and losses, the amortization of acquired intangible assets, the expense associated with stock-based compensation, acquisition related expenses and adjustments, the net impact of tax rate changes on the Company’s deferred tax asset and related changes in the tax-receivable agreement, deferred loan costs associated with the extinguishment of debt, certain non-cash asset impairment charges, gains on the extinguishment of a portion of the tax receivable agreement, restructuring charges, gain or losses on divestitures, regulatory reserves and adjustments attributable to non-controlling interests including adjustments to the redemption value of a non-controlling interest.

The Company operates in two reportable segments, Fleet Payment Solutions and Other Payment Solutions. The Fleet Payment Solutions segment provides customers with payment and transaction processing services specifically designed for the needs of vehicle fleet customers. This segment also provides information management services to these fleet customers. The Other Payment Solutions segment provides customers with a payment processing solution for their corporate purchasing and transaction monitoring needs. Revenue in this segment is derived from our corporate purchase cards and virtual and prepaid card products. The corporate purchase card products are used by businesses to facilitate purchases of products and to utilize the Company’s information management capabilities. The results of operations for Evolution1 are presented in the Company's Other Payment Solutions segment. Evolution1 contributed net revenues of approximately $72,205 and are not significant to the adjusted pre-tax income before NCI. Management is currently evaluating its internal reporting structure and is in the process of determining the impact of the changes on the Company’s segment and goodwill reporting.

Net realized and unrealized losses on derivative instruments are allocated to the Fleet Payment Solutions segment in the computation of segment results for internal evaluation purposes. Total assets are not allocated to the segments.

Beginning in the second quarter of 2015, adjusted net income attributable to WEX Inc. excludes net foreign currency gains and losses. For comparative purposes, adjusted net income attributable to WEX Inc. for the prior periods has been

24

WEX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except per share data)

(unaudited)

adjusted to reflect the exclusion of net foreign currency gains and losses and differs from the figure previously reported due to this adjustment. During the third quarter of 2015, the Company modified the call provision agreement for its redeemable non-controlling interest in UNIK and acquired the remaining 49 percent of UNIK. The ANI adjustment attributable to non-controlling interests now includes a change to the redemption value of the non-controlling interest in UNIK. Adjusted net income for the third quarter also excludes a reserve for a potential regulatory penalty arising from the Company’s partnership with Higher One. Management believes this information is useful to investors to facilitate comparison of operating results and better identify trends in our businesses.

The following table presents the Company’s reportable segment results on an adjusted pre-tax net income before NCI basis for the three months ended September 30, 2015 and 2014:

	Total Revenues		Operating Interest Expense		Depreciation and Amortization		Adjusted Pre-Tax Income before NCI
Three months ended September 30, 2015
Fleet payment solutions	$	140,672	$	405	$	7,234	$	54,377
Other payment solutions	85,385		1,078		1,943		30,349
Total	$	226,057	$	1,483	$	9,177	$	84,726
Three months ended September 30, 2014
Fleet payment solutions	$	144,497	$	1,033	$	6,412	$	54,045
Other payment solutions	77,637		827		1,390		31,942
Total	$	222,134	$	1,860	$	7,802	$	85,987

The following table presents the Company’s reportable segment results on an adjusted pre-tax net income before NCI basis for the nine months ended September 30, 2015 and 2014:

	Total  Revenues	Operating  Interest Expense	Depreciation and  Amortization	Adjusted Pre-Tax Income before NCI
Nine months ended September 30, 2015