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Segment Information | 9 Months Ended
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Sep. 30, 2016
Segment Reporting [Abstract] |
Segment Information |
16. | Segment Information
Operating segments are defined as components of an enterprise about which separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assess performance. The Company’s chief operating decision maker is its Chief Executive Officer. The operating segments are aggregated into the three reportable segments 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 certain items as noted below. The Fleet Solutions segment provides customers with payment and transaction processing services specifically designed for the needs of commercial and government fleets. This segment also provides information management services to these fleet customers. The Travel and Corporate Solutions segment focuses on the complex payment environment of business-to-business payments, providing customers with payment processing solutions for their corporate payment and transaction monitoring needs. The Health and Employee Benefit Solutions segment provides healthcare payment products and SaaS consumer directed platforms, as well as payroll related benefits to customers in Brazil. Prior to the fourth quarter of 2015, the Company reported its results of operations in two business segments, Fleet Payment Solutions and Other Payment Solutions. During the fourth quarter of 2015, the Company revised its internal and external reporting and reports its results of operations in three reportable segments. The Company has recast the prior year's segment information to conform to the current year presentation. During the third quarter of 2016, management continued to further refine our segment reporting, reclassifying certain revenues and expenses previously reported in our Health and Employee Benefit Solutions segment to our Fleet Solutions segment. The prior year amounts have been revised to reflect these adjustments, which were not deemed to be material to prior interim or annual periods, either individually or in the aggregate. Our segments earn interest income both from banking relationships and from cardholders. The majority of interest income from cardholders is earned on our salary payment cards offered in Brazil. The following table presents the Company's interest income by segment:
| Three Months Ended September 30, | Nine Months Ended September 30,
| 2016 |  | 2015 | 2016 |  | 2015
Fleet Solutions | $ | 961 |  |  | $ | 142 |  | $ | 2,547 |  |  | $ | 966 |
Travel and Corporate Solutions | 143 |  |  | 91 |  | 330 |  |  | 245 |
Health and Employee Benefit Solutions | 2,794 |  |  | 1,606 |  | 6,176 |  |  | 4,010 |
Total interest income | $ | 3,898 |  |  | $ | 1,839 |  | $ | 9,053 |  |  | $ | 5,221 |
Net realized and unrealized losses on derivative instruments are allocated to the Fleet 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 pre-tax income before NCI excludes net foreign currency gains and losses. Beginning in the third quarter of 2016, adjusted pre-tax income before NCI further excludes debt issuance cost amortization. For comparative purposes, adjusted pre-tax income before NCI attributable to shareholders for the prior periods has been adjusted to reflect the exclusion of these items and differs from the figure previously reported due to this adjustment. The segment information has also been updated for the three and nine month periods ended September 30, 2015 to disaggregate revenue into payment processing, account servicing, finance fee and other revenue in order to provide additional information regarding the Company’s significant revenue streams and to conform to the current year presentation. There was no change to total revenue or other financial information in any of the periods presented as a result of this updated presentation. The following tables present the Company’s reportable segment results on an adjusted pre-tax net income before NCI basis for the three and nine months ended September 30, 2016 and 2015:
| Three Months Ended September 30, | Nine Months Ended September 30,
| 2016 |  | 2015 | 2016 |  | 2015
Fleet Solutions revenue |  |  |  |  |  |
Payment processing revenue | $ | 83,132 |  |  | $ | 80,230 |  | $ | 216,133 |  |  | $ | 233,300 |
Account servicing revenue | 37,414 |  |  | 26,024 |  | 90,400 |  |  | 75,267 |
Finance fee revenue | 33,230 |  |  | 21,794 |  | 85,841 |  |  | 59,858 |
Other revenue | 30,982 |  |  | 14,789 |  | 57,417 |  |  | 43,345 |
Total Fleet Solutions revenue | $ | 184,758 |  |  | $ | 142,837 |  | $ | 449,791 |  |  | $ | 411,770 |
Total Fleet Solutions operating interest expense | $ | 1,066 |  |  | $ | 405 |  | $ | 1,867 |  |  | $ | 1,566 |
Total Fleet Solutions depreciation and amortization | $ | 35,172 |  |  | $ | 13,266 |  | $ | 62,927 |  |  | $ | 41,877 |
Total Fleet Solutions adjusted pre-tax income before NCI | $ | 49,718 |  |  | $ | 55,902 |  | $ | 121,096 |  |  | $ | 153,725 |
| Three Months Ended September 30, | Nine Months Ended September 30,
| 2016 |  | 2015 | 2016 |  | 2015
Travel and Corporate Solutions revenue |  |  |  |  |  |
Payment processing revenue | $ | 52,551 |  |  | $ | 44,387 |  | $ | 130,372 |  |  | $ | 114,586 |
Account servicing revenue | 242 |  |  | 449 |  | 852 |  |  | 1,329 |
Finance fee revenue | 115 |  |  | 104 |  | 336 |  |  | 233 |
Other revenue | 10,407 |  |  | 11,542 |  | 30,235 |  |  | 31,621 |
Total Travel and Corporate Solutions revenue | $ | 63,315 |  |  | $ | 56,482 |  | $ | 161,795 |  |  | $ | 147,769 |
Total Travel and Corporate Solutions operating interest expense | $ | 840 |  |  | $ | 488 |  | $ | 2,003 |  |  | $ | 754 |
Total Travel and Corporate Solutions depreciation and amortization | $ | 1,630 |  |  | $ | 1,336 |  | $ | 3,007 |  |  | $ | 2,251 |
Total Travel and Corporate Solutions adjusted pre-tax income before NCI | $ | 31,449 |  |  | $ | 26,991 |  | $ | 74,797 |  |  | $ | 68,076 |
| Three Months Ended September 30, | Nine Months Ended September 30,
| 2016 |  | 2015 | 2016 |  | 2015
Health and Employee Benefit Solutions revenue |  |  |  |  |  |
Payment processing revenue | $ | 10,499 |  |  | $ | 8,581 |  | $ | 36,814 |  |  | $ | 30,828 |
Account servicing revenue | 21,159 |  |  | 13,105 |  | 59,518 |  |  | 38,404 |
Finance fee revenue | 2,793 |  |  | 1,604 |  | 6,171 |  |  | 4,003 |
Other revenue | 5,232 |  |  | 3,448 |  | 13,532 |  |  | 9,221 |
Total Health and Employee Benefit Solutions revenue | $ | 39,683 |  |  | $ | 26,738 |  | $ | 116,035 |  |  | $ | 82,456 |
Total Health and Employee Benefit Solutions operating interest expense | $ | 693 |  |  | $ | 590 |  | $ | 1,620 |  |  | $ | 2,099 |
Total Health and Employee Benefit Solutions depreciation and amortization | $ | 9,206 |  |  | $ | 6,176 |  | $ | 25,447 |  |  | $ | 18,796 |
Total Health and Employee Benefit Solutions adjusted pre-tax income before NCI | $ | 3,364 |  |  | $ | 2,633 |  | $ | 15,571 |  |  | $ | 12,144 |
The following table reconciles income before income taxes to adjusted pre-tax income before NCI:
| Three Months Ended September 30, | Nine Months Ended September 30,
| 2016 |  | 2015 | 2016 |  | 2015
Income before income taxes | $ | 25,268 |  |  | $ | 72,496 |  | $ | 78,067 |  |  | $ | 149,862 |
Acquisition and divestiture related items | 46,955 |  |  | 11,888 |  | 108,805 |  |  | 34,843 |
Debt restructuring and debt issuance cost amortization | 9,106 |  |  | 778 |  | 10,649 |  |  | 2,319 |
Stock-based compensation | 5,199 |  |  | 3,067 |  | 14,312 |  |  | 10,227 |
Restructuring and other costs | 3,767 |  |  | (45 | ) | 11,689 |  |  | 8,514 |
Changes in unrealized fuel price derivatives | — |  |  | 3,251 |  | 5,007 |  |  | 27,552 |
Net foreign currency remeasurement (gains) losses | (5,932 | ) |  | (6,525 | ) | (17,233 | ) |  | 12 |
Non-cash adjustments related to tax receivable agreement | 168 |  |  | (1,634 | ) | 168 |  |  | (1,634 | )
Regulatory reserve | — |  |  | 2,250 |  | — |  |  | 2,250 |
Adjusted pre-tax income before NCI | $ | 84,531 |  |  | $ | 85,526 |  | $ | 211,464 |  |  | $ | 233,945 |
The Company's adjusted pre-tax income before NCI excludes acquisition and divestiture related items, debt restructuring and debt issuance cost amortization, stock-based compensation, restructuring and other costs related to certain outsourcing initiatives, changes in unrealized fuel price derivatives, net foreign currency remeasurement gains and losses, non-cash adjustments related to our tax receivable agreement and reserves for regulatory penalties. Although adjusted pre-tax income before NCI is not calculated in accordance with GAAP, this non-GAAP measure is integral to the Company's reporting and planning processes and the chief operating decision maker of the Company uses it to allocate resources. The Company considers this measure integral because in the periods prior to the second quarter of 2016, it eliminated the non-cash volatility associated with fuel price related derivative instruments, and it continues to exclude other specified items that the Company's management excludes in evaluating the Company's performance. Specifically, in addition to evaluating the Company's performance on a GAAP basis, management evaluates the Company's performance on a basis that excludes the above items because:
• | The Company considers certain acquisition-related costs, including certain financing costs, ticking fees, investment banking fees, warranty and indemnity insurance, acquisition-related expenses and amortization of acquired intangibles, as well as gains and losses from divestitures to be unpredictable, dependent on factors that may be outside of our control and unrelated to the continuing operations of the acquired or divested business or the Company. In prior periods not reflected above, the Company has adjusted for goodwill impairments and acquisition related asset impairments. In addition, the size and complexity of an acquisition, which often drives the magnitude of acquisition-related costs, may not be indicative of such future costs. The Company believes that excluding acquisition-related costs and gains or losses of divestitures facilitates the comparison of our financial results to the Company's historical operating results and to other companies in our industry.
• | Debt issuance cost amortization is a non-cash item. Additionally, both the debt issuance cost amortization and the costs associated with debt restructuring are unrelated to the continuing operations of the Company. Because these types of costs are dependent upon the financing method which can vary widely company to company, we believe that excluding these costs helps to facilitate comparison to historical results as well as to other companies within our industry.
• | Stock-based compensation is different from other forms of compensation, as it is a non-cash expense. For example, a cash salary generally has a fixed and unvarying cash cost. In contrast, the expense associated with an equity-based award is generally unrelated to the amount of cash ultimately received by the employee, and the cost to the Company is based on a stock-based compensation valuation methodology and underlying assumptions that may vary over time.
• | Restructuring and other costs are related to employee termination benefits from certain identified initiatives to further streamline the business, improve the Company's efficiency, create synergies, globalize the Company's operations, and advance certain outsourcing initiatives, all with an objective to improve scale and increase profitability going forward. We exclude these items when evaluating our continuing business performance as such items are not consistently occurring and do not reflect expected future operating expense, nor provide insight into the fundamentals of current or past operations of our business.
• | Exclusion of the non-cash, mark-to-market adjustments on fuel-price related derivative instruments helps management identify and assess trends in the Company's underlying business that might otherwise be obscured due to quarterly non-cash earnings fluctuations associated with fuel-price-related derivative contracts. The non-cash mark-to-market adjustments on derivative instruments are difficult to forecast accurately, making comparisons across historical and future quarters difficult to evaluate.
• | Net foreign currency gains and losses primarily result from the remeasurement to functional currency of cash, receivable and payable balances, certain intercompany notes denominated in foreign currencies and any gain or loss on foreign currency hedges relating to these items. The exclusion of these items helps management compare changes in operating results between periods that might otherwise be obscured due to currency fluctuations.
• | Regulatory reserves reflect charges related to the estimated impact of a regulatory action which resulted in WEX paying a penalty. We have excluded this item when evaluating our continuing business performance as it is not consistently recurring and does not reflect an expected future operating expense, nor provide insight into the fundamentals of the current or past operations of our business.
• | The non-cash adjustments related to tax receivable agreement have no significant impact on the ongoing operations of the business.
For the same reasons, WEX believes that adjusted pre-tax income before NCI may also be useful to investors as one means of evaluating the Company's performance. However, because adjusted pre-tax income before NCI is a non-GAAP measure, it should not be considered as a substitute for, or superior to, net income, operating income or cash flows from operating activities as determined in accordance with GAAP. In addition, adjusted pre-tax income before NCI as used by WEX may not be comparable to similarly titled measures employed by other companies.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599 + Details
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