v3.3.0.814
Segment Information
 9 Months Ended
Sep. 30, 2015
Segment Reporting [Abstract]  
Segment Information
16.
Segment Information
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. The operating segments are reviewed separately because each operating segment represents a strategic business unit that generally offers different products and serves different markets. The operating segments are aggregated into the two reportable segments as described below.
The Company’s chief operating decision maker evaluates the operating results of the Company’s operating and reportable segments based upon revenues and adjusted pre-tax income before NCI which adjusts income before income taxes to exclude fair value changes of fuel price derivative instruments, net foreign currency remeasurement gains and losses, the amortization of acquired intangible assets, the expense associated with stock-based compensation, acquisition related expenses and adjustments, the net impact of tax rate changes on the Company’s deferred tax asset and related changes in the tax-receivable agreement, deferred loan costs associated with the extinguishment of debt, certain non-cash asset impairment charges, gains on the extinguishment of a portion of the tax receivable agreement, restructuring charges, gain or losses on divestitures, regulatory reserves and adjustments attributable to non-controlling interests including adjustments to the redemption value of a non-controlling interest.
The Company operates in two reportable segments, Fleet Payment Solutions and Other Payment Solutions. The Fleet Payment Solutions segment provides customers with payment and transaction processing services specifically designed for the needs of vehicle fleet customers. This segment also provides information management services to these fleet customers. The Other Payment Solutions segment provides customers with a payment processing solution for their corporate purchasing and transaction monitoring needs. Revenue in this segment is derived from our corporate purchase cards and virtual and prepaid card products. The corporate purchase card products are used by businesses to facilitate purchases of products and to utilize the Company’s information management capabilities. The results of operations for Evolution1 are presented in the Company's Other Payment Solutions segment. Evolution1 contributed net revenues of approximately $72,205 and are not significant to the adjusted pre-tax income before NCI. Management is currently evaluating its internal reporting structure and is in the process of determining the impact of the changes on the Company’s segment and goodwill reporting.
Net realized and unrealized losses on derivative instruments are allocated to the Fleet Payment Solutions segment in the computation of segment results for internal evaluation purposes. Total assets are not allocated to the segments.
Beginning in the second quarter of 2015, adjusted net income attributable to WEX Inc. excludes net foreign currency gains and losses. For comparative purposes, adjusted net income attributable to WEX Inc. for the prior periods has been adjusted to reflect the exclusion of net foreign currency gains and losses and differs from the figure previously reported due to this adjustment. During the third quarter of 2015, the Company modified the call provision agreement for its redeemable non-controlling interest in UNIK and acquired the remaining 49 percent of UNIK. The ANI adjustment attributable to non-controlling interests now includes a change to the redemption value of the non-controlling interest in UNIK. Adjusted net income for the third quarter also excludes a reserve for a potential regulatory penalty arising from the Company’s partnership with Higher One. Management believes this information is useful to investors to facilitate comparison of operating results and better identify trends in our businesses.
The following table presents the Company’s reportable segment results on an adjusted pre-tax net income before NCI basis for the three months ended September 30, 2015 and 2014:
 
Total
Revenues
 
Operating
Interest
Expense
 
Depreciation
and
Amortization
 
Adjusted Pre-Tax Income before NCI
Three months ended September 30, 2015
 
 
 
 
 
 
 
Fleet payment solutions
$
140,672

 
$
405

 
$
7,234

 
$
54,377

Other payment solutions
85,385

 
1,078

 
1,943

 
30,349

Total
$
226,057

 
$
1,483

 
$
9,177

 
$
84,726

Three months ended September 30, 2014
 
 
 
 
 
 
 
Fleet payment solutions
$
144,497

 
$
1,033

 
$
6,412

 
$
54,045

Other payment solutions
77,637

 
827

 
1,390

 
31,942

Total
$
222,134

 
$
1,860

 
$
7,802

 
$
85,987

The following table presents the Company’s reportable segment results on an adjusted pre-tax net income before NCI basis for the nine months ended September 30, 2015 and 2014:
 
Total
 Revenues 
 
 Operating 
Interest
Expense
 
Depreciation
and
 Amortization 
 
Adjusted Pre-Tax Income before NCI
Nine months ended September 30, 2015
 
 
 
 
 
 
 
Fleet payment solutions
$
404,682

 
$
1,566

 
$
21,668

 
$
149,151

Other payment solutions
237,313

 
2,853

 
5,480

 
82,458

Total
$
641,995


$
4,419


$
27,148


$
231,609

Nine months Ended September 30, 2014
 
 
 
 
 
 
 
Fleet payment solutions
$
425,760

 
$
2,143

 
$
19,225

 
$
159,373

Other payment solutions
180,023

 
2,604

 
2,154

 
72,862

Total
$
605,783


$
4,747


$
21,379


$
232,235


The following table reconciles adjusted pre-tax income before NCI to income before income taxes:
 
Three months ended
 September 30,
Nine months ended
 September 30,
 
2015
 
2014
2015
 
2014
Adjusted pre-tax income before NCI
$
84,726

 
$
85,987

$
231,609

 
$
232,235

Unrealized (loss) gain on fuel price derivatives
(3,251
)
 
16,213

(27,552
)
 
14,140

Net foreign currency gain (loss)
6,525

 
(7,560
)
(12
)
 
(5,289
)
Amortization of acquired intangible assets
(11,601
)
 
(11,798
)
(35,776
)
 
(28,415
)
Stock-based compensation
(3,067
)
 
(4,549
)
(10,227
)
 
(10,089
)
Restructuring
45

 
—

(8,514
)
 
—

Gain on divestiture
—

 
27,169

1,215

 
27,169

Expenses and adjustments related to acquisitions
(265
)
 
(5,559
)
(265
)
 
(6,059
)
Non-cash adjustments related to tax receivable agreement
1,634

 
(1,356
)
1,634

 
(1,356
)
Regulatory reserve
(2,250
)
 
—

(2,250
)
 
—

Income before income taxes
$
72,496

 
$
98,547

$
149,862

 
$
222,336