WEX INC.
10-Ks and 10-Qs
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the
quarterly period ended September 30, 2011
OR
| o | 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
WRIGHT EXPRESS CORPORATION
(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.
þ
Yes
o
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).
þ
Yes
o
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
þ
|
Accelerated filer o | |
|
|
||
|
Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o
Yes
þ
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 31, 2011 | |
| Common Stock, $0.01 par value per share | 38,663,173 shares |
TABLE OF CONTENTS
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 contains
forward-looking statements. Any statements that are not statements of historical facts may be
deemed to be forward-looking statements. When used in this Quarterly Report, the words “may,”
“will,” “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 Company’s
failure to successfully integrate the businesses it has acquired; the failure to successfully
expand business internationally; fuel price volatility; 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 loan bank and the Company as the corporate parent; the uncertainties of litigation; the
impact of foreign currency exchange rates on the Company’s operations, revenue and income; the
effects of general economic conditions, including on fueling patterns and
the commercial activity of fleets; the effects of the Company’s international business expansion
efforts and any failure of those efforts; the impact and range of fourth quarter
credit losses; changes in interest rates; financial loss if the Company determines it necessary to
unwind its derivative instrument position prior to the expiration of a contract; as well as other
risks and uncertainties identified in Item 1A of our Annual Report for the year ended December 31,
2010, filed on Form 10-K with the Securities and Exchange Commission on February 28, 2011. Our
forward-looking statements and these factors do not reflect the potential future impact of any
alliance, merger, acquisition or disposition. 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 -
Table of Contents
PART I
Item 1. Financial Statements.
WRIGHT EXPRESS CORPORATION
(in thousands, except per share data)
(unaudited)
(unaudited)
| September 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
|
|
||||||||
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Assets
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||||||||
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Cash and cash equivalents
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$ | 42,077 | $ | 18,045 | ||||
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Accounts receivable (less reserve for credit losses of $12,825 in 2011 and $10,237 in 2010)
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1,512,343 | 1,160,482 | ||||||
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Available-for-sale securities
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17,021 | 9,202 | ||||||
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Income taxes receivable
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7,246 | — | ||||||
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Fuel price derivatives, at fair value
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2,908 | — | ||||||
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Property, equipment and capitalized software (net of accumulated depreciation of
$104,918 in 2011 and $88,970 in 2010)
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62,606 | 60,785 | ||||||
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Deferred income taxes, net
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144,170 | 161,156 | ||||||
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Goodwill
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541,173 | 537,055 | ||||||
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Other intangible assets, net
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109,037 | 124,727 | ||||||
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Other assets
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35,499 | 26,499 | ||||||
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||||||||
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Total assets
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$ | 2,474,080 | $ | 2,097,951 | ||||
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||||||||
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Liabilities and Stockholders’ Equity
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||||||||
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Accounts payable
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$ | 525,920 | $ | 379,855 | ||||
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Accrued expenses
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57,496 | 41,133 | ||||||
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Income taxes payable
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— | 3,638 | ||||||
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Deposits
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700,766 | 529,800 | ||||||
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Borrowed federal funds
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68,713 | 59,484 | ||||||
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Fuel price derivatives, at fair value
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— | 10,877 | ||||||
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Revolving line-of-credit facilities and term loan
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360,200 | 407,300 | ||||||
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Other liabilities
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5,742 | 6,712 | ||||||
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Amounts due under tax receivable agreement
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94,958 | 100,145 | ||||||
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||||||||
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Total liabilities
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1,813,795 | 1,538,944 | ||||||
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||||||||
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Commitments and contingencies (Note 10)
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||||||||
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Stockholders’ Equity
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||||||||
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Common stock $0.01 par value; 175,000 shares authorized, 42,240 in 2011
and 41,924 in 2010 shares issued; 38,754 in 2011 and 38,437 in 2010 shares outstanding
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422 | 419 | ||||||
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Additional paid-in capital
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144,040 | 132,583 | ||||||
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Retained earnings
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600,596 | 499,767 | ||||||
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Other comprehensive income (loss), net of tax:
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||||||||
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Net unrealized gain on available-for-sale securities
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236 | 92 | ||||||
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Net unrealized loss on interest rate swaps
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(116 | ) | (368 | ) | ||||
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Net foreign currency translation adjustment
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16,474 | 27,881 | ||||||
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||||||||
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Accumulated other comprehensive income
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16,594 | 27,605 | ||||||
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Less treasury stock at cost, 3,566 shares in 2011 and 2010
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(101,367 | ) | (101,367 | ) | ||||
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Total stockholders’ equity
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660,285 | 559,007 | ||||||
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Total liabilities and stockholders’ equity
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$ | 2,474,080 | $ | 2,097,951 | ||||
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See notes to unaudited condensed consolidated financial statements.
- 3 -
Table of Contents
WRIGHT EXPRESS CORPORATION
(in thousands, except per share data)
(unaudited)
(unaudited)
| Three months ended | Nine months ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||
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Revenues
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Fleet payment solutions
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$ | 117,054 | $ | 83,514 | $ | 329,236 | $ | 235,309 | |||||||||
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Other payment solutions
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34,824 | 16,715 | 84,004 | 40,201 | |||||||||||||
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Total revenues
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151,878 | 100,229 | 413,240 | 275,510 | |||||||||||||
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Expenses
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|||||||||||||||||
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Salary and other personnel
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27,388 | 23,746 | 79,492 | 63,813 | |||||||||||||
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Service fees
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20,774 | 15,953 | 51,978 | 33,015 | |||||||||||||
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Provision for credit losses
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8,677 | 3,882 | 20,464 | 12,644 | |||||||||||||
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Technology leasing and support
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3,895 | 3,319 | 11,851 | 9,404 | |||||||||||||
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Occupancy and equipment
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2,761 | 2,181 | 8,846 | 6,268 | |||||||||||||
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Depreciation and amortization
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11,767 | 6,752 | 33,644 | 18,362 | |||||||||||||
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Operating interest expense
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1,449 | 1,255 | 4,188 | 4,126 | |||||||||||||
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Cost of hardware and equipment sold
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1,166 | 447 | 3,042 | 1,645 | |||||||||||||
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Other
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8,757 | 6,502 | 27,144 | 18,504 | |||||||||||||
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Total operating expenses
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86,634 | 64,037 | 240,649 | 167,781 | |||||||||||||
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Operating income
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65,244 | 36,192 | 172,591 | 107,729 | |||||||||||||
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Financing interest expense
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(3,100 | ) | (1,484 | ) | (9,087 | ) | (2,903 | ) | |||||||||
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(Loss) gain on foreign currency transactions
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(855 | ) | 7,015 | (363 | ) | 7,058 | |||||||||||
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Net realized and unrealized gain (loss) on fuel price derivatives
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13,952 | (3,774 | ) | (4,991 | ) | 3,809 | |||||||||||
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(Increase) in amount due under tax receivable agreement
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(875 | ) | (214 | ) | (875 | ) | (214 | ) | |||||||||
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Income before income taxes
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74,366 | 37,735 | 157,275 | 115,479 | |||||||||||||
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Income taxes
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26,266 | 17,164 | 56,445 | 46,318 | |||||||||||||
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Net income
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48,100 | 20,571 | 100,830 | 69,161 | |||||||||||||
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Changes in available-for-sale securities, net of tax effect of $57 and
$90 in 2011 and $15 and $74 in 2010
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88 | 17 | 144 | 125 | |||||||||||||
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Changes in interest rate swaps, net of tax effect of $65 and $146
in 2011 and $(144) and $(200) in 2010
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113 | (248 | ) | 252 | (344 | ) | |||||||||||
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Foreign currency translation
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(29,888 | ) | 13,990 | (11,407 | ) | 13,457 | |||||||||||
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Comprehensive income
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$ | 18,413 | $ | 34,330 | $ | 89,819 | $ | 82,399 | |||||||||
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Earnings per share:
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Basic
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$ | 1.24 | $ | 0.54 | $ | 2.61 | $ | 1.80 | |||||||||
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Diluted
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$ | 1.23 | $ | 0.53 | $ | 2.59 | $ | 1.77 | |||||||||
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Weighted average common shares outstanding:
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Basic
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38,747 | 38,374 | 38,662 | 38,512 | |||||||||||||
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Diluted
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38,951 | 38,779 | 38,938 | 39,022 | |||||||||||||
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See notes to unaudited condensed consolidated financial statements.
- 4 -
Table of Contents
WRIGHT EXPRESS CORPORATION
(in thousands)
(unaudited)
(unaudited)
| Nine months ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
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Cash flows from operating activities
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Net income
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$ | 100,830 | $ | 69,161 | ||||
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Adjustments to reconcile net income to net cash used for operating activities:
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Fair value change of fuel price derivatives
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(13,785 | ) | 7,020 | |||||
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Stock-based compensation
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7,429 | 5,411 | ||||||
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Depreciation and amortization
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35,267 | 19,197 | ||||||
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Deferred taxes
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20,297 | 18,636 | ||||||
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Provision for credit losses
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20,464 | 12,644 | ||||||
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Loss on disposal of property and equipment
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715 | — | ||||||
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Changes in operating assets and liabilities, net of effects of acquisition:
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||||||||
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Accounts receivable
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(383,951 | ) | (216,089 | ) | ||||
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Other assets
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(7,981 | ) | (6,385 | ) | ||||
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Accounts payable
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148,480 | 84,426 | ||||||
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Accrued expenses
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6,674 | 8,373 | ||||||
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Income taxes
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(2,765 | ) | 5,026 | |||||
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Other liabilities
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(962 | ) | 2,907 | |||||
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Amounts due under tax receivable agreement
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(5,187 | ) | (5,559 | ) | ||||
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Net cash (used for) provided by operating activities
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(74,475 | ) | 4,768 | |||||
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Cash flows from investing activities
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Purchases of property and equipment
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(19,862 | ) | (20,378 | ) | ||||
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Purchases of available-for-sale securities
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(8,353 | ) | (115 | ) | ||||
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Maturities of available-for-sale securities
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769 | 1,552 | ||||||
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Acquisition
of ReD - net of cash acquired
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3,734 | (340,030 | ) | |||||
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Acquisition of rapid!, net of earn out
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(8,081 | ) | — | |||||
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Net cash used for investing activities
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(31,793 | ) | (358,971 | ) | ||||
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Cash flows from financing activities
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Excess tax benefits from share-based payment arrangements
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3,788 | 1,123 | ||||||
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Repurchase of share-based awards to satisfy tax withholdings
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(2,547 | ) | (1,763 | ) | ||||
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Proceeds from stock option exercises
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2,755 | 2,306 | ||||||
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Net increase in deposits
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170,974 | 71,763 | ||||||
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Net increase (decrease) in borrowed federal funds
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9,229 | (6,729 | ) | |||||
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Loan origination fee paid for 2011 revolving line-of-credit facility
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(6,184 | ) | — | |||||
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Net (repayments) borrowings on 2007 revolving line-of-credit facility
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(332,300 | ) | 217,500 | |||||
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(Repayments)
borrowings on term loan
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(75,000 | ) | 75,000 | |||||
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Net borrowings in 2011 revolving line-of-credit facility
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165,200 | — | ||||||
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Borrowings on 2011 term note agreement
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200,000 | — | ||||||
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Repayment of 2011 term note agreement
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(5,000 | ) | — | |||||
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Purchase of shares of treasury stock
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— | (18,357 | ) | |||||
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Net cash provided by financing activities
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130,915 | 340,843 | ||||||
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Effect of exchange rate changes on cash and cash equivalents
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(615 | ) | 100 | |||||
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Net change in cash and cash equivalents
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24,032 | (13,260 | ) | |||||
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Cash and cash equivalents, beginning of period
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18,045 | 39,304 | ||||||
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Cash and cash equivalents, end of period
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$ | 42,077 | $ | 26,044 | ||||
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Supplemental cash flow information
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Interest paid
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$ | 11,439 | $ | 15,807 | ||||
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Income taxes paid
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$ | 35,066 | $ | 21,528 | ||||
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Conversion of preferred stock shares and accrued preferred dividends to common stock shares
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$ | — | $ | 10,004 | ||||
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Significant non-cash transaction
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Acquisition
of rapid! – estimated earn out
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$ | 10,000 | $ | — | ||||
See notes to unaudited condensed consolidated financial statements.
- 5 -
Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
(unaudited)
(unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States 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 generally accepted accounting principles (“GAAP”) for
complete financial statements. However, except as disclosed herein, there have been no material
changes in the information disclosed in the notes to consolidated financial statements included in
the Annual Report on Form 10-K of Wright Express Corporation for the year ended December 31, 2010.
These condensed consolidated financial statements should be read in conjunction with the financial
statements that are included in the Company’s Annual Report filed on Form 10-K for the year ended
December 31, 2010, filed with the Securities and Exchange Commission (“SEC”) on February 28, 2011.
When used in these notes, the term “Company” means Wright Express Corporation and all entities
included in the consolidated financial statements. 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, 2011, are not
necessarily indicative of the results that may be expected for any future quarter(s) or the year
ending December 31, 2011.
In the first nine months of 2011, consolidated stockholders’ equity changed because of (i)
changes in other comprehensive income reflected in the consolidated statements of comprehensive
income; (ii) changes in common stock and additional paid-in capital reflected in the consolidated
statements of cash flows (including stock-based compensation, proceeds from stock option exercises
and tax activities around share-based awards); and (iii) net income.
- 6 -
Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
2. Business Acquisitions
Acquisition of RD Card Holdings Australia Pty Ltd.
On September 14, 2010, the Company, through its wholly-owned subsidiary, Wright Express
Australia Holdings Pty Ltd, completed its acquisition of all of the outstanding shares of RD Card
Holdings Australia Pty Ltd. from RD Card Holdings Limited and an intra-group note receivable from
RD Card Holdings Limited (the “ReD Transaction”). This acquisition extends the Company’s
international presence and provides global revenue diversification. Consideration paid for the
transaction was $360,300 Australian Dollars (“AUD”) (which was equivalent to approximately $336,300
U.S. Dollars (“USD”) at the time of closing). This consideration included
working capital adjustments.
The purchase price and related allocations for the ReD Transaction were revised during 2011 as the Company finalized its working capital adjustments and
valuation of intangible assets. The prior year’s amortization was adjusted by $250 USD for the
effects of the change in intangible asset valuation. The purchase price and related allocations of
the ReD Transaction are finalized as of September 30, 2011.
The following is a summary of the allocation of the purchase price to the assets and
liabilities acquired:
|
|
||||||||
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Purchase Price
Allocation |
||||||||
| Final | Preliminary | |||||||
| September 30, | December 31, | |||||||
| $ USD | 2011 | 2010 | ||||||
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Consideration paid
(net of cash acquired)
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$ | 336,260 | $ | 339,994 | ||||
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Less:
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Accounts receivable
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91,394 | 91,638 | ||||||
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Accounts payable
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(50,816 | ) | (50,534 | ) | ||||
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Other tangible assets, net
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768 | 1,970 | ||||||
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Software
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11,526 | 10,986 | ||||||
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Patent
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3,086 | 2,869 | ||||||
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Customer relationships
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70,723 | 73,939 | ||||||
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Brand name
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5,470 | 5,374 | ||||||
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Recorded goodwill
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$ | 204,109 | $ | 203,752 | ||||
- 7 -
Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
The following represents unaudited pro forma operational results as if Wright Express
Australia had been included in the Company’s condensed consolidated statements of operations as of
the beginning of the fiscal year ended 2010:
|
|
||||||||
| Three months | Nine months | |||||||
| ended | ended | |||||||
| September 30, | September 30, | |||||||
| $ USD | 2010 | 2010 | ||||||
|
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Net revenue
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$ | 112,131 | $ | 312,986 | ||||
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Net income
|
$ | 20,584 | $ | 68,978 | ||||
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|
||||||||
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Pro forma net income per common share:
|
||||||||
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Net income
per share – basic
|
$ | 0.54 | $ | 1.79 | ||||
|
Net income
per share – diluted
|
$ | 0.53 | $ | 1.77 | ||||
|
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||||||||
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||||||||
The pro forma financial information assumes the companies were combined as of January 1,
2010, and includes business combination accounting effects from the acquisition including
amortization charges from acquired intangible assets, interest expense for debt incurred in the
acquisition, net of 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 costs that have
been or will be incurred by the Company to integrate Wright Express Australia. 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 2010.
Acquisition of rapid! Financial Services LLC
On March 31, 2011, the Company acquired certain assets of rapid! Financial Services LLC
(“rapid!”) for approximately $18,000 including an estimate of contingent consideration for future
performance milestones of $10,000. rapid! is a provider of payroll debit cards, e-paystubs and
e-W-2s, and is focused on small and medium sized businesses. The Company purchased rapid! to expand
its other Payment solutions product offerings. The operations of rapid! are included in the Other Payment
Solutions segment. During the first quarter of 2011, the Company allocated the purchase price of
the acquisition based upon a preliminary estimate of the fair values of the assets acquired and
liabilities assumed. During the second and third quarter of 2011, the estimated valuation of
intangibles was revised to increase acquired intangible assets by $2,600, while goodwill was
decreased by the same amount. These valuations of intangible assets are still based on a
preliminary assessment.
A contingent consideration agreement was entered into in connection with the purchase of
rapid!. Under the terms of the agreement the former owners of rapid! will receive additional
consideration based upon the achievement of certain performance criteria, measured over the
twelve-month period from the date of purchase. The payment is anticipated to be made during the
second quarter of 2012. There have been no changes to the estimate of contingent consideration since the first quarter of 2011.
- 8 -
Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
The following is a summary of the preliminary allocation of the purchase price to the assets
and liabilities acquired:
| Preliminary Purchase Price | ||||||||
| Allocation | ||||||||
| September 30, | March 31, | |||||||
| 2011 | 2011 | |||||||
|
|
||||||||
|
Consideration paid (including estimated $10,000, contingent consideration)
|
$ | 18,081 | $ | 18,081 | ||||
|
Less:
|
||||||||
|
Accounts receivable
|
75 | 75 | ||||||
|
Accounts payable
|
(85 | ) | (85 | ) | ||||
|
Other tangible assets, net
|
105 | 105 | ||||||
|
Customer relationships
(a)
|
4,600 | 3,597 | ||||||
|
Trade name
|
1,600 | — | ||||||
|
|
||||||||
|
Recorded goodwill
|
$ | 11,786 | $ | 14,389 | ||||
|
|
||||||||
|
(a)
Weighted average life - 4.7 years.
|
||||||||
No pro forma information for 2010 has been included in these financial statements as the
operations of rapid! for the period that they were not part of the Company, are not material to the
Company’s revenues, net income and earnings per share.
3. Goodwill and Other Intangible Assets
Goodwill
The changes in goodwill during the first nine months of 2011 were as follows:
| Fleet | Other | |||||||||||
| Payment | Payment | |||||||||||
| Solutions | Solutions | |||||||||||
| Segment | Segment | Total | ||||||||||
|
|
||||||||||||
|
Balance at December 31, 2010
|
$ | 510,396 | $ | 26,659 | $ | 537,055 | ||||||
|
Impact of foreign currency translation
|
(7,356 | ) | (669 | ) | (8,025 | ) | ||||||
|
ReD purchase price adjustment
|
1,408 | (1,051 | ) | 357 | ||||||||
|
Acquisition of rapid!
|
— | 11,786 | 11,786 | |||||||||
|
|
||||||||||||
|
Balance at September 30, 2011
|
$ | 504,448 | $ | 36,725 | $ | 541,173 | ||||||
|
|
||||||||||||
- 9 -
Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
Other Intangible Assets
The changes in other intangible assets during the first nine months of 2011 were as follows:
|
|
||||||||||||||||||||||||
| Net Carrying | Impact of | Net Carrying | ||||||||||||||||||||||
| Amount, | Purchase | Foreign | Amount, | |||||||||||||||||||||
| December 31, | Price | Currency | September 30, | |||||||||||||||||||||
| 2010 | Acquisition | Adjustment | Amortization | Translation | 2011 | |||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Definite-lived intangible assets
|
||||||||||||||||||||||||
|
Acquired software
|
$ | 22,640 | $ | — | $ | 540 | $ | (3,350 | ) | $ | (123 | ) | $ | 19,707 | ||||||||||
|
Customer relationships
|
88,788 | 4,600 | (3,216 | ) | (13,165 | ) | (2,253 | ) | 74,754 | |||||||||||||||
|
Patent
|
2,982 | — | 217 | (207 | ) | (221 | ) | 2,771 | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Indefinite-lived intangible assets
|
||||||||||||||||||||||||
|
Trademarks and trade names
|
10,317 | 1,600 | 96 | — | (208 | ) | 11,805 | |||||||||||||||||
|
|
||||||||||||||||||||||||
|
Total
|
$ | 124,727 | $ | 6,200 | $ | (2,363 | ) | $ | (16,722 | ) | $ | (2,805 | ) | $ | 109,037 | |||||||||
|
|
||||||||||||||||||||||||
The Company expects amortization expense related to the definite-lived intangible assets
above to be as follows: $5,459 for October 1, 2011 through December 31, 2011; $18,791 for 2012;
$15,665 for 2013; $12,918 for 2014; $10,544 for 2015 and $8,551 for 2016.
Other intangible assets consist of the following:
|
|
||||||||||||||||||||||||
| September 30, 2011 | December 31, 2010 | |||||||||||||||||||||||
| Gross | Gross | |||||||||||||||||||||||
| Carrying | Accumulated | Net Carrying | Carrying | Accumulated | Net Carrying | |||||||||||||||||||
| Amount | Amortization | Amount | Amount | Amortization | Amount | |||||||||||||||||||
|
Definite-lived intangible assets
|
||||||||||||||||||||||||
|
Acquired software
|
$ | 28,394 | $ | (8,687 | ) | $ | 19,707 | $ | 28,263 | $ | (5,623 | ) | $ | 22,640 | ||||||||||
|
Non-compete agreement
|
100 | (100 | ) | — | 100 | (100 | ) | — | ||||||||||||||||
|
Customer relationships
|
103,591 | (28,837 | ) | 74,754 | 105,262 | (16,474 | ) | 88,788 | ||||||||||||||||
|
Trade name
|
100 | (100 | ) | — | 100 | (100 | ) | — | ||||||||||||||||
|
Patent
|
3,238 | (467 | ) | 2,771 | 3,124 | (142 | ) | 2,982 | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
|
$ | 135,423 | $ | (38,191 | ) | $ | 97,232 | $ | 136,849 | $ | (22,439 | ) | $ | 114,410 | ||||||||||
|
|
||||||||||||||||||||||||
|
Indefinite-lived intangible assets
|
||||||||||||||||||||||||
|
Trademarks and trade names
|
11,805 | 10,317 | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Total
|
$ | 109,037 | $ | 124,727 | ||||||||||||||||||||
|
|
||||||||||||||||||||||||
- 10 -
Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
4. Earnings per Common 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, 2011 and 2010:
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
|
|
||||||||||||||||
|
Income
available for common stockholders – Basic
|
$ | 48,100 | $ | 20,571 | $ | 100,830 | $ | 69,161 | ||||||||
|
Convertible, redeemable preferred stock
|
— | — | — | 40 | ||||||||||||
|
|
||||||||||||||||
|
Income
available for common stockholders – Diluted
|
$ | 48,100 | $ | 20,571 | $ | 100,830 | $ | 69,201 | ||||||||
|
|
||||||||||||||||
|
Weighted
average common shares outstanding – Basic
|
38,747 | 38,374 | 38,662 | 38,512 | ||||||||||||
|
Unvested restricted stock units
|
74 | 196 | 110 | 155 | ||||||||||||
|
Stock options
|
130 | 209 | 166 | 219 | ||||||||||||
|
Convertible, redeemable preferred stock
|
— | — | — | 136 | ||||||||||||
|
|
||||||||||||||||
|
Weighted
average common shares outstanding – Diluted
|
38,951 | 38,779 | 38,938 | 39,022 | ||||||||||||
|
|
||||||||||||||||
No shares were considered anti-dilutive during the periods reported.
- 11 -
Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
5. Derivative Instruments
The Company is exposed to certain risks relating to its ongoing business operations. The
primary risks managed by using derivative instruments are interest rate risk and commodity price
risk. Interest rate swap arrangements are entered into to manage interest rate risk associated with
the Company’s variable-rate borrowings. The Company also enters into put and call option contracts
based on the wholesale price of gasoline and retail price of diesel fuel, which settle on a monthly
basis, related to the Company’s commodity price risk. 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.
Accounting guidance requires companies to recognize all derivative instruments as either
assets or liabilities at fair value in the statement of financial position. The Company designates
interest rate swap arrangements as cash flow hedges of the forecasted interest payments on a
portion of its variable-rate credit agreement. The Company’s fuel price derivative instruments do
not qualify for hedge accounting treatment under current guidance, and therefore, no such hedging
designation has been made. Because the derivatives are either accounting or economic hedges of
operational exposures, cash flows from the settlement of such contracts are included in “Cash flows
from operating activities” on the Condensed Consolidated Statements of Cash Flows.
Cash Flow Hedges
For derivative instruments that are designated and qualify as a cash flow hedge, the effective
portion of the gain or loss on the derivative is reported as a component of other comprehensive
income and reclassified into earnings in the same period or periods during which the hedged
transaction affects earnings. Gains and losses on the derivative representing either hedge
ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in
current earnings.
The Company had two separate interest rate swap arrangements in place at the beginning of the third quarter.
The Company’s $50,000 interest rate swap expired in July 2011. As of September
30, 2011, the Company had the following outstanding interest rate
swap arrangement still in place that was
entered into to hedge forecasted variable rate interest payments:
| Weighted- | Aggregate | |||||||
| Average | Notional | |||||||
| Base Rate | Amount | |||||||
|
|
||||||||
|
Interest rate swap arrangement settling through March 2012
|
0.56 | % | $ | 150,000 | ||||
|
|
||||||||
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, 2011, the Company had the
following put and call option contracts which settle on a monthly basis:
| Aggregate | ||||||||
| Notional | ||||||||
| Amount | ||||||||
| (gallons) (a) | ||||||||
|
|
||||||||
|
Fuel price
derivative instruments – unleaded fuel
Option contracts settling October 2011 – March 2013 |
36,423 | |||||||
|
|
||||||||
|
Fuel price
derivative instruments – diesel
Option contracts settling October 2011– March 2013 |
16,364 | |||||||
|
|
||||||||
|
Total fuel price derivative instruments
|
52,787 | |||||||
|
|
||||||||
| (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 Oxygen Blending and the U.S. Department of Energy’s weekly retail on-highway diesel fuel price for the month. |
- 12 -
Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
The following table presents information on the location and amounts of derivative fair
values in the condensed consolidated balance sheets:
| Derivatives Classified as Assets | Derivatives Classified as Liabilities | |||||||||||||||||||||||||||||||
| September 30, 2011 | December 31, 2010 | September 30, 2011 | December 31, 2010 | |||||||||||||||||||||||||||||
| Balance | Balance | Balance | Balance | |||||||||||||||||||||||||||||
| Sheet | Fair | Sheet | Fair | Sheet | Fair | Sheet | Fair | |||||||||||||||||||||||||
| Location | Value | Location | Value | Location | Value | Location | Value | |||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Derivatives designated as
hedging instruments
|
||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Interest rate contracts
|
Other assets | $ | — | Other assets | $ | — | Accrued expenses | $ | 184 | Accrued expenses | $ | 581 | ||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Derivatives not designated
as hedging instruments
|
||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Commodity contracts
|
Fuel price
derivatives, at fair value |
2,908 |
Fuel price
derivatives, at fair value |
— |
Fuel price
derivatives, at fair value |
— |
Fuel price
derivatives, at fair value |
10,877 | ||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Total derivatives
|
$ | 2,908 | $ | — | $ | 184 | $ | 11,458 | ||||||||||||||||||||||||
The following table presents information on the location and amounts of derivative gains
and losses in the condensed consolidated statements of income:
| Amount of Gain | ||||||||||||||||||||||||||||||||
| or (Loss) | ||||||||||||||||||||||||||||||||
| Reclassified | Amount of Gain or | |||||||||||||||||||||||||||||||
| from | (Loss) Recognized in | |||||||||||||||||||||||||||||||
| Accumulated | Income on Derivative | |||||||||||||||||||||||||||||||
| Amount of Gain or | OCI into | Location of Gain or | (Ineffective Portion | |||||||||||||||||||||||||||||
| (Loss) Recognized in | Income | (Loss) Recognized in | and Amount | |||||||||||||||||||||||||||||
| OCI on Derivative | Location of Gain or | (Effective | Income on Derivative | Excluded from | ||||||||||||||||||||||||||||
| Derivatives in | (Effective Portion) (a) | (Loss) Reclassified | Portion) | (Ineffective Portion | Effectiveness Testing) | |||||||||||||||||||||||||||
| Cash Flow | Three months ended | from Accumulated | Three months ended | and Amount Excluded | Three months ended | |||||||||||||||||||||||||||
| Hedging | September 30, | OCI into Income | September 30, | from Effectiveness | September 30, | |||||||||||||||||||||||||||
| Relationships | 2011 | 2010 | (Effective Portion) | 2011 | 2010 | Testing) (b) | 2011 | 2010 | ||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Interest rate contracts
|
$ | 113 | $ | (248) |
Financing interest
expense |
$ | (188 | ) | $ | (132) |
Financing interest
expense |
$ | — | $ | — | |||||||||||||||||
| Amount of Gain or | ||||||||||||
| (Loss) Recognized in | ||||||||||||
| Income on Derivative | ||||||||||||
| Derivatives Not | Location of Gain or | Three months ended | ||||||||||
| Designated as | (Loss) Recognized in | September 30, | ||||||||||
| Hedging Instruments | Income on Derivative | 2011 | 2010 | |||||||||
|
|
||||||||||||
|
Commodity contracts
|
Net realized and
unrealized gain (loss) on fuel price derivatives |
$ | (13,952 | ) | $ | (3,774 | ) | |||||
| (a) | The amount of gain or (loss) recognized in OCI on the Company’s interest rate swap arrangement has been recorded net of tax impacts of $(65) in 2011 and $(144) in 2010. | |
| (b) | No ineffectiveness was reclassified into earnings nor was any amount excluded from effectiveness testing. |
- 13 -
Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
| Amount of Gain | ||||||||||||||||||||||||||||||||
| or (Loss) | ||||||||||||||||||||||||||||||||
| Reclassified | Amount of Gain or | |||||||||||||||||||||||||||||||
| from | (Loss) Recognized in | |||||||||||||||||||||||||||||||
| Accumulated | Income on Derivative | |||||||||||||||||||||||||||||||
| Amount of Gain or | OCI into | Location of Gain or | (Ineffective Portion | |||||||||||||||||||||||||||||
| (Loss) Recognized in | Income | (Loss) Recognized in | and Amount | |||||||||||||||||||||||||||||
| OCI on Derivative | Location of Gain or | (Effective | Income on Derivative | Excluded from | ||||||||||||||||||||||||||||
| Derivatives in | (Effective Portion) (a) | (Loss) Reclassified | Portion) | (Ineffective Portion | Effectiveness Testing) | |||||||||||||||||||||||||||
| Cash Flow | Nine months ended | from Accumulated | Nine months ended | and Amount Excluded | Nine months ended | |||||||||||||||||||||||||||
| Hedging | September 30, | OCI into Income | September 30, | from Effectiveness | September 30, | |||||||||||||||||||||||||||
| Relationships | 2011 | 2010 | (Effective Portion) | 2011 | 2010 | Testing) (b) | 2011 | 2010 | ||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Interest rate contracts
|
$ | 252 | $ | (344) |
Financing interest
expense |
$ | (710 | ) | $ | (409) |
Financing interest
expense |
$ | — | $ | — | |||||||||||||||||
| Amount of Gain or | ||||||||||||
| (Loss) Recognized in | ||||||||||||
| Income on Derivative | ||||||||||||
| Derivatives Not | Location of Gain or | Nine months ended | ||||||||||
| Designated as | (Loss) Recognized in | September 30, | ||||||||||
| Hedging Instruments | Income on Derivative | 2011 | 2010 | |||||||||
|
|
||||||||||||
|
Commodity contracts
|
Net realized and
unrealized (loss) gain on fuel price derivatives |
$ | (4,991 | ) | $ | 3,809 | ||||||
| (a) | The amount of gain or (loss) recognized in OCI on the Company’s interest rate swap arrangement has been recorded net of tax impacts of $(146) in 2011 and $(200) in 2010. | |
| (b) | No ineffectiveness was reclassified into earnings nor was any amount excluded from effectiveness testing. |
| 6. |
|
On May 23, 2011, the Company entered into a Credit Agreement (the “Credit Agreement”), by and
among the Company and certain of its subsidiaries, as borrowers, and Wright Express Card Holdings
Australia Pty Ltd, as specified designated borrower, with a lending syndicate. The Credit Agreement
provides for a five-year $200,000 term loan facility and a five-year $700,000 revolving credit
facility with a $100,000 sublimit for letters of credit and a $20,000 sublimit for swingline loans.
Term loan payments in the amount of $2,500 are due beginning on June 30, 2011, and on the last day
of each September, December, March and June thereafter, through and including March 31, 2016.
On the maturity date for the term agreement, May 23, 2016, the remaining outstanding principal
amount of $150,000 is due. As of September 30, 2011, the Company had $360,200 of loans outstanding
under the Credit Agreement. Accordingly, at September 30, 2011, the Company had $530,700 of
availability under the Credit Agreement. The Company capitalized approximately $6,200 in
association with this borrowing and wrote-off approximately $700 of previous issuance costs in the second quarter of 2011.
Proceeds from the new credit facility were used to refinance the Company’s existing
indebtedness under its 2007 credit facility, and its existing indebtedness under its 2010 term loan
facility. The new credit facility is available for working capital purposes, acquisitions, payment
of dividends and other restricted payments, refinancing of indebtedness, and other general
corporate purposes.
Amounts outstanding under the Credit Agreement bear interest at a rate equal to, at the
Company’s option, (a) the Eurocurrency Rate, as defined, plus a margin of 1.25 percent to 2.25
percent based on the ratio of consolidated funded indebtedness of the Company and its subsidiaries
to consolidated EBITDA or (b) the highest of (i) the Federal Funds Rate plus 0.50 percent, (ii) the
prime rate announced by lead lender, or (iii) the Eurocurrency Rate plus 1.00 percent, in each case
plus a margin of 0.25 percent to 1.25 percent based on the ratio of consolidated funded
indebtedness of the Company and its subsidiaries to consolidated EBITDA. In addition, the Company
has agreed to pay a quarterly commitment fee at a rate per annum ranging from 0.20 percent to 0.40
percent of the daily unused portion of the credit facility. Any outstanding loans under the Credit
Agreement mature on May 23, 2016, unless extended pursuant to the terms of the Credit Agreement. As
of September 30, 2011, the interest rate for the borrowings under the credit facility was 2.15
percent.
- 14 -
Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
The Company’s credit agreement contains various financial covenants requiring it to maintain
certain financial ratios. In addition to the financial covenants, the credit agreement contains
various customary restrictive covenants, including restrictions on the payment of dividends. The
obligations under the Credit Agreement are secured by a pledge of 65 percent of the stock of Wright
Express Australia Holdings Pty Ltd, a wholly-owned subsidiary of the Company.
| 7. | Fair Value |
The Company holds mortgage-backed securities, fixed income and equity securities, derivatives
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. |
- 15 -
Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
The following table presents the Company’s assets and liabilities that are measured at fair value and the related hierarchy levels:
| Fair Value Measurements | ||||||||||||||||
| at Reporting Date Using | ||||||||||||||||
| Quoted Prices | ||||||||||||||||
| in Active | Significant | |||||||||||||||
| Markets for | Other | Significant | ||||||||||||||
| Identical | Observable | Unobservable | ||||||||||||||
| September 30, | Assets | Inputs | Inputs | |||||||||||||
| 2011 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
|
Assets:
|
||||||||||||||||
|
|
||||||||||||||||
|
Mortgage-backed securities
|
$ | 3,216 | $ | — | $ | 3,216 | $ | — | ||||||||
|
Asset-backed securities
|
1,982 | — | 1,982 | — | ||||||||||||
|
Municipal bonds
|
147 | — | 147 | — | ||||||||||||
|
Equity securities
|
11,676 | 11,676 | — | — | ||||||||||||
|
|
||||||||||||||||
|
Total available-for-sale securities
|
$ | 17,021 | $ | 11,676 | $ | 5,345 | $ | — | ||||||||
|
|
||||||||||||||||
|
Executive deferred compensation plan trust
(a)
|
$ | 2,080 | $ | 2,080 | $ | — | $ | — | ||||||||
|
|
||||||||||||||||
|
Fuel price
derivatives – diesel
|
$ | 335 | $ | — | $ | — | $ | 335 | ||||||||
|
Fuel price
derivatives – unleaded fuel
|
2,573 | — | 2,573 | — | ||||||||||||
|
|
||||||||||||||||
|
Total fuel
price derivatives – assets
|
$ | 2,908 | $ | — | $ | 2,573 | $ | 335 | ||||||||
|
|
||||||||||||||||
|
Liabilities:
|
||||||||||||||||
|
|
||||||||||||||||
|
Interest rate swap arrangement with a base
rate of 0.56% and an aggregate notional amount of $150,000
(b)
|
$ | 184 | $ | — | $ | 184 | $ | — | ||||||||
|
|
||||||||||||||||
|
Contingent consideration
|
$ | 10,000 | $ | — | $ | — | $ | 10,000 | ||||||||
|
|
||||||||||||||||
| (a) | The fair value of these instruments is recorded in other assets. | |
| (b) | The fair value of this instrument is recorded in accrued expenses. |
- 16 -
Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
The following table presents a reconciliation of the beginning and ending balances for
assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)
during the three months ended September 30, 2011:
| Fuel Price | ||||||||
| Contingent | Derivatives – | |||||||
| Consideration | Diesel | |||||||
|
|
||||||||
|
Beginning balance
|
$ | (10,000 | ) | $ | (5,525 | ) | ||
|
Total gains
or (losses) – realized/unrealized
|
||||||||
|
Included in earnings
(a)
|
— | 5,860 | ||||||
|
Included in other comprehensive income
|
— | — | ||||||
|
Purchases, issuances and settlements
|
— | — | ||||||
|
Transfers in/(out) of Level 3
|
— | — | ||||||
|
|
||||||||
|
Ending balance
|
$ | (10,000 | ) | $ | 335 | |||
| (a) | Gains and losses (realized and unrealized) included in earnings for the three months ended September 30, 2011, are reported in net realized and unrealized losses on fuel price derivatives on the condensed consolidated statements of income. |
The following table presents a reconciliation of the beginning and ending balances for
assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)
during the nine months ended September 30, 2011:
| Fuel Price | ||||||||
| Contingent | Derivatives – | |||||||
| Consideration | Diesel | |||||||
|
|
||||||||
|
Beginning balance
|
$ | — | $ | (3,643 | ) | |||
|
Total gains
or (losses) – realized/unrealized
|
||||||||
|
Included in earnings
(a)
|
— | 3,978 | ||||||
|
Included in other comprehensive income
|
— | — | ||||||
|
Purchases, issuances and settlements
|
(10,000 | ) | — | |||||
|
Transfers in/(out) of Level 3
|
— | — | ||||||
|
|
||||||||
|
Ending balance
|
$ | (10,000 | ) | $ | 335 | |||
| (a) | Gains and losses (realized and unrealized) included in earnings for the nine months ended September 30, 2011, are reported in net realized and unrealized losses on fuel price derivatives on the condensed consolidated statements of income. |
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Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
The following table presents a reconciliation of the beginning and ending balances for
assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)
during the three months ended September 30, 2010:
| Fuel Price | |||||||
| Derivatives – | |||||||
| Diesel | |||||||
|
|
|||||||
|
Beginning balance
|
$ | 1,775 | |||||
|
Total gains or (losses) — realized/unrealized
|
|||||||
|
Included in earnings
(a)
|
(2,675 | ) | |||||
|
Included in other comprehensive income
|
— | ||||||
|
Purchases, issuances and settlements
|
— | ||||||
|
Transfers in/(out) of Level 3
|
— | ||||||
|
|
|||||||
|
Ending balance
|
$ | (900 | ) | ||||
| (a) | Gains and losses (realized and unrealized) included in earnings for the three months ended September 30, 2010, are reported in net realized and unrealized losses on fuel price derivatives on the condensed consolidated statements of income. |
The following table presents a reconciliation of the beginning and ending balances for
assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)
during the nine months ended September 30, 2010:
| Fuel Price | ||||
| Derivatives – | ||||
| Diesel | ||||
|
|
||||
|
Beginning balance
|
$ | 2,641 | ||
|
Total gains or (losses) — realized/unrealized
|
||||
|
Included in earnings
(a)
|
(3,541 | ) | ||
|
Included in other comprehensive income
|
— | |||
|
Purchases, issuances and settlements
|
— | |||
|
Transfers in/(out) of Level 3
|
— | |||
|
|
||||
|
Ending balance
|
$ | (900 | ) | |
| (a) | Gains and losses (realized and unrealized) included in earnings for the nine months ended September 30, 2010, are reported in net realized and unrealized losses on fuel price derivatives on the condensed consolidated statements of income. |
| 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.
| Fuel price derivatives and interest rate swap arrangements |
The majority of derivatives 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.
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Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
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 instrument, 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 items with longer tenures are generally less
observable.
| Contingent consideration |
The Company has classified its liability for contingent consideration related to its
acquisition of rapid! within Level 3 of the fair value hierarchy because the fair value is
determined using significant unobservable inputs, which include the projected revenues of rapid!
over a twelve month period.
8.
Stock-Based Compensation
During the first nine months of 2011, the Company awarded restricted stock units and
performance-based restricted stock units to employees under the 2010 Equity and Incentive Plan (the
“2011 grant”). Expense associated with the performance-based restricted stock units may increase or
decrease due to changes in the probability of the Company achieving pre-established performance
metrics. For the nine months ended September 30, 2011, total stock-based compensation cost
recognized was approximately $7,400, of which approximately $1,500 was related to the 2011 grant.
As of September 30, 2011, total unrecognized compensation cost related to non-vested stock options,
restricted stock units, and performance-based restricted stock units under the 2011 grant was
approximately $6,900, to be recognized over the remaining vesting period of these awards of
approximately 2 years.
9. Income Taxes
During the first quarter of 2011, management determined that future earnings generated by the
Company’s Australia subsidiaries will be invested indefinitely outside the United States. In the prior
year while the Company had designated its initial investment in Wright Express Australia as indefinitely
reinvested, it had considered earnings to be subject to remittance in the short term. This new determination relative to
earnings results in no incremental domestic tax effects being contemplated in deferred
tax balances for the current year.
10.
Commitments and Contingencies
| Litigation |
The Company is involved in pending litigation in the usual 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.
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Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
11.
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 Company’s chief operating decision maker evaluates the operating results of the Company’s
reportable segments based upon revenues and “adjusted net income,” which is defined by the Company
as net income adjusted for fair value changes of derivative instruments, the amortization of
purchased intangibles, the net impact of tax rate changes on the estimate of amounts due under the
tax receivable agreement, the net impact of tax rate changes on IPO related goodwill, certain
non-cash asset impairment charges and the gains on the extinguishment of a portion of the tax
receivable agreement. These adjustments are reflected net of the tax impact.
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,
payroll and transaction monitoring needs. Revenue in this segment is derived from corporate
charge cards, single use accounts and prepaid card products. The corporate charge card products are
used by businesses to facilitate purchases of products and utilize the Company’s information
management capabilities. The operations from the rapid! acquisition are included in the Other
Payment Solutions segment.
Financing interest expense and net realized and unrealized losses on derivative instruments
are not allocated to the Other Payment Solutions segment in the computation of segment results.
Total assets are not allocated to the segments.
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Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
The following table presents the Company’s reportable segment results for the three months
ended September 30, 2011 and 2010:
| Operating | Depreciation | |||||||||||||||||||
| Total | Interest | and | Provision for | Adjusted Net | ||||||||||||||||
| Revenues | Expense | Amortization | Income Taxes | Income | ||||||||||||||||
|
|
||||||||||||||||||||
|
Three months ended September 30, 2011
|
||||||||||||||||||||
|
Fleet payment solutions
|
$ | 117,054 | $ | 1,202 | $ | 5,557 | $ | 15,831 | $ | 30,085 | ||||||||||
|
Other payment solutions
|
34,824 | 247 | 432 | 5,753 | 8,622 | |||||||||||||||
|
|
||||||||||||||||||||
|
Total
|
$ | 151,878 | $ | 1,449 | $ | 5,989 | $ | 21,584 | $ | 38,707 | ||||||||||
|
|
||||||||||||||||||||
|
Three months ended September 30, 2010
|
||||||||||||||||||||
|
Fleet payment solutions
|
$ | 83,514 | $ | 1,034 | $ | 4,530 | $ | 15,726 | $ | 23,729 | ||||||||||
|
Other payment solutions
|
16,715 | 221 | 72 | 3,047 | 4,330 | |||||||||||||||
|
|
||||||||||||||||||||
|
Total
|
$ | 100,229 | $ | 1,255 | $ | 4,602 | $ | 18,773 | $ | 28,059 | ||||||||||
|
|
||||||||||||||||||||
The following table presents the Company’s reportable segment results for the nine months
ended September 30, 2011 and 2010:
| Operating | Depreciation | |||||||||||||||||||
| Total | Interest | and | Provision for | Adjusted Net | ||||||||||||||||
| Revenues | Expense | Amortization | Income Taxes | Income | ||||||||||||||||
|
|
||||||||||||||||||||
|
Nine months ended September 30, 2011
|
||||||||||||||||||||
|
Fleet payment solutions
|
$ | 329,236 | $ | 3,440 | $ | 15,693 | $ | 45,519 | $ | 83,322 | ||||||||||
|
Other payment solutions
|
84,004 | 748 | 1,229 | 12,150 | 20,096 | |||||||||||||||
|
|
||||||||||||||||||||
|
Total
|
$ | 413,240 | $ | 4,188 | $ | 16,922 | $ | 57,669 | $ | 103,418 | ||||||||||
|
|
||||||||||||||||||||
|
Nine months ended September 30, 2010
|
||||||||||||||||||||
|
Fleet payment solutions
|
$ | 235,309 | $ | 3,483 | $ | 13,302 | $ | 42,572 | $ | 68,277 | ||||||||||
|
Other payment solutions
|
40,201 | 643 | 195 | 6,481 | 10,248 | |||||||||||||||
|
|
||||||||||||||||||||
|
Total
|
$ | 275,510 | $ | 4,126 | $ | 13,497 | $ | 49,053 | $ | 78,525 | ||||||||||
|
|
||||||||||||||||||||
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Table of Contents
WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)
(unaudited)
The following table reconciles adjusted net income to net income:
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
|
|
||||||||||||||||
|
Adjusted net income
|
$ | 38,707 | $ | 28,059 | $ | 103,418 | $ | 78,525 | ||||||||
|
Unrealized gains (losses) on fuel price derivatives
|
20,728 | (6,733 | ) | 13,785 | (7,020 | ) | ||||||||||
|
Amortization of acquired intangible assets
|
(5,778 | ) | (2,150 | ) | (16,722 | ) | (4,865 | ) | ||||||||
|
Non-cash adjustment related to the tax receivable agreement
|
(875 | ) | (214 | ) | (875 | ) | (214 | ) | ||||||||
|
Tax impact
|
(4,682 | ) | 1,609 | 1,224 | 2,735 | |||||||||||
|
|
||||||||||||||||
|
Net income
|
$ | 48,100 | $ | 20,571 | $ | 100,830 | $ | 69,161 | ||||||||
|
|
||||||||||||||||
The tax impact of the foregoing adjustments is the difference between the Company’s GAAP
tax provision and a pro forma tax provision based upon the Company’s adjusted net income before
taxes. The methodology utilized for calculating the Company’s adjusted net income tax provision is
the same methodology utilized in calculating the Company’s GAAP tax provision.
- 22 -
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
We intend for this discussion to provide the reader with information that will assist in
understanding our financial statements, the changes in key items in those financial statements from
year to year, and the primary factors that accounted for those changes, as well as how certain
accounting estimates affect our financial statements. The discussion also provides information
about the financial results of the two segments of our business to provide a better understanding
of how those segments and their results affect our financial condition and results of operations as
a whole. This discussion should be read in conjunction with our audited consolidated financial
statements as of December 31, 2010, the notes accompanying those financial statements and
management’s discussion and analysis as contained in our Annual Report on Form 10-K filed with the
SEC on February 28, 2011 and in conjunction with the unaudited condensed consolidated financial
statements and notes in
Item 1
of
Part I of
this report.
Overview
Wright Express Corporation is a leading provider of value-based, business payment processing
and information management solutions. We provide products and services that meet the needs of
businesses in various geographic regions including North America, Asia Pacific and Europe. The
Company’s fleet and other payment solutions provide its more than 350,000 customers with security
and control for complex payments across a wide spectrum of business sectors. Together with our
affiliates, we market our products and services directly, as well as through more than
150 strategic relationships which include major oil companies, fuel
retailers, vehicle
maintenance providers, and online travel agencies.
Our Company is organized under two segments, Fleet Payment Solutions and Other Payment
Solutions. The Fleet Payment Solutions segment provides customers with fleet vehicle payment
processing services specifically designed for the needs of commercial and government fleets. Fleet
Payment Solutions revenue, which represents a majority of our total revenue, is earned primarily
from payment processing, account servicing and transaction processing, with the majority generated
by payment processing.
The Other Payment Solutions segment of our business provides customers with payment processing
solutions for their corporate purchasing and transaction monitoring needs through our corporate
charge card, payroll card, and through our prepaid and gift card products and services. Other
Payment Solutions revenue is earned primarily from payment processing.
Summary
Below are selected items from the third quarter of 2011:
| • | Average number of vehicles serviced increased 29 percent from the third quarter of 2010 to approximately 6.5 million, primarily due to the acquisition of Wright Express Australia in September of 2010 and the addition of fleets in New Zealand. | ||
| • | Total fleet transactions processed increased 20 percent from the third quarter of 2010 to 85.1 million. Payment processing transactions increased 14 percent to 65.2 million, while transaction processing transactions increased 47 percent to 19.9 million, over the same period in the prior year. These increases are primarily due to the acquisition of Wright Express Australia and the addition of fleet transactions in Australia and New Zealand. Domestic payment processing transactions increased 7 percent over the same period in the prior year. Payment processing transaction and vehicle count data, as well as related calculated metrics associated with this data, for all periods presented have been revised to reflect information provided from an improved business intelligence reporting process that was implemented in the second quarter of 2011. These changes do not impact our revenue or earnings. |
- 23 -
Table of Contents
| • | Average expenditure per payment processing transaction increased 33 percent to $73.26 from $55.00 for the same period last year. This increase was driven by higher average retail fuel prices. The average U.S. fuel price per gallon during the three months ended September 30, 2011, was $3.70 for North America, a 33 percent increase over the same period last year. | ||
| • | Realized losses on our fuel price derivatives during the third quarter of 2011 were $6.8 million compared to realized gains of $3.0 million for the same period in the prior year. | ||
| • | Credit loss expense in the fleet segment was $8.5 million for the three months ended September 30, 2011, versus $3.9 million for the three months ended September 30, 2010. | ||
| • | Corporate charge card purchase volume grew $1.1 billion to $2.4 billion for the three months ended September 30, 2011, an increase of 83 percent over the same period last year. | ||
| • | Our effective tax rate was 35.3 percent for the three months ended September 30, 2011 and 45.5 percent for the three months ended September 30, 2010. The rate in the third quarter of 2010 was higher as compared to the current quarter as certain expenses incurred for the acquisition of Wright Express Australia in September 2010 were not deductible for tax purposes. Future tax rates may fluctuate due to changes in the mix of earnings among different tax jurisdictions including our foreign subsidiaries. Our tax rate may also fluctuate due to the impacts that rate and mix changes have on our net deferred tax assets. |
- 24 -
Table of Contents
Results of Operations
Fleet Payment Solutions
The following table reflects comparative operating results and key operating statistics within
our Fleet Payment Solutions segment:
| Three months ended | Nine months ended | |||||||||||||||||||||||||||||||
| September 30, | Increase (decrease) | September 30, | Increase (decrease) | |||||||||||||||||||||||||||||
| (in thousands, except per transaction and per gallon data) | 2011 | 2010 | Amount | Percent | 2011 | 2010 | Amount | Percent | ||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Revenues
|
||||||||||||||||||||||||||||||||
|
Payment processing revenue
|
$ | 78,381 | $ | 56,562 | $ | 21,819 | 39 | % | $ | 222,480 | $ | 159,743 | $ | 62,737 | 39 | % | ||||||||||||||||
|
Transaction processing revenue
|
4,305 | 4,236 | 69 | 2 | % | 12,472 | 12,637 | (165 | ) | (1 | )% | |||||||||||||||||||||
|
Account servicing revenue
|
17,014 | 9,247 | 7,767 | 84 | % | 45,420 | 25,731 | 19,689 | 77 | % | ||||||||||||||||||||||
|
Finance fees
|
12,791 | 9,491 | 3,300 | 35 | % | 33,821 | 26,147 | 7,674 | 29 | % | ||||||||||||||||||||||
|
Other
|
4,563 | 3,978 | 585 | 15 | % | 15,043 | 11,051 | 3,992 | 36 | % | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Total revenues
|
117,054 | 83,514 | 33,540 | 40 | % | 329,236 | 235,309 | 93,927 | 40 | % | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Total operating expenses
|
65,163 | 54,699 | 10,464 | 19 | % | 186,068 | 144,309 | 41,759 | 29 | % | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Operating income
|
51,891 | 28,815 | 23,076 | 80 | % | 143,168 | 91,000 | 52,168 | 57 | % | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
(Loss) gain on foreign currency transactions
|
(790 | ) | 7,015 | (7,805 | ) | (111 | )% | (298 | ) | 7,058 | (7,356 | ) | (104 | )% | ||||||||||||||||||
|
Financing interest expense
(b)
|
(3,100 | ) | (1,484 | ) | (1,616 | ) | 109 | % | (9,087 | ) | (2,903 | ) | (6,184 | ) | 213 | % | ||||||||||||||||
|
Net realized and unrealized gain (loss)
on fuel price derivatives
(b)
|
13,952 | (3,774 | ) | 17,726 | (470 | )% | (4,991 | ) | 3,809 | (8,800 | ) | (231 | )% | |||||||||||||||||||
|
Increase in the amount due under tax
receivable agreement
|
(875 | ) | (214 | ) | (661 | ) | 309 | % | (875 | ) | (214 | ) | (661 | ) | 309 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Income before income taxes
|
61,078 | 30,358 | 30,720 | 101 | % | 127,917 | 98,750 | 29,167 | 30 | % | ||||||||||||||||||||||
|
Income taxes
|
20,853 | 14,117 | 6,736 | 48 | % | 45,182 | 39,837 | 5,345 | 13 | % | ||||||||||||||||||||||
|
Net income
|
$ | 40,225 | $ | 16,241 | $ | 23,984 | 148 | % | $ | 82,735 | $ | 58,913 | $ | 23,822 | 40 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Key operating statistics
|
||||||||||||||||||||||||||||||||
|
Payment processing revenue:
|
||||||||||||||||||||||||||||||||
|
Payment processing transactions
(a)
|
65,230 | 57,208 | 8,022 | 14 | % | 187,330 | 163,253 | 24,077 | 15 | % | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Average expenditure per payment
processing transaction
|
$ | 73.26 | $ | 55.00 | $ | 18.26 | 33 | % | $ | 71.82 | $ | 55.05 | $ | 16.77 | 30 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Average price per gallon of fuel -
Domestic – ($USD/gal)
|
$ | 3.70 | $ | 2.78 | $ | 0.92 | 33 | % | $ | 3.65 | $ | 2.81 | $ | 0.84 | 30 | % | ||||||||||||||||
|
Average price per gallon of fuel -
Australia – ($USD/gal)
|
$ | 5.50 | $ | 4.37 | $ | 1.13 | 26 | % | $ | 5.48 | $ | 4.37 | $ | 1.11 | 25 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Transaction processing revenue:
|
||||||||||||||||||||||||||||||||
|
Transaction processing transactions
|
19,854 | 13,470 | 6,384 | 47 | % | 52,130 | 40,268 | 11,862 | 29 | % | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Account servicing revenue:
|
||||||||||||||||||||||||||||||||
|
Average number of vehicles serviced
(a)
|
6,497 | 5,020 | 1,477 | 29 | % | 6,228 | 4,887 | 1,341 | 27 | % | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
| (a) | Payment processing transaction and vehicle count data, as well as related calculated metrics associated with this data, for all periods presented have been revised to reflect information provided from an improved business intelligence reporting process that was implemented in the second quarter of 2011. These changes do not impact our revenue or earnings. | |
| (b) | As described in Item 1—Note 11 to our Financial Statements, financing interest expense and net realized and unrealized gains and losses on derivative instruments are allocated solely to the Fleet segment. |
Revenues
Payment processing revenue increased $21.8 million for the three months ended September 30,
2011, compared to the same period last year. The primary component of this increase is a $13.3
million increase in revenue associated with a 33 percent increase in the average domestic price per
gallon of fuel. Domestic payment processing transactions increased 7 percent over the same period
in
- 25 -
Table of Contents
the prior year, resulting in an increase in revenue of $3.4 million. The remaining increase in
payment processing revenue is primarily due to the operations of Wright Express Australia, acquired
late in the third quarter of 2010.
Payment processing revenue increased $62.7 million for the nine months ended September 30,
2011, compared to the same period last year. The primary component of this increase is a $36.2
million increase in revenue associated with a 30 percent increase in the average domestic price per
gallon of fuel. Domestic payment processing transactions increased 7 percent over the same period
in the prior year, resulting in an increase in revenue of $11.0 million. The remaining increase in
payment processing revenue is primarily due to the operations of Wright Express Australia.
Our account servicing revenue increased $7.8 million for the three months ended September
30, 2011, as compared to the same period in 2010, and increased $19.7 million for the nine months
ended September 30, 2011, as compared to the same period in 2010. These increases are primarily
related to the addition of the operations of Wright Express Australia.
Our finance fees have increased $3.3 million for the three months ended September 30, 2011, as
compared to the same period in 2010, and increased $7.7 million for the nine months ended
September 30, 2011, as compared to the same period in 2010. The increases in finance fees are
associated with (i) higher accounts receivable balances associated with past due accounts in North
America and (ii) operations of Wright Express Australia as described below, recognition has been given in our reserve for credit loss for the change in the past due account balance.
Expenses
The following table compares selected expense line items within our Fleet Payment Solutions
segment for the three months ended September 30:
| Increase | ||||||||||||||||
| (decrease) | ||||||||||||||||
| (in thousands) | 2011 | 2010 | Amount | Percent | ||||||||||||
|
Expense
|
||||||||||||||||
|
Provision for credit losses
|
$ | 8,473 | $ | 3,930 | $ | 4,543 | 116 | % | ||||||||
|
Salary and other personnel
|
$ | 24,417 | $ | 22,689 | $ | 1,728 | 8 | % | ||||||||
|
Service fees
|
$ | 6,064 | $ | 8,612 | $ | (2,548 | ) | (30 | )% | |||||||
|
Depreciation and amortization
|
$ | 10,250 | $ | 6,680 | $ | 3,570 | 53 | % | ||||||||
|
Other
|
$ | 8,020 | $ | 6,398 | $ | 1,622 | 25 | % | ||||||||
|
|
||||||||||||||||
Changes in operating expenses for the three months ended September 30, 2011, as compared
to the corresponding period a year ago, include the following:
| • | We generally measure our credit loss performance by calculating credit losses as a percentage of total fuel expenditures on payment processing transactions (“Fuel Expenditures”). This metric for credit losses was 18.1 basis points of Fuel Expenditures for the three months ended September 30, 2011, compared to 12.2 basis points of Fuel Expenditures for the same period last year. We use a roll rate methodology to calculate the amount necessary for our ending receivable reserve balance. This methodology takes into account total receivable balances, recent charge off experience, recoveries on previously charged off accounts, and the dollars that are delinquent to calculate the total reserve. In addition, management undertakes a detailed evaluation of the receivable balances to help ensure further overall reserve adequacy. The expense we recognized in the quarter is the amount necessary to bring the reserve to its required level after charge offs. The increase in expense is primarily due to a 52 percent increase in customer spend during the three months ended September 30, 2011, as compared to the same period in the prior year, as well as a softening in the early stage aging, experienced during the end of the second quarter and the beginning of the third quarter of 2011. | ||
| • | Salary and other personnel expenses increased $1.7 million for the three months ended September 30, 2011, as compared to the same period last year. This increase is primarily due to the operations of Wright Express Australia, acquired during the third quarter of 2010, which added $2.0 million in expense over the same period in the prior year. | ||
| • | Service fees decreased $2.5 million for the three months ended September 30, 2011, as compared to the same period in the prior year. The decrease in fees is primarily associated with the increase of expenses in 2010 of approximately $5.2 million incurred during the third quarter with our purchase of Wright Express Australia. This decrease is partially offset with higher fees associated with our WEXSmart product as well as our operations of Wright Express Australia. |
- 26 -
Table of Contents
| • | Depreciation and amortization expenses increased approximately $3.6 million for the three months ended September 30, 2011, as compared to the same period in 2010. This increase is primarily due to amortization of intangible assets related to our acquisition of Wright Express Australia. | ||
| • | Other expenses increased $1.6 million for the three months ended September 30, 2011, as compared to the same period in the prior year. Approximately $1.3 million of this increase is from the operations of Wright Express Australia. The remaining increase is related to our North American operations, including marketing and customer service related expenses. |
The following table compares selected expense line items within our Fleet Payment Solutions
segment for the nine months ended September 30:
| Increase (decrease) | ||||||||||||||||
| (in thousands) | 2011 | 2010 | Amount | Percent | ||||||||||||
|
|
||||||||||||||||
|
Expense
|
||||||||||||||||
|
Provision for credit losses
|
$ | 20,102 | $ | 11,906 | $ | 8,196 | 69 | % | ||||||||
|
Salary and other personnel
|
$ | 71,561 | $ | 61,128 | $ | 10,433 | 17 | % | ||||||||
|
Service fees
|
$ | 16,995 | $ | 15,788 | $ | 1,207 | 8 | % | ||||||||
|
Depreciation and amortization
|
$ | 29,528 | $ | 18,167 | $ | 11,361 | 63 | % | ||||||||
|
Other
|
$ | 24,788 | $ | 18,121 | $ | 6,667 | 37 | % | ||||||||
|
|
||||||||||||||||
Changes in operating expenses for the nine months ended September 30, 2011, as compared
to the corresponding period a year ago, include the following:
| • | Credit losses were 14.7 basis points of Fuel Expenditures for the nine months ended September 30, 2011, compared to 13.1 basis points of Fuel Expenditures for the same period last year. The increase in expense is primarily due to increases in accounts receivables balances during the nine months ended September 30, 2011. During the end of the second quarter and the beginning of the third quarter of 2011, we experienced a softening of accounts receivable aging. | ||
| • | Salary and other personnel expenses increased $10.4 million for the nine months ended September 30, 2011, as compared to the same period last year. This increase is primarily due to the operations of Wright Express Australia, acquired during the third quarter of 2010, which added $6.6 million in expense over the same period in the prior year. The remaining increase is primarily due to incentives and employee benefit expenses at our North America operations. | ||
| • | Service fees increased $1.2 million for the nine months ended September 30, 2011, as compared to the same period in the prior year. Service fees increased with higher fees associated with our WEXSmart product as well as our operations of Wright Express Australia. This increase is offset with higher 2010 service fees of $5.2 million incurred during the third quarter of 2010 with our purchase of Wright Express Australia. | ||
| • | Depreciation and amortization expenses increased $11.4 million for the nine months ended September 30, 2011, as compared to the same period in 2010. This increase is primarily due to amortization of intangible assets related to our acquisition of Wright Express Australia. | ||
| • | Other expenses increased $6.7 million for the nine months ended September 30, 2011, as compared to the same period in the prior year. Approximately $4.3 million of this increase is due to operations of Wright Express Australia. The remaining increase is related to our North American operations, including marketing and customer service related expenses. |
- 27 -
Table of Contents
Fuel price derivatives
We own fuel price derivative instruments that we purchase on a periodic basis to manage the
impact of volatility in North American fuel prices on our cash flows. These fuel price derivative
instruments do not qualify for hedge accounting. Accordingly, both realized and unrealized gains
and losses on our fuel price derivative instruments affect our net income. Activity related to the
changes in fair value and settlements of these instruments and the changes in average fuel prices
in relation to the underlying strike price of the instruments is shown in the following table:
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| (in thousands, except per gallon data) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
|
|
||||||||||||||||
|
Fuel price derivatives, at fair value, beginning of period
|
$ | (17,820 | ) | $ | 5,865 | $ | (10,877 | ) | $ | 6,152 | ||||||
|
Net change in fair value
|
13,952 | (3,774 | ) | (4,991 | ) | 3,809 | ||||||||||
|
Cash payments (receipts) on settlement
|
6,776 | (2,959 | ) | 18,776 | (10,829 | ) | ||||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Fuel price derivatives, at fair value, end of period
|
$ | 2,908 | $ | (868 | ) | $ | 2,908 | $ | (868 | ) | ||||||
|
|
||||||||||||||||
|
Collar range:
|
||||||||||||||||
|
Floor
|
$ | 2.93 | $ | 3.03 | $ | 2.86 | $ | 3.15 | ||||||||
|
Ceiling
|
$ | 2.99 | $ | 3.09 | $ | 2.92 | $ | 3.21 | ||||||||
|
|
||||||||||||||||
|
Fuel price, beginning of period
|
$ | 3.65 | $ | 2.82 | $ | 3.15 | $ | 2.70 | ||||||||
|
Fuel price, end of period
|
$ | 3.58 | $ | 2.77 | $ | 3.58 | $ | 2.77 | ||||||||
|
|
||||||||||||||||
Changes in fuel price derivatives for the three and nine months ended September 30, 2011,
as compared to the corresponding period a year ago are attributable to the movements in fuel prices
at the corresponding times. Generally, if this projected average price of fuel is below the floor price of the
collar for the periods we have our derivatives, we record an asset.
The contrary is the case if the project average price of fuel is
above the ceiling of the collar range. Losses or gains that we actually
realize on these derivatives are offset by higher or lower payment processing revenue we receive because
such revenues are dependent, in part, on the current price of fuel.
We expect that our fuel price derivatives program will continue to be important to our
business model going forward, and we expect to purchase derivatives in the future. The Company
currently does not plan to hedge our fuel price risk exposure for Wright Express Australia as the
exposure to fuel price movements is limited and has not historically fluctuated to the degree it
has as in the United States.
- 28 -
Table of Contents
Other Payment Solutions
The following table reflects comparative operating results and key operating statistics within
our Other Payment Solutions segment:
| Three months ended | Nine months ended | |||||||||||||||||||||||||||||||
| September 30, | Increase (decrease) | September 30, | Increase (decrease) | |||||||||||||||||||||||||||||
| (in thousands) | 2011 | 2010 | Amount | Percent | 2011 | 2010 | Amount | Percent | ||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Revenues
|
||||||||||||||||||||||||||||||||
|
Payment processing revenue
|
$ | 24,025 | $ | 13,529 | $ | 10,496 | 78 | % | $ | 57,344 | $ | 33,716 | $ | 23,628 | 70 | % | ||||||||||||||||
|
Transaction processing revenue
|
1,661 | — | 1,661 | — | 5,261 | — | 5,261 | — | ||||||||||||||||||||||||
|
Account servicing revenue
|
955 | 21 | 934 | NM | 1,994 | 47 | 1,947 | NM | ||||||||||||||||||||||||
|
Finance fees
|
190 | 149 | 41 | 28 | % | 529 | 379 | 150 | 40 | % | ||||||||||||||||||||||
|
Other
|
7,993 | 3,016 | 4,977 | 165 | % | 18,876 | 6,059 | 12,817 | 212 | % | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Total revenues
|
34,824 | 16,715 | 18,109 | 108 | % | 84,004 | 40,201 | 43,803 | 109 | % | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Total operating expenses
|
21,471 | 9,338 | 12,133 | 130 | % | 54,581 | 23,472 | 31,109 | 133 | % | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Operating income
|
13,353 | 7,377 | 5,976 | 81 | % | 29,423 | 16,729 | 12,694 | 76 | % | ||||||||||||||||||||||
|
(Loss) gain on foreign currency transactions
|
(65 | ) | — | (65 | ) | — | (65 | ) | — | (65 | ) | — | ||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Income before income taxes
|
13,288 | 7,377 | 5,911 | 80 | % | 29,358 | 16,729 | 12,629 | 75 | % | ||||||||||||||||||||||
|
Income taxes
|
5,413 | 3,047 | 2,366 | 78 | % | 11,263 | 6,481 | 4,782 | 74 | % | ||||||||||||||||||||||
|
Net income
|
$ | 7,875 | $ | 4,330 | $ | 3,545 | 82 | % | $ | 18,095 | $ | 10,248 | $ | 7,847 | 77 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Key operating statistics
|
||||||||||||||||||||||||||||||||
|
Payment processing revenue:
|
||||||||||||||||||||||||||||||||
|
MasterCard purchase volume
|
$ | 2,404,669 | $ | 1,310,666 | $ | 1,094,003 | 83 | % | $ | 5,741,369 | $ | 3,199,441 | $ | 2,541,928 | 79 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
NM – Not meaningful
|
||||||||||||||||||||||||||||||||
Revenues
Payment processing revenue for the three months ended September 30, 2011, increased $10.5
million, as compared to the same period in the prior year, and increased $23.6 million for the nine
months ended September 30, 2011, as compared to the same period in the prior year. These increases
are primarily driven by higher corporate charge card purchase volume from our single use account
product in the online travel service market and by increased market penetration with our corporate
charge card product. These increases more than offset the decreases in the corporate charge card net interchange
rate for the third quarter of 2011, which was down 6 basis points, as compared to the third quarter of last year, primarily due to contract
mix and increased foreign spend. In addition, we also had a one-time benefit in this rate during
the third quarter this year for some additional incentives payments received. The corporate charge
card net interchange rate for the first nine months of 2011 is down 8 basis points, as compared to
the first nine months of last year, primarily due to contract mix.
Transaction processing revenue for the three months ended September 30, 2011, increased
approximately $1.7 million as compared to the same period in the prior year, and increased $5.3
million for the nine months ended September 30, 2011, as compared to the same period in the prior
year. These increases are due to the addition of the Wright Express Australia prepaid business,
acquired later in the third quarter of 2010.
Other revenue for the three months ended September 30, 2011, increased approximately $5.0
million as compared to the same period in the prior year, and increased $12.8 million for the nine
months ended September 30, 2011, as compared to the same period in the prior year. These increases
are primarily due to increased fees related to cross border charges.
- 29 -
Table of Contents
Operating Expenses
The following table compares selected expense line items within our Other Payment Solutions
segment for the three months ended September 30:
| Increase (decrease) | |||||||||||||||||
| (in thousands) | 2011 | 2010 | Amount | Percent | |||||||||||||
|
|
|||||||||||||||||
|
Expense
|
|||||||||||||||||
|
Service fees
|
$ | 14,710 | $ | 7,341 | $ | 7,369 | 100 | % | |||||||||
|
Salary and other personnel
|
$ | 2,971 | $ | 1,056 | $ | 1,915 | 181 | % | |||||||||
|
Depreciation and amortization
|
$ | 1,517 | $ | 72 | $ | 1,445 | NM | ||||||||||
|
|
|||||||||||||||||
|
NM – Not meaningful
|
|||||||||||||||||
Service fees increased $7.4 million during the third quarter of 2011 as compared to the
same period in the prior year. This increase is primarily due to increased volume and cross border
charges on our North America corporate charge card product.
Salary and other personnel expenses increased $1.9 million for the three months ended
September 30, 2011, as compared to the same period last year. This increase is primarily due to
operations of Wright Express Australia, which added $1.1 million in expense over the same period in
the prior year. The remaining increase is primarily due to additional sales staff, incentives and
employee benefit expenses at our North America operations.
Depreciation and amortization expenses increased $1.4 million for the three months ended
September 30, 2011, as compared to the same period in 2010. This
increase is primarily due to
amortization of intangible assets related to our acquisition of Wright Express Australia and
rapid!.
Operating Expenses
The following table compares selected expense line items within our Other Payment Solutions
segment for the nine months ended September 30:
| Increase (decrease) | ||||||||||||||||
| (in thousands) | 2011 | 2010 | Amount | Percent | ||||||||||||
|
|
||||||||||||||||
|
Expense
|
||||||||||||||||
|
Service fees
|
$ | 34,983 | $ | 17,227 | $ | 17,756 | 103 | % | ||||||||
|
Salary and other personnel
|
$ | 7,931 | $ | 2,684 | $ | 5,247 | 195 | % | ||||||||
|
Depreciation and amortization
|
$ | 4,116 | $ | 195 | $ | 3,921 | NM | |||||||||
|
|
||||||||||||||||
|
NM – Not meaningful
|
||||||||||||||||
Service fees increased $17.8 million during the first nine months of 2011 as compared to
the same period in the prior year. This increase is primarily due to increased volume and cross
border charges on our North America corporate charge card product.
Salary and other personnel expenses increased $5.2 million for the nine months ended September
30, 2011, as compared to the same period last year. This increase is primarily due to the
acquisition of Wright Express Australia, which added $3.8 million in expense over the same period
in the prior year. The remaining increase is primarily due to additional sales staff, incentives
and employee benefit expenses at our North America operations.
Depreciation and amortization expenses increased $3.9 million for the nine months ended
September 30, 2011, as compared to the same period in 2010. This
increase is primarily due to
amortization of intangible assets related to our acquisition of Wright Express Australia and
rapid!.
- 30 -
Table of Contents
Liquidity, Capital Resources and Cash Flows
We focus on management operating cash as a key element in achieving maximum stockholder value,
and it is the primary measure we use internally to monitor cash flow performance from our core
operations. Since deposits and borrowed federal funds are used to finance our accounts receivable,
we believe that they are a recurring and necessary use and source of cash. As such, we consider
deposits and borrowed federal funds when evaluating our operating activities. For the same reason,
we believe that management operating cash may also be useful to investors as one means of
evaluating our performance. However, management operating cash is a non-GAAP measure and should not
be considered a substitute for, or superior to, net cash provided by (used for) operating
activities as presented on the consolidated statement of cash flows in accordance with GAAP.
While GAAP cash flows from operating activities showed a use of $74.5 million in the first
nine months of 2011, management operating cash moved in the opposite direction providing
approximately $105.7 million of inflows. During the first nine months of 2010, GAAP cash flows from
operating activities provided approximately $4.8 million and management operating cash provided
$69.8 million.
With the $105.7 million of management operating cash we generated during the first nine months
of 2011, we decreased borrowings under our revolving credit facility by $47.1 million, purchased
approximately $8.4 million of available-for-sale securities and increased our property, plant and
equipment by $19.9 million. We also paid $8.1 million in cash for the acquisition of rapid! during
the first quarter of 2011. This activity resulted in an increase in our overall cash balance of
$24.0 million for the first nine months of 2011.
On May 23, 2011, we entered into a Credit Agreement (the “Credit Agreement”), by and among us
and certain of our subsidiaries, as borrowers, and Wright Express Card Holdings Australia Pty Ltd,
as specified designated borrower, with a lending syndicate. The Credit Agreement provides for a
five-year $200 million term loan facility and a five-year $700 million revolving credit facility
with a $100 million sublimit for letters of credit and a $20 million sublimit for swingline loans.
Term loan payments in the amount of $2.5 million are due beginning on June 30, 2011, and on the
last day of each September, December, March and June thereafter, through and including March 31,
2016, and on the maturity date for the term agreement, May 23, 2016, the remaining outstanding
principal amount of $150 million is due. As of September 30, 2011, we had $360.2 million of loans
outstanding under the Credit Agreement. Accordingly, at September 30, 2011, we had $530.7 million
of availability under the Credit Agreement. In conjunction with the establishment of the new credit
facility, we capitalized approximately $6.2 million in association with this borrowing and
wrote-off approximately $0.7 million of previous issuance costs.
Proceeds from the new credit facility were used to refinance our existing indebtedness under
its 2007 credit facility with a lending syndicate, and its existing indebtedness under its 2010
term loan facility with a bank. The funding is available for working capital purposes,
acquisitions, payment of dividends and other restricted payments, refinancing of indebtedness, and
other general corporate purposes.
Amounts outstanding under the Credit Agreement bear interest at a rate equal to, at our
option, (a) the Eurocurrency Rate, as defined, plus a margin of 1.25 percent to 2.25 percent based
on the ratio of consolidated funded indebtedness of the Company and its subsidiaries to
consolidated EBITDA or (b) the highest of (i) the Federal Funds Rate plus 0.50 percent, (ii) the
prime rate announced by the lead lender, or (iii) the Eurocurrency Rate plus 1.00 percent, in each
case plus a margin of 0.25 percent to 1.25 percent based on the ratio of consolidated funded
indebtedness of the Company and its subsidiaries to consolidated EBITDA. In addition, we have
agreed to pay a quarterly commitment fee at a rate per annum ranging from 0.20 percent to 0.40
percent of the daily unused portion of the credit facility. Any outstanding loans under the Credit
Agreement mature on May 23, 2016, unless extended pursuant to the terms of the Credit Agreement.
- 31 -
Table of Contents
Management Operating Cash
The table below reconciles net cash provided by operating activities to change in management
operating cash:
| Nine months ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
|
|
||||||||
|
Net cash used for operating activities
|
$ | (74,475 | ) | $ | 4,768 | |||
|
Net increase in deposits
|
170,974 | 71,763 | ||||||
|
Net increase (decrease) in borrowed federal funds
|
9,229 | (6,729 | ) | |||||
|
|
||||||||
|
Management operating cash
|
$ | 105,728 | $ | 69,802 | ||||
|
|
||||||||
Our bank subsidiary, Wright Express Financial Services Corporation (“FSC”), utilizes
FDIC-insured deposits to finance our accounts receivable. FSC issued certificates of deposit in
various maturities ranging between three months and two years and with fixed interest rates ranging
from 0.25 percent to 1.95 percent as of September 30, 2011. As of September 30, 2011, we had
approximately $587 million of certificates of deposits outstanding. FSC also has money market
deposits of $104 million outstanding as of September 30, 2011. Deposits
are subject to regulatory
capital requirements.
FSC also utilizes federal funds lines of credit to supplement the financing of our accounts
receivable. We have approximately $140 million in federal funds lines of credit as of September 30,
2011.
Liquidity
We continue to have appropriate access to short-term borrowing instruments to fund our
accounts receivable. Our cash balance for the period increased by approximately $24 million. During
the nine months ended September 30, 2011 deposits increased approximately $171 million, accounts
receivable increased approximately $384 million and accounts payable increased approximately $148
million, primarily due to increased fuel prices.
We have approximately 5 years left on our revolving credit facility and have approximately
$165.2 million in borrowings against it. We had $530.7 million available to us under this agreement
as of September 30, 2011. Our term loan has $195.0 million borrowed against it. As of September 30,
2011, we are paying a rate of LIBOR plus 175 basis points on our credit facility. We decreased our
financing debt by $47.1 million during the first nine months and ended the period with a balance
outstanding of $360.2 million.
Our credit agreement contains various financial covenants requiring us to maintain certain
financial ratios. In addition to the financial covenants, the credit agreement contains various
customary restrictive covenants including restrictions in certain situations on the payment of
dividends. FSC is not subject to certain of these restrictions. We have been, and expect to
continue to be, in compliance with all material covenants and restrictions.
Management believes that we can adequately fund our cash needs during the next 12 months.
Off-balance Sheet Arrangements
Letters of credit.
We are required to post collateral to secure our fuel price sensitive
derivative instruments where our unrealized loss exceeds any unsecured credit granted by our
counter party. At September 30, 2011, we had posted, as
collateral, letters of credit totaling $4.1
million.
- 32 -
Table of Contents
Contractual Obligations
The table below summarizes the change in contractual obligations, as presented in our Annual
Report on Form 10-K for the year ended December 31, 2010, as of September 30, 2011.
| Remaining | 2015 and | |||||||||||||||||||||||
| (in thousands) | 2011 | 2012 | 2013 | 2014 | Thereafter | Total | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Revolving line-of-credit, term loan
(a)
|
$ | 2,500 | $ | 10,000 | $ | 10,000 | $ | 10,000 | $ | 327,700 | $ | 360,200 | ||||||||||||
|
|
||||||||||||||||||||||||
| (a) |
Our Revolving line-of-credit and term loan is set to expire in May 2016.
Amounts in table exclude interest payments.
See Item 1 – Note 6, Financing Debt. |
Purchase of Treasury Shares
We did not repurchase any shares of common stock during the quarter ended September 30, 2011.
Critical Accounting Policies and Estimates
We have no material changes to our critical accounting policies and estimates discussed in our
Annual Report on Form 10-K for the year ended December 31, 2010.
Recently Adopted Accounting Standards
None
We have no material changes to the disclosure on this matter made in our Annual Report on
Form 10-K for the year ended December 31, 2010.
Evaluation of Disclosure Controls and Procedures
The principal executive officer and principal financial officer of Wright Express Corporation
evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of
the period covered by this report. “Disclosure controls and procedures” are controls and other
procedures of a company that are designed to ensure that information required to be disclosed by
the company in the reports that it files or submits under the Securities Exchange Act of 1934,
within the time periods specified in the SEC’s rules and forms, is recorded, processed, summarized
and reported, and is accumulated and communicated to the company’s management, including its
principal executive officer and principal financial officer, as appropriate to allow timely
decisions regarding required disclosure. Based on their evaluation, the principal executive officer
and principal financial officer of Wright Express Corporation concluded that the Company’s
disclosure controls and procedures were effective as of September 30, 2011.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during
the fiscal quarter ended September 30, 2011, our most recently completed fiscal quarter, that have
materially affected, or are reasonably likely to materially affect, the Company’s internal control
over financial reporting.
- 33 -
Table of Contents
As of the date of this filing, we are not involved in any material legal proceedings. We also
were not involved in any material legal proceedings that were terminated during the third quarter
of 2011. However, from time to time, we are subject to other legal proceedings and claims in the
ordinary course of business, none of which we believe are likely to have a material adverse effect
on our financial position, results of operations or cash flows.
In addition to the other information set forth in this report, you should carefully consider
the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the
year ended December 31, 2010, which could materially affect our business, financial condition or
future results. The risks described in this report and in our Annual Report on Form 10-K are not
the only risks facing our Company. Additional risks and uncertainties not currently known to us or
that we currently deem to be immaterial also may materially adversely affect our business,
financial condition or future results.
- 34 -
Table of Contents
| Exhibit No. | Description | |||||
|
|
3.1 | Certificate of Incorporation (incorporated by reference to Exhibit No. 3.1 to our Current Report on Form 8-K filed with the SEC on March 1, 2005, File No. 001-32426) | ||||
|
|
||||||
|
|
3.2 | Amended and Restated By-Laws (incorporated by reference to Exhibit No. 3.1 to our Current Report on Form 8-K filed with the SEC on November 20, 2008, File No. 001-32426) | ||||
|
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4.1 | Rights Agreement, dated as of February 16, 2005 by and between Wright Express Corporation and Wachovia Bank, National Association (incorporated by reference to Exhibit No. 4.1 to our Current Report on Form 8-K filed with the SEC on March 1, 2005, File No. 001-32426) | ||||
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*
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31.1 | Certification of Chief Executive Officer of Wright Express Corporation pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended | ||||
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*
|
31.2 | Certification of Chief Financial Officer of Wright Express Corporation pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended | ||||
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|
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|
*
|
32.1 | Certification of Chief Executive Officer of Wright Express Corporation pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code | ||||
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*
|
32.2 | Certification of Chief Financial Officer of Wright Express Corporation pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code | ||||
|
|
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|
**
|
101.INS | XBRL Instance Document | ||||
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|
**
|
101.SCH | XBRL Taxonomy Extension Schema Document | ||||
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||||||
|
**
|
101.CAL | XBRL Taxonomy Calculation Linkbase Document | ||||
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|
||||||
|
**
|
101.LAB | XBRL Taxonomy Label Linkbase Document | ||||
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|
||||||
|
**
|
101.PRE | XBRL Taxonomy Presentation Linkbase Document | ||||
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|
||||||
|
**
|
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||||
| * | These exhibits have been filed with this Quarterly Report on Form 10-Q. | |
| ** | In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be "furnished" and not "filed". |
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Table of Contents
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
WRIGHT EXPRESS CORPORATION
|
||||
| November 4, 2011 | By: | /s/ Steven A. Elder | ||
| Steven A. Elder | ||||
|
Senior Vice President and CFO
(principal financial officer and principal accounting officer) |
||||
- 36 -
Table of Contents
EXHIBIT INDEX
| Exhibit No. | Description | |||||
|
|
3.1 | Certificate of Incorporation (incorporated by reference to Exhibit No. 3.1 to our Current Report on Form 8-K filed with the SEC on March 1, 2005, File No. 001-32426) | ||||
|
|
||||||
|
|
3.2 | Amended and Restated By-Laws (incorporated by reference to Exhibit No. 3.1 to our Current Report on Form 8-K filed with the SEC on November 20, 2008, File No. 001-32426) | ||||
|
|
||||||
|
|
4.1 | Rights Agreement, dated as of February 16, 2005 by and between Wright Express Corporation and Wachovia Bank, National Association (incorporated by reference to Exhibit No. 4.1 to our Current Report on Form 8-K filed with the SEC on March 1, 2005, File No. 001-32426) | ||||
|
|
||||||
|
*
|
31.1 | Certification of Chief Executive Officer of Wright Express Corporation pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended | ||||
|
|
||||||
|
*
|
31.2 | Certification of Chief Financial Officer of Wright Express Corporation pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended | ||||
|
|
||||||
|
*
|
32.1 | Certification of Chief Executive Officer of Wright Express Corporation pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code | ||||
|
|
||||||
|
*
|
32.2 | Certification of Chief Financial Officer of Wright Express Corporation pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code | ||||
|
|
||||||
|
**
|
101.INS | XBRL Instance Document | ||||
|
|
||||||
|
**
|
101.SCH | XBRL Taxonomy Extension Schema Document | ||||
|
|
||||||
|
**
|
101.CAL | XBRL Taxonomy Calculation Linkbase Document | ||||
|
|
||||||
|
**
|
101.LAB | XBRL Taxonomy Label Linkbase Document | ||||
|
|
||||||
|
**
|
101.PRE | XBRL Taxonomy Presentation Linkbase Document | ||||
|
|
||||||
|
**
|
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||||
| * | These exhibits have been filed with this Quarterly Report on Form 10-Q. | |
| ** | In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be "furnished" and not "filed". | |
- 37 -
TABLE OF CONTENTS