Business Acquisitions and Other Intangible Asset Acquisitions

The Company incurred and expensed costs directly related to acquisitions of $7,694 in 2014, $203 in 2013, and $6,341 in 2012, which are included primarily within service fees expenses in the consolidated statements of income.

Esso portfolio in Europe

On December 1, 2014, the Company announced that it had acquired certain assets of the Esso portfolio in Europe through a majority owned subsidiary, WEX Europe Services Limited. The Company formed this entity during 2013 and has 75 percent ownership. The Company paid $378,470 in cash, which includes an $80,000 advance payment made in the third quarter of 2014. The purchase price is subject to an estimated future working capital adjustment that is expected to be settled in 2015. The transaction was financed through the Company’s cash on hand and existing credit facility. Under the terms of the transaction, WEX purchased ExxonMobil’s commercial fleet fuel card program which includes operations, funding, pricing, sales and marketing in nine countries in Europe. As part of the transaction, both parties have agreed to enter into a long term supply agreement to serve the current and future Esso Card customers and to grow the business. The Company entered into this transaction in order to expand its presence in the European market and to broaden its international footprint, while laying the foundation for further expansion.

During the fourth quarter of 2014, the Company obtained preliminary information to assist in determining the fair values of certain tangible and intangible assets acquired and liabilities assumed in the Esso portfolio in Europe transaction. Based on such information, the Company recorded intangible assets and goodwill as described below. The Company is still reviewing the valuation as well as performing procedures to verify the completenesses and accuracy of the data used in the independent valuation of all assets and liabilities. The Company has not finalized the purchase accounting.

The operations of the Esso portfolio in Europe contributed net revenues of approximately $3,428 and net losses attributable to WEX Inc. of approximately $7,172 from December 1, 2014, through December 31, 2014, which includes finance costs. Goodwill related to this transaction is expected to be deducted for income tax purposes. The results of operations for the Esso portfolio in Europe are presented in the Company's Fleet Payment Solutions segment.

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



Consideration paid (net of cash acquired and consideration receivable)	$	378,470
Less:
Accounts receivable	303,378
Other tangible assets and liabilities, net	(9,698		)
Licensing agreements^(a)	36,979
Customer relationships^(b)	7,720
Recorded goodwill	$	40,091


^(a)	Weighted average life – 4.6 years.


^(b)	Weighted average life – 7.2 years.

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

Acquisition of Evolution1

On July 16, 2014, the Company acquired all of the outstanding stock of Evolution1, a leading provider of payment solutions within the healthcare industry, for approximately $532,174 in cash. The transaction was financed through the Company’s cash on hand and existing credit facility. Evolution1 developed and operates an all-in-one, multi-tenant technology platform, card products, and mobile offering that supports a full range of healthcare account types. This includes consumer-directed payments for health savings accounts, health reimbursement arrangements, flexible spending accounts, voluntary employee beneficiary associations, and defined contribution and wellness programs. The Company acquired Evolution1 to enhance the Company's capabilities and positioning in the growing healthcare market.

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

The operations of Evolution1 contributed net revenues of approximately $35,976 and net losses of approximately $512 from July 16, 2014, through December 31, 2014, which includes finance costs. Evolution1 had previously recorded goodwill on its financial statements from prior acquisitions, some of which is expected to be deductible for tax purposes. The results of operations for Evolution1 are presented in the Company's Other Payment Solutions segment.

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



Consideration paid (net of cash acquired)	$	532,174
Less:
Accounts receivable	8,418
Accounts payable	(175		)
Deferred tax liabilities, net	(68,516		)
Other tangible assets and liabilities, net	(3,585		)
Acquired software and developed technology ^(a)	70,000
Customer relationships^(b)	211,000
Trade name^(c)	7,900
Trade name^(d)	11,000
Recorded goodwill	$	296,132


^(a)	Weighted average life – 6.4 years.


^(b)	Weighted average life – 9.7 years.


^(c)	Weighted average life – 9.9 years.


^(d)	Indefinite-lived

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



	December 31,
	2014		2013
Revenue	$	865,056	$	786,854
Net income attributable to WEX Inc.	$	191,415	$	97,016
Pro forma net income attributable to WEX Inc. per common share:
Net income per share – basic	$	4.92	$	2.49
Net income per share – diluted	$	4.91	$	2.48

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

Acquisition of FastCred

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

Acquisition of CorporatePay

On May 11, 2012, the Company acquired all of the stock of CorporatePay, a provider of corporate prepaid solutions to the travel industry in the United Kingdom for approximately $27,800, net of cash acquired. The Company purchased CorporatePay to expand its Other Payment Solution segment. During the second quarter of 2012, 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 first quarter of 2013, the Company obtained information to assist in determining the fair values of certain tangible and intangible assets acquired and liabilities assumed as of the CorporatePay acquisition date. Based on such information, the Company retrospectively adjusted the fiscal year 2012 comparative information resulting in an increase in accounts receivable of $508, a decrease in deferred taxes of $32, an increase in intangible assets of $140, a decrease in goodwill of $247, and an increase in accrued expenses of $369. There were no changes to the previously reported consolidated statements of operations or statements of cash flows. With the initial purchase of CorporatePay, the Company established a full valuation allowance of $1,219 on the acquired net operating losses. The Company believes that it is more likely than not that the losses will not be utilized. The valuations of all assets and liabilities have been finalized.

Goodwill related to the CorporatePay acquisition is not expected to be deductible for income tax purposes. The results of operations of CorporatePay are reflected in the Other Payment Solutions segment from the date of acquisition.

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



Consideration paid (net of cash acquired)	$	27,783
Less:
Accounts receivable	1,585
Accounts payable	(629		)
Other tangible liabilities, net	(4,040		)
Acquired software and developed technology^(a)	8,233
Customer relationships^(b)	1,614
Trademarks and trade name^(c)	1,453
Recorded goodwill	$	19,567


^(a)	Weighted average life – 6.2 years.


^(b)	Weighted average life – 6.3 years.


^(c)	Weighted average life – 5.3 years.

No pro forma information has been included in these financial statements as the operations of CorporatePay 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.

Acquisition of UNIK

On August 30, 2012, the Company acquired a 51 percent ownership interest in UNIK, a privately-held provider of payroll cards in Brazil. The Company purchased its interest in UNIK to expand its Other Payment Solutions segment. UNIK is a provider of payroll cards, private label and processing services in Brazil specializing in the retail, government and transportation sectors.

The investment was consummated through the purchase of newly issued shares of UNIK for approximately $22,800. The purchase agreement also included a potential contingent consideration component based on performance milestones. Although the contingent consideration was not capped, the Company estimated the amount of the liability, at the time of acquisition, to be approximately $991 at the time of acquisition. On December 31, 2012, the Company revised the estimate based on current performance milestones to be approximately $313. On June 30, 2013, the Company finalized the contingent consideration amount based on current performance milestones and determined it to be approximately $511, which was paid on July 1, 2013. The purchase agreement further provides the Company with a call option which allows the Company to acquire the remaining shares at specific times over a three-year period. Additionally the agreement provides the non-controlling shareholders with the right to put their interest back to the Company at specific times. The put options are exercisable at specific dates subject to the achievement of performance hurdles. Pricing for both the call and put options are based upon multiples of UNIK’s trailing twelve month EBITDA. Using the proceeds from the acquisition of UNIK, UNIK paid down approximately $19,600 of existing financing debt.

Based on its ownership position, the Company concluded that it has acquired a controlling interest in UNIK. The Company allocated the purchase price of the acquisition based upon an estimate of the fair values of the assets acquired and liabilities assumed. Goodwill associated with the transaction is not expected to be deductible for income tax purposes. In addition, the Company has recognized and measured a redeemable non-controlling interest. The redeemable non-controlling interest represents the portion of UNIK’s net assets owned by the non-controlling shareholders and is presented in the mezzanine section on the Company’s consolidated balance sheets. The results of operations of UNIK are reflected in the Other Payment Solutions segment. The valuations of all assets and liabilities have been finalized.

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



Total UNIK value	$	44,701
Less: Redeemable non-controlling interest	21,904
Total purchase price (includes estimated earn out of $991)	$	22,797
Less:
Cash	1,566
Accounts receivable	11,726
Accounts payable	(12,640		)
Other tangible liabilities, net	(36,866		)
Acquired software and developed technology^(a)	14,193
Customer relationships^(b)	15,171
Trademarks and trade name^(c)	1,272
Recorded goodwill	$	28,375


^(a)	Weighted average life – 6.2 years.


^(b)	Weighted average life – 5.9 years.


^(c)	Weighted average life – 5.5 years.

No pro forma information has been included in these financial statements as the operations of UNIK 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.

Acquisition of FleetOne

On October 4, 2012, the Company acquired certain assets of FleetOne, a privately-held provider of value-based business payment processing and information management solutions. The Company purchased FleetOne to expand its fuel card and fleet management information services, as well as to accelerate its presence in the over-the-road market.

FleetOne was purchased from the private equity firms of LLR Partners and FTV Capital for approximately $376,258, net of cash acquired. The Company allocated the purchase price of the acquisition based upon an estimate of the fair values of the assets acquired and liabilities assumed. The valuations of all assets and liabilities have been finalized.

The operations at FleetOne contributed net revenues of approximately $14,200 and net earnings of approximately $1,400 from October 4, 2012, through December 31, 2012. The goodwill is expected to be deductible for tax purposes. Operations from FleetOne are reflected in the Fleet Payment Solutions segment from the date of acquisition.

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



Consideration paid (net of cash acquired)	$	376,258
Less:
Accounts receivable	152,527
Accounts payable	(151,647		)
Other tangible liabilities, net	(693		)
Acquired software and developed technology^(a)	35,000
Customer relationships^(b)	74,000
Trademarks and trade name^(c)	4,000
Recorded goodwill	$	263,071


^(a)	Weighted average life – 6.7 years.


^(b)	Weighted average life – 5.5 years.


^(c)	Weighted average life – 5.5 years.

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



	2012
Net revenue	$	668,548
Net income	$	91,065
Pro forma net income per common share:
Net income per share – basic	$	2.34
Net income per share – diluted	$	2.33

The pro forma financial information assumes that the companies were combined as of January 1, 2011, and includes business combination accounting effects from the acquisition including amortization charges from acquired intangible assets, interest expense for debt incurred in the acquisition and net income tax effects. The pro forma results of operations do not include any cost savings or other synergies that may result from the acquisition or any estimated costs that have been or will be incurred by the Company to integrate. 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 2011.