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8-K/A - FORM 8-K/A - WEX Inc.b83546e8vkza.htm
EX-23.1 - EX-23.1 - WEX Inc.b83546exv23w1.htm
EX-99.2 - EX-99.2 - WEX Inc.b83546exv99w2.htm
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
          The following unaudited pro forma condensed combined statement of operations for the year ended December 31, 2009, and the six months ended June 30, 2010, are based on the historical financial statements of Wright Express Corporation (the “Company”) and RD Card Holdings Australia Pty Ltd (the “Target”) after giving effect to the Company’s acquisition of the Target as described at Item 2.01 of this Form 8-K and applying the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements. The Company’s Form 10-Q filed on November 8, 2010, contained a consolidated balance sheet which included the acquisition of the Target. Accordingly, no pro forma condensed balance sheet is being presented herein.
          The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2010 and year ended December 31, 2009 are presented as if the Target acquisition had occurred on January 1, 2009, and carried forward through each of the respective periods.
          The acquisition has been accounted for under the acquisition method of accounting in accordance with ASC 805-10. Under the acquisition method of accounting, the total estimated purchase price, calculated as described in Note 1 to these unaudited pro forma condensed combined financial statements, is allocated to the net tangible and intangible assets acquired and liabilities assumed based on various estimates. These preliminary estimates and assumptions are subject to change during the purchase price allocation period as we finalize the valuations of net tangible assets, intangible assets and other working capital. Therefore, some of the amounts reflected in the pro forma statements of operations may change.
          The unaudited pro forma condensed combined financial information has been prepared by management for illustrative purposes only in accordance with Article 11 of SEC Regulation S-X and are not necessarily indicative of the consolidated financial position or results of operations in future periods or the results that actually would have been realized had the Company and the Target been a combined company during the specified periods. Certain reclassification adjustments have been made in the presentation of the Target historical amounts to conform the Target’s financial statement basis of presentation to that followed by the Company. The unaudited pro forma condensed combined financial information, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with the Company’s historical consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2009, and its Forms 10-Q for the periods ended September 30, 2010, June 30, 2010, and March 31, 2010, and the Target’s historical consolidated financial statements for the year ended December 31, 2009.

 


 

WRIGHT EXPRESS CORPORATION
PRO FORMA CONDENSED
COMBINED CONSOLIDATED STATEMENTS OF INCOME OF WRIGHT EXPRESS
CORPORATION AND RD CARD HOLDINGS AUSTRALIA PTY LTD
For the year ended December 31, 2009
(in thousands, except per share data)
(Unaudited)
                                 
    Historical   Pro Forma
    Wright   RD Card        
    Express   Holdings   Adjustments   Combined
     
 
                               
Service Revenues
                               
Payment processing revenue
  $ 215,620     $ 12,045     $ (504 )A   $ 227,161  
Transaction processing revenue
    17,532       10,907             28,439  
Account servicing revenue
    37,001       5,510             42,511  
Finance fees
    32,816       3,559             36,375  
Other
    12,011       13,455       2,546 A     28,012  
     
 
                               
Total service revenues
    314,980       45,476       2,042       362,498  
 
                               
Product Revenues
                               
Hardware and equipment sales
    3,244                   3,244  
     
 
                               
Total revenues
    318,224       45,476       2,042       365,742  
 
                               
Expenses
                               
Salary and other personnel
    75,123       8,598             83,721  
Service fees
    27,666       1,160       2,546 A     31,372  
Provision for credit losses
    17,715       1,786             19,501  
Technology leasing and support
    9,327       876             10,203  
Occupancy and equipment
    8,718       6,006           14,724  
Advertising
    4,974                   4,974  
Marketing
    2,737       1,282             4,019  
Postage and shipping
    3,105                   3,105  
Communications
    2,703                   2,703  
Depreciation and amortization
    21,930       10,637       5,370 E     37,937  
Operating interest expense
    13,274                   13,274  
Cost of hardware and equipment sold
    2,803                   2,803  
Other
    9,999             (1,177 )A,B     8,822  
     
 
                               
Total operating expenses
    200,074       30,345       6,739       237,158  
     
 
                               
Operating income
    118,150       15,131       (4,697 )     128,584  
 
                               
Financing interest expense
    (6,210 )     (18,162 )     7,506 D     (16,866 )
(Loss) gain on foreign currency transactions
    (40 )     5,075             5,035  
Gain on settlement of portion of amounts due under tax receivable agreement
    136,485                   136,485  
Net realized and unrealized gains (losses) on fuel price derivatives
    (22,542 )                 (22,542 )
Increase in amount due under tax receivable agreement
    (599 )                 (599 )
     
 
                               
Income before income taxes
    225,244       2,044       2,809       230,097  
 
                               
Income taxes
    85,585       882       (1,076 )C     85,391  
     
 
                               
Net income
  $ 139,659     $ 1,162     $ 3,885     $ 144,706  
     
 
                               
Earnings per share:
                               
Basic
  $ 3.65                     $ 3.78  
Diluted
  $ 3.55                     $ 3.68  
 
                               
Weighted average common shares outstanding:
                               
Basic
    38,303                       38,303  
Diluted
    39,364                       39,364  
 

 


 

WRIGHT EXPRESS CORPORATION
PRO FORMA CONDENSED
COMBINED CONSOLIDATED STATEMENTS OF INCOME OF WRIGHT EXPRESS
CORPORATION AND RD CARD HOLDINGS AUSTRALIA PTY LTD
For the six months ended June 30, 2010
(in thousands, except per share data)
(Unaudited)
                                 
    Historical   Pro Forma
    Wright   RD Card        
    Express   Holdings   Adjustments   Combined
     
 
                               
Service Revenues
                               
Payment processing revenue
  $ 123,368     $ 7,375     $ (329 )A   $ 130,414  
Transaction processing revenue
    8,401       6,051             14,452  
Account servicing revenue
    16,510       3,207             19,717  
Finance fees
    16,886       2,230             19,116  
Other
    8,683       6,572       (63 )A     15,192  
     
 
                               
Total service revenues
    173,848       25,435       (392 )     198,891  
 
                               
Product Revenues
                               
Hardware and equipment sales
    1,433                   1,433  
     
 
                               
Total revenues
    175,281       25,435       (392 )     200,324  
 
                               
Expenses
                               
Salary and other personnel
    40,067       5,495             45,562  
Service fees
    17,062       460       (63 )A     17,459  
Provision for credit losses
    8,762       900             9,662  
Technology leasing and support
    6,085       701             6,786  
Occupancy and equipment
    4,087       3,782           7,869  
Depreciation and amortization
    11,610       6,888       748 E     19,246  
Operating interest expense
    2,871                   2,871  
Cost of hardware and equipment sold
    1,198                   1,198  
Other
    12,002       1,160       (753 )A,B     12,409  
     
 
                               
Total operating expenses
    103,744       19,386       (68 )     123,062  
     
 
                               
Operating income
    71,537       6,049       (324 )     77,262  
 
                               
Financing interest expense
    (1,419 )     (6,732 )     4,664 D     (3,487 )
Gain on foreign currency transactions
    43       1,356             1,399  
Gain on settlement of portion of amounts due under tax receivable agreement
                               
Net realized and unrealized gains (losses) on fuel price derivatives
    7,583                   7,583  
(Increase) decrease in amount due under tax receivable agreement
                               
     
 
                               
Income before income taxes
    77,744       673       4,340       82,757  
 
                               
Income taxes
    29,154       198       1,360 C     30,712  
     
 
                               
Net income
  $ 48,590     $ 475     $ 2,980     $ 52,045  
     
 
                               
Earnings per share:
                               
Basic
  $ 1.26                     $ 1.35  
Diluted
  $ 1.24                     $ 1.33  
 
                               
Weighted average common shares outstanding:
                               
Basic
    38,582                       38,582  
Diluted
    39,115                       39,115  
 

 


 

     Basis of Presentation
          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 “RD Transaction”). This acquisition extends the Company’s international presence and provides global revenue diversification. The purchase price and related allocations for the RD Transaction have not been finalized.
          The Agreement has been attached as an exhibit to provide investors and security holders with information regarding its terms.
          The unaudited pro forma condensed combined statements of operations of the Company and the Target for the year ended December 31, 2009, and the six months ended June 30, 2010, are presented as if the Company’s acquisition of the Target had been consummated on January 1, 2009, and carried forward for each of the respective periods. The unaudited pro forma condensed combined statements of operations of the Company and the Target for the year ended December 31, 2009, and the six months ended June 30, 2010, have been prepared using the historical consolidated statements of operations data of the Company and the Target for the year ended December 31, 2009, and the six months ended June 30, 2010, and giving effect to the Company’s acquisition of the Target using the acquisition method of accounting and applying the assumptions and adjustments described in the accompanying notes to these unaudited pro forma condensed combined income statements.
     Pro Forma Adjustments ($ in thousands)
A.   Adjustments reflect the reclassification of the Target’s accounts to conform to the Company’s accounting policies.
 
B.   Adjustment to eliminate historical management fee expense paid to the Target’s former owners.
 
C.   Assuming the acquisition occurred on January 1, 2009, adjustment to the tax provision reflects the tax expense for the Target and for the adjustments to earnings detailed within these pro forma condensed financial statements. The effective tax rate for the Target is the statutory tax rate of 30 percent adjusted for the tax effects of items which are not deductible or taxable in calculating taxable income.
 
D.   Net adjustment reflects the elimination of Target’s interest expense on borrowings not assumed in the acquisition, offset by interest expense on the Company’s borrowings to finance the acquisition. The Company financed the acquisition through borrowings under its $75,000 term note with a 364 day maturity and borrowings under its existing revolving line-of-credit facilities. Borrowings under the term note bear interest at a rate of LIBOR plus 2.5 percent. Borrowings under the revolving line of credit facility are assumed to bear interest at a rate of LIBOR plus 0.875 percent for 2009 and LIBOR plus 0.70 percent for the six months ended June 30, 2010. These rates are based on the pro forma leverage ratios. In connection with the financing, the Company incurred approximately $2,300 in bank fees and other expenses which were recorded as deferred financing costs to be amortized over the life of the loans.
 
E.   Amounts relate to estimated amortization expense on definite-lived intangibles acquired. These amortizing intangibles total $93,200 and will be expensed over a weighted average life of 4.5 years. The definite-lived intangible assets are amortized over the period of time that the assets are expected to contribute directly or indirectly to future discounted cash flows.