WEX
Annual Report 2020

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P W E R I N G THROUGH PAYMENTS 1 hancock street / portland, maine 04101 / (207) 773.8171 newsroom@ wexinc.com / www.wexinc.com 2 0 2 0 A N N U A L R E P O R T DIRECTORS MELISSA D. SMITH Chair and Chief Executive Officer, WEX JACK VANWOERKOM Vice Chairman and Lead Director, WEX JAMES NEARY JOEL (JAY) DEARBORN Managing Director, Warburg Pincus President, Corporate Payments STEPHEN (STEVE) SMITH ROBERT DESHAIES President and Chief Executive Officer, President, Health L.L.Bean SUSAN SOBBOTT ANN (ANNIE) DREW Chief Risk and Compliance Officer Former Executive Vice President and General Counsel, The Home Depot Former President of Global Commercial Services, American Express JOHN (JEB) E. BACHMAN Former Partner, PwC REGINA O. SOMMER Financial and Business Consultant DANIEL (DON) CALLAHAN Former Global Head of Operations and Technology, Citigroup SHIKHAR GHOSH Professor, Harvard Business School JAMES (JIM) GROCH Former Global Group President and Chief Investment Officer, CBRE Group, Inc EXECUTIVE OFFICERS MELISSA D. SMITH Chair and Chief Executive Officer DAVID COOPER Chief Technology Officer SCOTT PHILLIPS President, Global Fleet HILARY A. RAPKIN Chief Legal Officer ROBERTO SIMON Chief Financial Officer MELANIE TINTO Chief Human Resources Officer CORPORATE HEADQUARTERS ATTORNEYS INVESTOR RELATIONS Wilmer Cutler Pickering Hale Steve Elder Senior Vice President, Global Investor Relations (207) 523-7769 Steve.Elder@wexinc.com FORM 10-K A copy of the Company’s Form 10-K, filed with the Securities and Exchange Commission, is available without charge upon written request to: WEX Virtual meeting details to be provided Investor Relations, 1 Hancock Street in Notice and Proxy Statement Portland, ME 04101; by calling (866) 230-1633; or by emailing investors@wexinc.com. WEX 1 Hancock Street Portland, ME 04101 (207) 773-8171 Email: newsroom@wexinc.com www.wexinc.com TRANSFER AGENT American Stock Transfer and Trust Company, LLC 6201 15th Avenue Brooklyn, NY 11219 (800) 937-5449 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte & Touche LLP 200 Berkeley Street Boston, MA 02116-5022 (617) 437-2000 STOCKHOLDERS’ MEETING and Dorr LLP 60 State Street Boston, MA 02109 (617) 526-6000 Date: June 4, 2021 Time: 8:00 a.m. ET Location: TICKER SYMBOL NYSE: WEX WEX is a leading financial technology service provider. Since our founding in 1983, we have simplified the complexities of payment systems across continents and industries through innovative technology, user-friendly tools and industry-leading customer experience. Our proprietary technology allows us to harness massive amounts of data and deliver insights that help customers make better business decisions. Our expertise within our three segments—Fleet Solutions, Travel and Corporate Solutions, and Health and Employee Benefit Solutions—is complemented by our ability to deliver solutions tailored to meet specific customer needs. Through our products and services, we provide security, control and intelligence for the payment transactions of more than 15.8 million fleet vehicles, $20.9 billion of Travel and Corporate Solutions spend and 33.1 million healthcare consumers. WEX and its subsidiaries employ approximately 5,300 associates around the world. The company has been publicly traded since 2005, and is listed on the New York Stock Exchange under the ticker symbol “WEX.” 1 2020 proved to be a year like no other and I am proud of how WEX responded to the challenging environment. I want to express my gratitude and deep appreciation for the hard work and dedication of the entire WEX team. Despite unprecedented circumstances, they executed extraordinarily well, and once again, have proven why they are the cornerstone of our organization. We remained resilient and nimble as a company, stacking up a series of competitive wins and renewals, strategically targeting spending, and building upon WEX’s proven robust technology platform. Business resilience Our focus on the health and safety of our employees, customers and partners, and the communities in which we operate, was paramount in 2020 and remains the same today. Importantly, we were able to prioritize well-being while maintaining business continuity, continuing to advance our products, and increasing the momentum of our technology. These achievements are reflected in the large number of customer signings and renewals and a great deal of sales momentum created throughout the year. On the cost side, we successfully delivered savings initiatives through expense management and targeted capital spending in areas that will drive benefits for years to come. Powering our future We continued to push forward on the strategic imperative of investing for our future. As a technology-focused company, we made significant investments in increasing speed and reliability through modern tools and executing against our Cloud-native development methodology. We continued the momentum of our global fleet platform Cloud migrations, and now approximately two-thirds of the volume we process is Cloud-based – a significant milestone for WEX. These 2020 technology investments serve to meet the dynamic needs of our customers and position WEX for future growth and scalability. Additionally, we invested in high-growth areas, such as our U.S. health and corporate payments businesses, and we also closed the eNett and Optal transaction. I remain excited about completing this acquisition, as we believe it strengthens WEX’s travel position and enhances our global payments capabilities, thus creating value for customers and investors over the long term by leveraging our collective assets and global reach as the foundation of future innovation. 2 DEAR FELLOW SHAREHOLDERS unprecedented circumstances, 2020 proved to be a year like no other and I am proud of how WEX responded to the challenging environment. I want to express my gratitude and deep appreciation for the hard work and dedication of the entire WEX team. Despite they executed extraordinarily well, and once again, have proven why they are the cornerstone of our organization. We remained resilient and nimble as a company, stacking up a series of competitive wins and renewals, strategically targeting spending, and building upon WEX’s proven robust technology platform. Business resilience Our focus on the health and safety of our employees, customers and partners, and the communities in which we operate, was paramount in 2020 and remains the same today. Importantly, we were able to prioritize well-being while maintaining business continuity, continuing to advance our products, and increasing the momentum of our technology. These achievements are reflected in the large number of customer signings and renewals and the great deal of sales momentum created throughout the year. On the cost side, we successfully delivered savings initiatives through expense management and targeted capital spending in areas that will drive benefits for years to come. Powering our future We continued to push forward on the strategic imperative of investing for our future. As a technology-focused company, we made significant investments in increasing speed and reliability through modern tools and executing against our Cloud-first development methodology. We continued the momentum of our global fleet platform Cloud migrations, and now approximately two-thirds of the volume we process is Cloud-based – a significant milestone for WEX. These 2020 technology investments serve to meet the dynamic needs of our customers and position WEX for future growth and scalability. Additionally, we invested in high-growth areas, such as our U.S. health and corporate payments businesses, and we also closed the eNett and Optal transaction. I remain excited about completing this acquisition, as we believe it strengthens WEX’s travel position and enhances our global payments capabilities, thus creating value for customers and investors over the long term by leveraging our collective assets and global reach as the foundation of future innovation. Lastly, we believe a diverse and inclusive workplace is an important part of our success. During 2020, we advanced several key diversity and inclusion initiatives and implemented new programs to support our broader ESG efforts. Our work in this area, however, is far from complete and I look forward to sharing more detail about our plans over the course of 2021. We remained focused on our core philanthropic areas, specifically, the arts, education, social equality, and wellbeing, and in support of this effort, we awarded grants to more than 130 global, non-profit organizations. We are proud of the impact that WEX has been able and continues to make in our communities. Looking ahead As we turned the page on 2020, we refreshed our strategic pillars to better reflect the opportunities in front of us as well as the expected operating environment going forward. As a technology-focused company, we remained committed to increasing speed and reliability through the use of modern tools. We will continue to build upon our deep sector expertise, trusted client relationships, and risk management capabilities. We are focused on winning in the marketplace through anticipating customer needs, bringing innovative offerings to the market first through modular integrated solutions, and fostering our values-based culture to attract and retain the best talent in the industry. We are progressing through 2021 with the groundwork for success and building blocks for future growth acceleration and market share gains in place. While the pace of recovery will vary, I am confident that our next chapter of growth will be our best yet. We have established a strong platform that is more resilient and diversified than ever before and remain committed to driving long-term growth and value for our shareholders. The future for WEX is bright. Thank you for your continued support. Chair and Chief Executive Officer • April 20, 2021 3 FINANCIAL HIGHLIGHTS TOTAL REVENUE ($ in Millions) TOTAL PURCHASE VOLUME ($ in Billions) 82.2 76.5 65.0 50.6 55.6 ’16 ’17 ’18 ’19 ‘20 ’16 ’17 ’18 ’19 ‘20 KEY FINANCIAL HIGHLIGHTS & RECONCILIATIONS ($ in thousands) 2020 2019 2018 Revenue $ 1,559,869 $ 1,723,691 $ 1,492,639 Reconciliation of Net (Loss) Income Attributable to Shareholders to Adjusted Net Income ("ANI") Net (loss) income attributable to shareholders $ (243,638) $ 99,006 $ 168,295 Unrealized loss (gain) on financial instruments Net foreign currency remeasurement loss (gain) Acquisition-related intangible amortization Other acquisition and divestiture related items Legal settlement Loss on sale of subsidiary Stock-based compensation Other costs Impairment charges Debt restructuring and debt issuance cost amortization Non-cash adjustments related to tax receivable agreement ANI adjustments attributable to non-controlling interests Tax related items 27,036 25,783 171,144 57,787 162,500 46,362 65,841 13,555 53,378 40,063 (491) (42,910) (108,086) 34,654 926 159,431 37,675 – – 47,511 25,106 – 21,004 (932) 53,035 (74,743) (2,579) 38,800 138,186 4,143 – – 35,103 13,717 5,649 14,101 775 (1,370) (53,918) Adjusted net income attributable to shareholders $ 268,324 $ 402,673 $ 360,902 The Company’s non-GAAP adjusted net income excludes unrealized gains and losses on financial instruments, net foreign currency remeasurement gains and losses, acquisition-related intangible amortization, other acquisition and divestiture related items, loss on sale of subsidiary, stock-based compensation, restructuring and other costs, legal settlement, impairment charges, debt restructuring and debt issuance cost amortization, non-cash adjustments related to tax receivable agreement, similar adjustments attributable to our non-controlling interests and certain tax related items. Although adjusted net income 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 segment adjusted operating income to allocate resources among our operating segments. The Company considers this measure integral because it excludes the above-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: • Exclusion of the non-cash, mark-to-market adjustments on financial instruments, including interest rate swap agreements and investment securities, 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 these financial instruments. Additionally, the non-cash, mark-to-market adjustments on financial 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, accounts receivable and accounts 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. • The Company considers certain acquisition-related costs, including certain financing costs, investment banking fees, warranty and indemnity insurance, certain integration 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 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. • Legal settlement represents the consideration paid to the sellers of eNett and Optal in excess of the businesses’ fair values. Management has elected to exclude this item as the charge is nonrecurring and does not reflect future operating expenses resulting from this acquisition. • The loss on sale of subsidiary relates to the divestiture of our former Brazilian subsidiary as of the date of sale, September 30, 2020, and the associated write-off of its assets and liabilities. As previously discussed, gains and losses from divestitures are considered by us to be unpredictable and dependent on factors that may be outside of our control. The exclusion of these gains and losses are consistent with our practice of excluding other non-recurring items associated with strategic transactions. • Legal settlement represents the consideration paid to the sellers of eNett and Optal in excess of the businesses’ fair values. Management has elected to exclude this item as the charge is nonrecurring and does not reflect future operating expenses resulting from this acquisition. • The loss on sale of subsidiary relates to the divestiture of our former Brazilian subsidiary as of the date of sale, September 30, 2020, and the associated write-off of its assets and liabilities. As previously discussed, gains and losses from divestitures are considered by us to be unpredictable and dependent on factors that may be outside of our control. The exclusion of these gains and losses are consistent with our practice of excluding other non-recurring items associated with strategic transactions. • 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. • We exclude restructuring and other costs when evaluating our continuing business performance as such items are not consistently occurring and do not reflect expected future operating expense, nor do they provide insight into the fundamentals of current or past operations of our business. This also includes costs related to certain identified initiatives, including technology initiatives, to further streamline the business, improve the Company’s efficiency, create synergies and globalize the Company’s operations and remediate the prior year material weaknesses, all with an objective to improve scale and efficiency and increase profitability going forward. For the year ended December 31, 2020, restructuring and other costs include certain costs incurred in association with COVID-19, including the cost of providing additional health, welfare and technological support to our employees as they work remotely. • Impairment charges represent non-cash asset write-offs, which do not reflect recurring costs that would be relevant to the Company’s continuing operations. The Company believes that excluding these nonrecurring expenses facilitates the comparison of our financial results to the Company’s historical operating results and to other companies in its industry. • Debt restructuring and debt issuance cost amortization are unrelated to the continuing operations of the Company. Debt restructuring costs are not consistently occurring and do not reflect expected future operating expense, nor do they provide insight into the fundamentals of current or past operations of our business. In addition, since debt issuance cost amortization is 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. • The adjustments attributable to non-controlling interests, including adjustments to the redemption value of a noncontrolling interest, and non-cash adjustments related to the tax receivable agreement have no significant impact on the ongoing operations of the business. • The tax related items are 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 as well as the impact from certain discrete tax items. 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. For the same reasons, WEX believes that adjusted net income may also be useful to investors as one means of evaluating our performance. However, because adjusted net income 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 net income as used by WEX may not be comparable to similarly titled measures employed by other companies. 4 PERFORMANCE GRAPH TOTAL RETURN PERFORMANCE ) $ ( E U L A V X E D N I 350 300 250 200 150 100 50 12/31/15 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 WEX S&P 500 S&P DATA PROCESSING AND OUTSOURCED SERVICES PERIOD ENDING DECEMBER 31 2015 2016 2017 2018 2019 2020 $ 100.00 $ 100.00 $ 100.00 126.24 111.96 107.77 159.76 158.44 236.95 136.40 130.42 171.49 150.94 171.53 248.01 230.24 203.04 309.03 FINANCIAL HIGHLIGHTS TOTAL REVENUE ($ in Millions) TOTAL PURCHASE VOLUME ($ in Billions) 82.2 76.5 65.0 50.6 55.6 PERFORMANCE GRAPH The following graph assumes $100 invested December 31, 2015, and compares (a) the percentage change in the Company’s cumulative total stockholder return on the common stock (as measured by dividing (i) the sum of (A) the cumulative amount of dividends, assuming dividend reinvestment, during the periods presented, and (B) the difference between the Company’s share price at the end and the beginning of the periods presented by (ii) the share price at the beginning of the periods presented) with (b) (i) the S&P 500 Index and (ii) the S&P Data Processing & Outsourced Services Index. TOTAL RETURN PERFORMANCE 350 300 250 200 150 100 ) $ ( E U L A V X E D N I 50 12/31/15 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 WEX S&P 500 S&P DATA PROCESSING AND OUTSOURCED SERVICES ’16 ’17 ’18 ’19 ‘20 ’16 ’17 ’18 ’19 ‘20 KEY FINANCIAL HIGHLIGHTS & RECONCILIATIONS ($ in thousands) Revenue 2020 2019 2018 $ 1,559,869 $ 1,723,691 $ 1,492,639 Reconciliation of Net (Loss) Income Attributable to Shareholders to Adjusted Net Income ("ANI") Net (loss) income attributable to shareholders $ (243,638) $ 99,006 $ 168,295 Unrealized loss (gain) on financial instruments Net foreign currency remeasurement loss (gain) Acquisition-related intangible amortization Other acquisition and divestiture related items Legal settlement Loss on sale of subsidiary Stock-based compensation Other costs Impairment charges Debt restructuring and debt issuance cost amortization Non-cash adjustments related to tax receivable agreement ANI adjustments attributable to non-controlling interests Tax related items 27,036 25,783 171,144 57,787 162,500 46,362 65,841 13,555 53,378 40,063 (491) (42,910) (108,086) 34,654 926 159,431 37,675 – – – 47,511 25,106 21,004 (932) 53,035 (74,743) (2,579) 38,800 138,186 4,143 – – 35,103 13,717 5,649 14,101 775 (1,370) (53,918) Adjusted net income attributable to shareholders $ 268,324 $ 402,673 $ 360,902 The Company’s non-GAAP adjusted net income excludes unrealized gains and losses on financial instruments, net foreign currency remeasurement gains and losses, acquisition-related intangible amortization, other acquisition and divestiture related items, loss on sale of subsidiary, stock-based compensation, restructuring and other costs, legal settlement, impairment charges, debt restructuring and debt issuance cost amortization, non-cash adjustments related to tax receivable agreement, similar adjustments attributable to our non-controlling interests and certain tax related items. Although adjusted net income 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 segment adjusted operating income to allocate resources among our operating segments. The Company considers this measure integral because it excludes the above-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: • Exclusion of the non-cash, mark-to-market adjustments on financial instruments, including interest rate swap agreements and investment securities, 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 these financial instruments. Additionally, the non-cash, mark-to-market adjustments on financial 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, accounts receivable and accounts 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. • The Company considers certain acquisition-related costs, including certain financing costs, investment banking fees, warranty and indemnity insurance, certain integration 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 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. • Legal settlement represents the consideration paid to the sellers of eNett and Optal in excess of the businesses’ fair values. Management has elected to exclude this item as the charge is nonrecurring and does not reflect future operating expenses resulting from this acquisition. resulting from this acquisition. • The loss on sale of subsidiary relates to the divestiture of our former Brazilian subsidiary as of the date of sale, September 30, 2020, and the associated write-off of its assets and liabilities. As previously discussed, gains and losses from divestitures are considered by us to be unpredictable and dependent on factors that may be outside of our control. The exclusion of these gains and losses are consistent with our practice of excluding other non-recurring items associated with strategic transactions. • Legal settlement represents the consideration paid to the sellers of eNett and Optal in excess of the businesses’ fair values. Management has elected to exclude this item as the charge is nonrecurring and does not reflect future operating expenses • The loss on sale of subsidiary relates to the divestiture of our former Brazilian subsidiary as of the date of sale, September 30, 2020, and the associated write-off of its assets and liabilities. As previously discussed, gains and losses from divestitures are considered by us to be unpredictable and dependent on factors that may be outside of our control. The exclusion of these gains and losses are consistent with our practice of excluding other non-recurring items associated with strategic transactions. • 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. • We exclude restructuring and other costs when evaluating our continuing business performance as such items are not consistently occurring and do not reflect expected future operating expense, nor do they provide insight into the fundamentals of current or past operations of our business. This also includes costs related to certain identified initiatives, including technology initiatives, to further streamline the business, improve the Company’s efficiency, create synergies and globalize the Company’s operations and remediate the prior year material weaknesses, all with an objective to improve scale and efficiency and increase profitability going forward. For the year ended December 31, 2020, restructuring and other costs include certain costs incurred in association with COVID-19, including the cost of providing additional health, welfare and technological support to our employees as they work remotely. • Impairment charges represent non-cash asset write-offs, which do not reflect recurring costs that would be relevant to the Company’s continuing operations. The Company believes that excluding these nonrecurring expenses facilitates the comparison of our financial results to the Company’s historical operating results and to other companies in its industry. • Debt restructuring and debt issuance cost amortization are unrelated to the continuing operations of the Company. Debt restructuring costs are not consistently occurring and do not reflect expected future operating expense, nor do they provide insight into the fundamentals of current or past operations of our business. In addition, since debt issuance cost amortization is 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. • The adjustments attributable to non-controlling interests, including adjustments to the redemption value of a noncontrolling interest, and non-cash adjustments related to the tax receivable agreement have no significant impact on the ongoing operations of the business. • The tax related items are 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 as well as the impact from certain discrete tax items. 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. For the same reasons, WEX believes that adjusted net income may also be useful to investors as one means of evaluating our performance. However, because adjusted net income 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 net income as used by WEX may not be comparable to similarly titled measures employed by other companies. $ 100.00 $ 100.00 $ 100.00 126.24 111.96 107.77 159.76 158.44 236.95 136.40 130.42 171.49 150.94 171.53 248.01 PERIOD ENDING DECEMBER 31 2016 2017 2015 2018 2019 2020 230.24 203.04 309.03 5 L E A D E R S H I P T E A M B O A R D O F D I R E C T O R S DAVID COOPER Chief Technology Officer JOEL (JAY) DEARBORN President, Corporate Payments ROBERT DESHAIES President, Health MELISSA D. SMITH Chair and Chief Executive Officer ANN (ANNIE) DREW Chief Risk and Compliance Officer SCOTT PHILLIPS President, Global Fleet DANIEL (DON) CALLAHAN Former Global Head of Operations and Technology, Citigroup HILARY A. RAPKIN Chief Legal Officer ROBERTO SIMON Chief Financial Officer MELANIE TINTO Chief Human Resources Officer JAMES NEARY Managing Director, Warburg Pincus Cautionary Note Regarding Forward-Looking Statements This annual report contains forward-looking statements, including statements regarding: assumptions underlying the Company’s future financial performance, future operations, future growth and expansion opportunities and expectations, expectations for future revenue performance, future impacts from areas of investment, including technology investments, expectations for the macro environment; and, expectations for volumes. Any statements that are not statements of historical facts may be deemed to be forward-looking statements. When used in this earnings release, the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, including: the extent to which the coronavirus (COVID-19) pandemic and measures taken in response thereto impact our business, results of operations and financial condition in excess of current expectations; the effects of general economic conditions on fueling patterns as well as payment and transaction processing activity; the impact of foreign currency exchange rates on the Company’s operations, revenue and income; changes in interest rates; the impact of fluctuations in fuel prices, including the impact of any continued reductions in fuel price and the resulting impact on our revenues and net income; changes or limitations on interchange fees; failure to comply with the applicable requirements of MasterCard or Visa contracts and rules; the effects of the Company’s business expansion and acquisition efforts; potential adverse changes to business or employee relationships, including those resulting from the completion of an acquisition; competitive responses to any acquisitions; uncertainty of the expected financial performance of the combined operations following completion of an acquisition; the failure to complete or successfully integrate the Company’s acquisitions or the ability to realize anticipated synergies and cost savings from such transactions; unexpected costs, charges or expenses resulting from an acquisition, specifically including the recent eNett and Optal acquisitions; the Company’s failure to successfully acquire, integrate, operate and expand commercial fuel card programs; the failure of corporate investments to result in anticipated strategic value; 6 the impact and size of credit losses; the impact of changes to the Company’s credit standards; breaches of the Company’s technology systems or those of our third-party service providers and any resulting negative impact on our reputation, liabilities or relationships with customers or merchants; the Company’s failure to maintain or renew key commercial agreements; failure to expand the Company’s technological capabilities and service offerings as rapidly as the Company’s competitors; failure to successfully implement the Company’s information technology strategies and capabilities in connection with its technology outsourcing and insourcing arrangements and any resulting cost associated with that failure; the actions of regulatory bodies, including banking and securities regulators, or possible changes in banking or financial regulations impacting the Company’s industrial bank, the Company as the corporate parent or other subsidiaries or affiliates; legal, regulatory, political and economic uncertainty surrounding the United Kingdom’s departure from the European Union and the resulting trade agreement; the impact of the future transition from LIBOR as a global benchmark to a replacement rate; the impact of the Company’s presently outstanding notes on its operations; the impact of increased leverage on the Company’s operations, results or borrowing capacity generally, and as a result of acquisitions specifically; the impact of sales or dispositions of significant amounts of our outstanding common stock into the public market, or the perception that such sales or dispositions could occur; the possible dilution to our stockholders caused by the issuance of additional shares of common stock or equity-linked securities, as result of our convertible notes or otherwise; the incurrence of impairment charges if our assessment of the fair value of certain of our reporting units changes; the uncertainties of litigation; as well as other risks and uncertainties identified in Item 1A of our annual report for the year ended December 31, 2020, filed on Form 10-K with the Securities and Exchange Commission on March 1, 2021. The Company’s forward-looking statements do not reflect the potential future impact of any alliance, merger, acquisition, disposition or stock repurchases. The forward-looking statements speak only as of the date of this earnings release and undue reliance should not be placed on these statements. The Company disclaims any obligation to update any forward-looking statements as a result of new information, future events or otherwise. L E A D E R S H I P T E A M B O A R D O F D I R E C T O R S ROBERT DESHAIES President, Health MELISSA D. SMITH Chair and Chief Executive Officer JACK VANWOERKOM Vice Chairman and Lead Director, WEX Former Executive Vice President and General Counsel, The Home Depot JOHN (JEB) E. BACHMAN Former Partner, PwC DANIEL (DON) CALLAHAN Former Global Head of Operations and Technology, Citigroup SHIKHAR GHOSH Professor, Harvard Business School JAMES (JIM) GROCH Former Global Group President and Chief Investment Officer, CBRE Group, Inc MELANIE TINTO Chief Human Resources Officer JAMES NEARY Managing Director, Warburg Pincus STEPHEN (STEVE) SMITH President and Chief Executive Officer, L.L.Bean SUSAN SOBBOTT Former President of Global Commercial Services, American Express REGINA O. SOMMER Financial and Business Consultant Cautionary Note Regarding Forward-Looking Statements This annual report contains forward-looking statements, including statements regarding: assumptions underlying the Company’s future financial performance, future operations, future growth and expansion opportunities and expectations, expectations for future revenue performance, future impacts from areas of investment, including technology investments, expectations for the macro environment; and, expectations for volumes. Any statements that are not statements of historical facts may be deemed to be forward-looking statements. When used in this earnings release, the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, including: the extent to which the coronavirus (COVID-19) pandemic and measures taken in response thereto impact our business, results of operations and financial condition in excess of current expectations; the effects of general economic conditions on fueling patterns as well as payment and transaction processing activity; the impact of foreign currency exchange rates on the Company’s operations, revenue and income; changes in interest rates; the impact of fluctuations in fuel prices, including the impact of any continued reductions in fuel price and the resulting impact on our revenues and net income; changes or limitations on interchange fees; failure to comply with the applicable requirements of MasterCard or Visa contracts and rules; the effects of the Company’s business expansion and acquisition efforts; potential adverse changes to business or employee relationships, including those resulting from the completion of an acquisition; competitive responses to any acquisitions; uncertainty of the expected financial performance of the combined operations following completion of an acquisition; the failure to complete or successfully integrate the Company’s acquisitions or the ability to realize anticipated synergies and cost savings from such transactions; unexpected costs, charges or expenses resulting from an acquisition, specifically including the recent eNett and Optal acquisitions; the Company’s failure to successfully acquire, integrate, operate and expand commercial fuel card programs; the failure of corporate investments to result in anticipated strategic value; 6 the impact and size of credit losses; the impact of changes to the Company’s credit standards; breaches of the Company’s technology systems or those of our third-party service providers and any resulting negative impact on our reputation, liabilities or relationships with customers or merchants; the Company’s failure to maintain or renew key commercial agreements; failure to expand the Company’s technological capabilities and service offerings as rapidly as the Company’s competitors; failure to successfully implement the Company’s information technology strategies and capabilities in connection with its technology outsourcing and insourcing arrangements and any resulting cost associated with that failure; the actions of regulatory bodies, including banking and securities regulators, or possible changes in banking or financial regulations impacting the Company’s industrial bank, the Company as the corporate parent or other subsidiaries or affiliates; legal, regulatory, political and economic uncertainty surrounding the United Kingdom’s departure from the European Union and the resulting trade agreement; the impact of the future transition from LIBOR as a global benchmark to a replacement rate; the impact of the Company’s presently outstanding notes on its operations; the impact of increased leverage on the Company’s operations, results or borrowing capacity generally, and as a result of acquisitions specifically; the impact of sales or dispositions of significant amounts of our outstanding common stock into the public market, or the perception that such sales or dispositions could occur; the possible dilution to our stockholders caused by the issuance of additional shares of common stock or equity-linked securities, as result of our convertible notes or otherwise; the incurrence of impairment charges if our assessment of the fair value of certain of our reporting units changes; the uncertainties of litigation; as well as other risks and uncertainties identified in Item 1A of our annual report for the year ended December 31, 2020, filed on Form 10-K with the Securities and Exchange Commission on March 1, 2021. The Company’s forward-looking statements do not reflect the potential future impact of any alliance, merger, acquisition, disposition or stock repurchases. The forward-looking statements speak only as of the date of this earnings release and undue reliance should not be placed on these statements. The Company disclaims any obligation to update any forward-looking statements as a result of new information, future events or otherwise. 7 UNITED�STATES SECURITIES�AND�EXCHANGE�COMMISSION Washington,�D.C.�20549 FORM�10-K (Mark�One) ☑ ☐ ANNUAL�REPORT�PURSUANT�TO�SECTION�13�OR�15(d)�OF�THE�SECURITIES�EXCHANGE�ACT�OF�1934 For�the�fiscal�year�ended�December�31,�2020 OR 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 �� WEX�INC. (Exact�name�of�registrant�as�specified�in�its�charter) Delaware (State�or�other�jurisdiction�of� incorporation�or�organization) 1�Hancock�St., Portland, ME (Address�of�principal�executive�offices) � � � � 01-0526993 (I.R.S.�Employer� Identification�No.) 04101 (Zip�Code) (207)�773-8171 (Registrant’s�telephone�number,�including�area�code) Securities�registered�pursuant�to�Section�12(b)�of�the�Act: Title�of�each�class Common�Stock,�$0.01�par�value � � Trading�Symbol(s) WEX � � Name�of�each�exchange�on�which�registered New�York�Stock�Exchange Securities�registered�pursuant�to�Section�12(g)�of�the�Act: None (Title�of�class) Indicate�by�check�mark�if�the�registrant�is�a�well-known�seasoned�issuer,�as�defined�in�Rule�405�of�the�Securities�Act. Indicate�by�check�mark�if�the�registrant�is�not�required�to�file�reports�pursuant�to�Section�13�or�Section�15(d)�of�the�Act. ����¨��Yes�������������þ��No 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������������¨��No Indicate�by�check�mark�whether�the�registrant�has�submitted�electronically�every�Interactive�Data�File�required�to�be�submitted�pursuant�to�Rule�405�of�Regulation�S–T�(§�232.405�of�this chapter)�during�the�preceding�12�months�(or�for�such�shorter�period�that�the�registrant�was�required�to�submit�such�files). ����þ��Yes�������������¨��No Indicate�by�check�mark�whether�the�registrant�is�a�large�accelerated�filer,�an�accelerated�filer,�a�non-accelerated�filer,�a�smaller�reporting�company,�or�an�emerging�growth�company.�See�the definitions�of�“large�accelerated�filer,”�“accelerated�filer,”�“smaller�reporting�company,”�and�“emerging�growth�company”�in�Rule�12b–2�of�the�Exchange�Act. ����þ��Yes�������������¨��No Large�accelerated�filer Non-accelerated�filer þ� ☐ �� Accelerated�filer �� Smaller�reporting�company Emerging�growth�company ☐ ☐ ☐ If�an�emerging�growth�company,�indicate�by�check�mark�if�the�registrant�has�elected�not�to�use�the�extended�transition�period�for�complying�with�any�new�or�revised�financial�accounting standards�provided�pursuant�to�Section�13(a)�of�the�Exchange�Act.�¨ Indicate�by�check�mark�whether�the�registrant�has�filed�a�report�on�and�attestation�to�its�management’s�assessment�of�the�effectiveness�of�its�internal�control�over�financial�reporting�under Section�404(b)�of�the�Sarbanes-Oxley�Act�(15�U.S.C.�7262(b))�by�the�registered�public�accounting�firm�that�prepared�or�issued�its�audit�report.�☑ Indicate�by�check�mark�whether�the�registrant�is�a�shell�company�(as�defined�in�Rule�12b–2�of�the�Act). The�aggregate�market�value�of�the�voting�and�non-voting�common�equity�held�by�non-affiliates�of�the�registrant�(assuming�for�the�purpose�of�this�calculation,�but�without�conceding,�that ����☐��Yes�������������þ��No all�directors,�officers�and�any�10�percent�or�greater�stockholders�are�affiliates�of�the�registrant)�as�of�June�30,�2020,�the�last�business�day�of�the�registrant’s�most�recently�completed�second�fiscal quarter,�was�$7,140,251,666�(based�on�the�closing�price�of�the�registrant’s�common�stock�on�that�date�as�reported�on�the�New�York�Stock�Exchange). There�were�44,190,995�shares�of�the�registrant’s�common�stock�outstanding�as�of�February�22,�2021. Portions�of�the�Company’s�definitive�Proxy�Statement�to�be�delivered�to�stockholders�in�connection�with�the�Company's�2021�Annual�Meeting�of�Stockholders�(the�"2021�Proxy Statement")�are�incorporated�by�reference�into�Part�III�of�this�10–K.�With�the�exception�of�the�sections�of�the�2021�Proxy�Statement�specifically�incorporated�herein�by�reference,�the�2021�Proxy Statement�is�not�deemed�to�be�filed�as�part�of�this�Annual�Report�on�10–K. DOCUMENTS�INCORPORATED�BY�REFERENCE � Item�1. Item�1A. Item�1B. Item�2. Item�3. Item�4. Item�5. Item�7. Item�7A. Item�8. Item�9. Item�9A. Item�9B. Item�10. Item�11. Item�12. Item�13. Item�14. Item�15. Item�16. Forward–Looking�Statements ACRONYMS�AND�ABBREVIATIONS Business Risk�Factors Unresolved�Staff�Comments Properties Legal�Proceedings Mine�Safety�Disclosures TABLE�OF�CONTENTS Part�I Part�II Market�for�Registrant’s�Common�Equity,�Related�Stockholder�Matters�and�Issuer�Purchases�of�Equity�Securities Management’s�Discussion�and�Analysis�of�Financial�Condition�and�Results�of�Operations Quantitative�and�Qualitative�Disclosures�About�Market�Risk Financial�Statements�and�Supplementary�Data Changes�in�and�Disagreements�with�Accountants�on�Accounting�and�Financial�Disclosure Controls�and�Procedures Other�Information Directors,�Executive�Officers�and�Corporate�Governance Executive�Compensation Security�Ownership�of�Certain�Beneficial�Owners�and�Management�and�Related�Stockholder�Matters Certain�Relationships�and�Related�Transactions,�and�Director�Independence Principal�Accounting�Fees�and�Services Part�III Part�IV Exhibits�and�Financial�Statement�Schedules Form�10–K�Summary Signatures 1 3 5 21 42 42 42 42 43 44 71 73 133 133 136 136 136 136 136 136 137 137 142 Unless�otherwise�indicated�or�required�by�the�context,�the�terms�“we,”�“us,”�“our,”�“WEX,”�or�the�“Company,”�in�this�Annual�Report�on�Form�10–K mean�WEX�Inc.�and�all�of�its�subsidiaries�that�are�consolidated�under�Generally�Accepted�Accounting�Principles�in�the�United�States. 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 �Annual �Report �includes �forward-looking �statements �including, �but �not �limited �to, �statements �about �management’s �plan �and �goals �and �statements �of strategic �priorities �included �within �the �“Strategy” �section �of �this �Annual �Report �in �Item �1. �Any �statements �in �this �Annual �Report �that �are �not �statements �of historical�facts�are�forward-looking�statements.�When�used�in�this�Annual�Report,�the�words�“anticipate,”�“believe,”�“continue,”�“could,”�“estimate,”�“expect,” “intend,” �“may,”�“plan,” �“project” �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�Annual�Report�and�in�oral�statements�made�by�our�authorized�officers: • • • • • • • • • • • • • • • • • • • • • • • • • • the �extent �to �which �the �coronavirus �(COVID-19) �pandemic �and �measures �taken �in �response �thereto �impact �our �business, �results �of �operations �and financial�condition�in�excess�of�current�expectations; the�demand�for �worldwide�travel �as�a�result �of�COVID-19�and �the�length �of�time �it�may�take �for�the �travel�industry �to�experience �a�rebound�after �the effects�of�the�COVID-19�pandemic�have�subsided; the�impact�of�fluctuations�in�fuel�prices,�including�the�impact�of�any�continued�reductions�in�fuel�price�and�the�resulting�impact�on�our�revenues�and�net income; the�effects�of�general�economic�conditions,�including�COVID-19,�on�fueling�patterns,�as�well�as�payment�and�transaction�processing�activity; our�compliance,�or�our�failure�to�comply,�with�the�applicable�requirements�of�MasterCard�or�Visa; any�limitation,�reduction,�or�elimination�of�interchange�fees; the�impact�of�foreign�currency�exchange�rates�on�the�Company’s�operations,�revenue�and�income; changes�in�interest�rates; the�effects�of�the�Company’s�business�expansion�and�acquisition�efforts; potential�adverse�changes�to�business�or�employee�relationships,�including�those�resulting�from�the�completion�of�an�acquisition; competitive�responses�to�any�acquisitions; uncertainty�of�the�expected�financial�performance�of�the�combined�operations�following�completion�of�an�acquisition; the�failure�to�complete�or�successfully�integrate�and�realize�anticipated�benefits,�synergies�and�cost�savings�from�the�Company’s�acquisitions,�including the�recently�competed�eNett�and�Optal�acquisition; unexpected�costs,�charges�or�expenses�resulting�from�an�acquisition; the�Company’s�failure�to�successfully�acquire,�integrate,�operate�and�expand�commercial�fuel�card�programs; the�failure�of�corporate�investments�to�result�in�anticipated�strategic�value; the�impact�and�size�of�credit�losses�and�fraudulent�use�of�our�payment�cards�or�systems; the�impact�of�changes�to�the�Company’s�credit�standards; breaches �of �the �Company’s �technology �systems �or �those �of �our �third-party �service �providers �and �any �resulting �negative �impact �on �our �reputation, liabilities�or�relationships�with�customers�or�merchants; the�Company’s �ability �to �successfully �obtain�new �customers �and �commercial �agreements, �maintain �key �commercial �agreements, �or �maintain �customer volumes�under�such�commercial�agreements; failure�to�expand�the�Company’s�technological�capabilities�and�service�offerings�as�rapidly�as�the�Company’s�competitors; failure�to �successfully �implement �the �Company’s�information �technology �strategies �and �capabilities �in �connection�with �its �technology �outsourcing �and insourcing�arrangements�and�any�resulting�cost�associated�with�that�failure; the�regulation,�supervision,�and�examination�of�our�business�or�our�entities�by�domestic�and�foreign�governmental�authorities,�as�well�as�litigation�and regulatory�actions; the�effect�of�the�United�Kingdom’s�departure�from�the�European�Union�and�the�resulting�trade�agreement; the�impact�of�the�transition�from�LIBOR�as�a�global�benchmark�to�a�replacement�rate; the�impact�of�the�2016�Credit�Agreement,�the�Notes�and�the�Convertible�Notes�on�our�operations; 1 • • • • • • the�impact�of�increased�leverage�on�the�Company’s�operations,�results�or�borrowing�capacity�generally,�and�as�a�result�of�acquisitions�specifically; the�impact�of�sales�or�dispositions�of�significant�amounts�of�our�outstanding�common�stock�into�the�public�market,�or�the�perception�that�such�sales�or dispositions�could�occur; the�possible�dilution�to�our�stockholders�caused�by�the�issuance�of�additional�shares�of�common�stock�or�equity-linked�securities,�whether�as�a�result�of the�Convertible�Notes�or�otherwise; the�incurrence�of�impairment�charges�if�our�assessment�of�the�fair�value�of�certain�of�our�reporting�units�changes; the�uncertainties�of�litigation;�as�well�as other�risks�and�uncertainties�identified�in�Item�1A�of�this�Annual�Report�and�in�connection�with�such�forward-looking�statements. � � � �Our �forward-looking �statements �and �these �factors �do �not �reflect �the �potential �future �impact �of �any �alliance, �merger, �acquisition, �disposition �or �stock repurchases.�The�forward-looking�statements�speak�only�as�of�the�date�of�the�initial�filing�of�this�Annual�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. RISK�FACTOR�SUMMARY Investment�in�our�securities�involves�risk.�Below�is�a�summary�of�what�we�believe�to�be�the�principal�risks�facing�our�business.�You�should�carefully review�and�consider�this�summary�along�with�the�risks�described�more�fully�in�Item�1A,�“Risk�Factors”�of�Part�I�of�this�Annual�Report�and�other�information included�in�this�Annual�Report.�The�risks�and�uncertainties�described�below�are�not�the�only�risks�and�uncertainties�we�face.�Additional�risks�and�uncertainties�not presently�known�to�us�or�that�we�presently�deem�less�significant�may�also�impair�our�business�operations. If�any�of�the�following�risks�occurs,�our�business,�financial�condition,�and�results�of�operations�and�future�growth�prospects�could�be�materially�and adversely�affected,�and�the�actual�outcomes�of�matters�as�to�which�forward-looking�statements�are�made�in�this�report�could�be�materially�different�from�those anticipated�in�such�forward-looking�statements. • Our�operations,�business,�and�financial�condition�have�been�and�are�expected�to�continue�to�be�adversely�affected�by�the�COVID-19�pandemic. COVID-19�has�negatively�impacted�the�business�and�consumer�spending�habits�which�result�in�revenues�for�us�and�has�impacted�our�workforce�and�operations�and the�operations�of�our�customers,�suppliers�and�business�partners. • A�significant�portion�of�our�revenues�are�related�to�the�dollar�amount�of�fuel�purchased�by�or�through�our�customers�and�from�our�fuel�retailer partners,�and,�as�a�result,�a�reduction�in�the�demand�for�fuel�and�other�vehicle�products�and�services�and/or�volatility�in�fuel�prices�could�have�a�material�adverse effect�on�our�revenues�and�financial�condition. • If�we�fail�to�comply�with�the�applicable�requirements�of�MasterCard�or�Visa,�they�could�seek�to�fine�us,�suspend�us�or�terminate�our�registrations. We�depend�on�MasterCard�or�Visa�to�process�a�large�number�of�transactions�and�any�disruption�or�elimination�of�that�ability�could�have�a�material�adverse�effect on�our�revenues�and�business. • A�substantial�portion�of�our�revenue�is�generated�by�network�processing�fees,�known�as�interchange�fees,�associated�with�transactions�processed using�our�payment�systems.�Any�limitation,�reduction�or�elimination�of�these�fees,�whether�by�regulation�or�by�private�actions�or�otherwise�could�have�a�material adverse�effect�on�our�revenues�and�business. • If�we�fail�to�adequately�assess�and�monitor�credit�risks�posed�by�our�counterparties�or�there�is�fraudulent�use�of�our�payment�cards�or�systems,�we could�experience�an�increase�in�credit�loss�and�other�intangible�damages.�This�could�affect�our�results�from�operations�as�well�as�our�business�reputation,�among other�things. • The�payments�solutions�industry�is�highly�competitive.�Such�competition�could�have�a�material�adverse�effect�on�the�fees�we�receive,�our margins,�and�our�ability�to�gain,�maintain,�or�expand�customer�relationships,�all�on�favorable�terms. • We�may�never�realize�the�anticipated�benefits�of�acquisitions�we�have�completed�or�may�undertake�and�we�may�encounter�difficulties�in�trying�to integrate�such�acquisitions�and�incur�significant�expenses�or�charges�as�a�result�of�an�acquisition.�In�December�2020,�we�consummated�the�acquisition�of�two�travel focused�electronic�payments�companies�that�were�significantly�impacted�by�the�global�COVID-19�pandemic.�Given�that�the�global�COVID-19�pandemic�has�had, and�will�likely�continue�to�have,�a�large�effect�on�the�travel�industry,�there�can�be�no�guarantee�that�we�will�achieve�any�of�the�anticipated�benefits�from�this acquisition. 2 • Unpredictable�events,�including�natural�catastrophes�or�public�health�crises,�dangerous�weather�conditions,�technology�failure,�political�unrest, and�terrorist�attacks�in�the�locations�in�which�we�or�our�customers�operate,�or�elsewhere,�may�adversely�affect�our�ability�to�conduct�business�and�could�impact�our results. • WEX�Bank�operates�under�an�industrial�loan�charter�(ILC),�which�allows�us�to�accept�brokered�deposits,�which�we�believe�provides�us�access�to lower�cost�funds�than�many�of�our�competitors,�thus�helping�us�to�offer�competitive�products.�The�loss�or�suspension�of�WEX�Bank's�industrial�loan�charter, changes�in�applicable�regulatory�requirements,�or�an�increase�in�the�number�or�type�of�institutions�eligible�for�an�ILC�could�be�disruptive�to�certain�of�our operations,�increase�costs,�and�increase�competition. • We�currently�have�a�substantial�amount�of�indebtedness�and�may�incur�additional�indebtedness,�which�could�affect�our�flexibility�in�managing our�business�and�could�materially�and�adversely�affect�our�ability�to�meet�our�debt�service�obligations.�At�December�31,�2020,�we�had�approximately�$3,026.8 million�of�debt�outstanding,�net�of�unamortized�debt�issuance�costs�and�debt�discount,�including�$152.7�million�in�current�liabilities. • We�may�want�or�need�to�refinance�a�significant�amount�of�indebtedness�or�otherwise�require�additional�financing�to�react�to�changing�economic or�business�conditions�or�to�replace�maturing�debt,�fund�working�capital,�capital�expenditures,�acquisitions,�or�other�general�corporate�purposes.�In�addition,�our access�to�lenders�in�the�future�is�also�dependent�on,�among�other�things,�market�conditions,�which�are�variable�and�potentially�volatile,�and�which�could�result�in increased�costs�for�obtaining�and�servicing�our�indebtedness.�Accordingly,�there�is�no�guarantee,�however,�that�we�will�be�able�to�finance�or�obtain�additional financing�on�favorable�terms,�or�at�all. • Existing�and�new�laws�and�regulations�and�enforcement�activities�could�negatively�impact�our�business�and�the�markets�we�presently�operate�in or�could�limit�our�expansion�opportunities.�These�regulations�can�negatively�impact�our�revenues�and�increase�our�compliance�costs.�In�addition,�failure�to�comply with�laws�and�regulations�may�result�in�the�suspension�or�revocation�of�licenses�or�registrations,�the�limitation,�suspension�or�termination�of�services,�and/or�the imposition�of�civil�and�criminal�penalties,�including�fines,�among�other�things. • If�the�technologies�we�use�in�operating�our�business�and�interacting�with�our�customers�fail,�are�unavailable,�or�do�not�operate�to�expectations,�or we�fail�to�successfully�implement�technology�strategies�and�capabilities�in�connection�with�our�outsourcing�arrangements,�our�business�and�results�of�operations could�be�adversely�impacted. • Our�business�is�regularly�subject�to�cyberattacks�and�attempted�security�and�privacy�breaches�and�we�may�not�be�able�to�adequately�protect�our information�systems,�including�the�data�we�collect�about�our�customers,�which�could�subject�us�to�liability�and�damage�our�reputation. • third�party. Provisions�in�our�charter�documents,�Delaware�law,�applicable�banking�law�and�the�Convertible�Notes�may�delay�or�prevent�our�acquisition�by�a • The�issuance�by�us�of�additional�shares�of�common�stock�or�equity-linked�securities,�including�in�connection�with�conversions�of�our�outstanding Convertible�Notes�(as�defined�below),�may�cause�dilution�to�our�stockholders. ����The�acronyms�and�abbreviations�identified�below�are�used�in�this�Annual�Report�including�the�accompanying�consolidated�financial�statements�and�the�notes thereto.�The�following�is�provided�to�aid�the�reader�and�provide�a�reference�point�when�reviewing�the�Annual�Report: ACRONYMS�AND�ABBREVIATIONS 2016�Credit�Agreement 2017�Tax�Act Adjusted�Net�Income�or�ANI AOC ASC Credit�agreement�entered�into�on�July�1,�2016,�as�amended�from�time�to�time,�by�and�among�the�Company�and�certain�of�its�subsidiaries, as �borrowers, �WEX �Card �Holding �Australia �Pty �Ltd., �as �designated �borrower,�and �Bank�of �America, �N.A., �as �administrative �agent �on behalf�of�the�lenders. Tax�Cuts�and�Jobs�Act�of�2017 A�non-GAAP�measure�that�adjusts�net�income�attributable�to�shareholders�to�exclude�unrealized�gains�and�losses�on�financial�instruments, net�foreign�currency�remeasurement�gains�and�losses,�acquisition-related�intangible�amortization,�other�acquisition�and�divestiture�related items,�loss�on�sale�of�subsidiary,�stock-based�compensation,�restructuring�and�other�costs,�legal�settlement,�impairment�charges,�debt restructuring�and�debt�issuance�cost�amortization,�non-cash�adjustments�related�to�tax�receivable�agreement,�similar�adjustments attributable�to�our�non-controlling�interests�and�certain�tax�related�items. AOC�Solutions�and�one�of�its�affiliate�companies,�3Delta�Systems,�Inc. Accounting�Standards�Codification 3 ASU�2014–09 ASU�2016–01 ASU�2016–02 ASU�2016–13 ASU�2017–04 Australian�Securitization�Subsidiary B2B CDH Company Convertible�Notes COVID-19�or�(“coronavirus”) CFPB Discovery�Benefits DSUs EBITDA EFS eNett European�Fleet�business European�Securitization�Subsidiary FASB FCPA FDIC FinCEN FRA FSA GAAP GILTI WEX�Fleet�Europe�(Go�Fuel�Card) HRA HSA ICS Indenture Legal�Settlement NAV Net�payment�processing�rate Notes Noventis NYSE OFAC Optal Over-the-road Pavestone�Capital Payment�processing�fuel�spend Payment�processing�transactions Payment�solutions�purchase�volume PBRSUs Purchase�volume Accounting�Standards�Update�No.�2014–09�Revenue�from�Contracts�with�Customers�(Topic�606) Accounting �Standards �Update �No. �2016–01 �Financial �Instruments–Overall �(Subtopic �825–10): �Recognition �and �Measurement �of Financial�Assets�and�Financial�Liabilities Accounting�Standards�Update�No.�2016–02�Leases�(Topic�842) Accounting�Standards�Update�No.�2016–13�Financial�Instruments–Credit�Losses�(Topic�326):�Measurement�of�Credit�Losses�on�Financial Instruments Accounting�Standards�Update�2017–04–Intangibles–Goodwill�and�Other�(Topic�350):�Simplifying�the�Test�for�Goodwill�Impairment Southern�Cross�WEX�2015-1�Trust,�a�special�purpose�entity�consolidated�by�the�Company Business-to-business Consumer-directed�healthcare WEX�Inc.�and�all�entities�included�in�the�consolidated�financial�statements Convertible�senior�unsecured�notes�due�on�July�15,�2027�in�an�aggregate�principal�amount�of�$310�million�with�a�6.5�percent�interest�rate, issued�July�1,�2020. An �infectious �disease �caused �by �the �SARS-CoV-2 �virus. �The �World �Health �Organization �declared �the �coronavirus �outbreak �a �global pandemic�on�March�11,�2020. Consumer�Financial�Protection�Bureau Discovery�Benefits,�Inc. Deferred�stock�units A�non-GAAP�measure�that�adjusts�income�before�income�taxes�to�exclude�interest,�depreciation�and�amortization Electronic�Funds�Source,�LLC,�a�provider�of�customized�corporate�payment�solutions�for�fleet �and�corporate�customers�with�a�focus�on the �large �and �mid-sized �over-the-road �fleets. �On �July �1, �2016, �the �Company �acquired �WP �Mustang �Topco �LLC, �the �indirect �parent �of Electronic �Funds �Source, �LLC �and �Warburg �Pincus �Private �Equity �XI �(Lexington), �LLC, �an �affiliated �entity, �from �investment �funds affiliated�with�Warburg�Pincus�LLC. eNett�International�(Jersey)�Limited WEX�Fleet�Europe�and�WEX�Europe�Services,�collectively Gorham�Trade�Finance�B.V.,�a�special�purpose�entity�consolidated�by�the�Company Financial�Accounting�Standards�Board U.S.�Foreign�Corrupt�Practices�Act Federal�Deposit�Insurance�Corporation Financial�Crimes�Enforcement�Network�of�the�U.S.�Department�of�the�Treasury Federal�Reserve�Act Flexible�Spending�Accounts Generally�Accepted�Accounting�Principles�in�the�United�States Global�Intangible�Low�Taxed�Income A�fleet�business�in�Europe�acquired�from�EG�Group�on�July�1,�2019 Health�Reimbursement�Arrangements Health�Savings�Accounts Insured�Cash�Sweep The�Notes�were�issued�pursuant�to�an�indenture�dated�as�of�January�30,�2013�among�the�Company,�the�guarantors�listed�therein,�and�The Bank�of�New�York�Mellon�Trust�Company,�N.A.,�as�trustee The�settlement�of�legal�proceedings�and�appeals�related�to�the�acquisition�of�eNett�and�Optal. Net�asset�value The �percentage �of �the �dollar �value�of �each �payment �processing �transaction �that �the �Company �records �as �revenue �from �merchants �less certain�discounts�given�to�customers�and�network�fees $400�million�senior�notes�with�a�4.75%�fixed�rate,�issued�on�January�30,�2013 Noventis,�Inc. New�York�Stock�Exchange The�United�States�Treasury’s�Office�of�Foreign�Assets�Control Optal�Limited Typically�heavy�trucks�traveling�long�distances Pavestone�Capital,�LLC Total�dollar�value�of�the�fuel�purchased�by�fleets�that�have�a�payment�processing�relationship�with�the�Company Total�number�of�purchases�made�by�fleets�that�have�a�payment�processing�relationship�with�the�Company,�where�the�Company�maintains the�receivable�for�the�total�purchase Total�dollar�value�of�all�WEX-issued�transactions�that�use�WEX�corporate�card�products�and�virtual�card�products Performance-based�restricted�stock�units Total �U.S. �dollar �value �of �all �transactions �in �the �Health�and �Employee �Benefit �Solutions �segment �where �interchange �is �earned �by �the Company 4 Redeemable�non-controlling�interest RSUs SaaS SEC Segment�adjusted�operating�income TSR Transaction�processing�transactions UNIK�or�WEX�Latin�America U.S.�Health�business Utah�DFI VCN VPN WEX WEX�Europe�Services WEX�Health ITEM�1.�BUSINESS Our�Company The �portion �of�the �U.S.�Health �business’�net �assets �owned�by �a�non-controlling �interest �subject�to �redemption�rights �held �by�the �non- controlling�interest Restricted�stock�units Software-as-a-service Securities�and�Exchange�Commission A�non-GAAP�measure�that�adjusts�operating�income�to�exclude�specified�items�that�the�Company’s�management�excludes�in�evaluating segment�performance,�including�acquisition�and�divestiture�related�expenses�and�adjustments�including�the�acquisition�related�intangible amortization, �impairment �charges, �stock-based �compensation, �restructuring �and �other �costs, �debt �restructuring �costs �and �unallocated corporate�expenses. Total�shareholder�return Unfunded�payment�transactions�where�the�Company�is�the�processor�and�only�has�receivables�for�the�processing�fee UNIK �S.A., �the �Company’s �Brazilian �subsidiary, �which �is �branded �WEX �Latin �America. �This �subsidiary �was �sold �on �September �30, 2020 WEX�Health�and�Discovery�Benefits,�collectively Utah�Department�of�Financial�Institutions Virtual�card�number Virtual�private�network WEX�Inc.,�unless�otherwise�indicated�or�required�by�the�context A�European�Fleet�business�acquired�by�the�Company�from�ExxonMobil�on�December�1,�2014 Legacy�healthcare�operations�prior�to�the�acquisition�of�Discovery�Benefits� PART�I � � � �WEX �Inc. �is �a �leading �financial �technology �service �provider �having �simplified �the �complexities �of �payment �systems �across �continents �and �industries. �We currently�operate�in�three�reportable�segments:�Fleet�Solutions,�Travel�and�Corporate�Solutions,�and�Health�and�Employee�Benefit�Solutions,�which�are�described in �more �detail �below. �The �Company’s �U.S. �operations �include �WEX �Inc., �the �majority-owned �U.S. �Health �business �(currently �consisting �of �WEX �Health �and Discovery�Benefits),�and�our�wholly-owned�subsidiaries�WEX�Bank,�WEX�FleetOne,�Noventis�and�EFS.�Our�international�operations�include�our�wholly-owned operations�including,�WEX�Fuel�Cards�Australia,�WEX�Prepaid�Cards�Australia,�WEX�Canada,�WEX�Asia,�WEX�Europe�Limited,�WEX�Fleet�Europe,�and�eNett and�Optal�and�their�respective�operating�subsidiaries,�and�a�controlling�interest�in�WEX�Europe�Services�Limited�and�its�subsidiaries. ����WEX�Bank,�a�Utah�industrial�bank�incorporated�in�1998,�is�an�FDIC�insured�depository�institution.�The�functions�performed�at�WEX�Bank�contribute�to�the U.S.�and�Canadian�operations�of�Fleet�Solutions�and�the�majority�of�operations�of�Travel�and�Corporate�Solutions�by�providing�a�funding�mechanism,�among�other services.�With�our�ownership�of�WEX�Bank,�we�have�access�to�low-cost�sources�of�capital.�WEX�Bank�raises�capital�primarily�through�the�issuance�of�brokered deposit �accounts �and �provides�the �financing �and�makes �credit �decisions �that�enable �the �Fleet �Solutions�and �Travel �and�Corporate �Solutions �segments�to �extend credit�to�customers.�WEX�Bank�approves�customer�applications,�maintains�appropriate�credit�lines�for�each�customer,�is�the�account�issuer,�and�is�the�counterparty for �the �customer �relationships �for �most �of �our �programs �in �the �U.S. �Operations �such �as �sales, �marketing, �merchant �relations, �customer �service, �software development�and�IT�are�performed�as�a�service�within�our�organization�but�outside�of�WEX�Bank.�WEX�Bank’s�primary�regulators�are�Utah�DFI�and�the�FDIC. The�activities�performed�by�WEX�Bank�are�integrated�into�the�operations�of�our�Fleet�Solutions�and�Travel�and�Corporate�Solutions�segments.�The�relationship between�WEX�Inc.�and�WEX�Bank�is�governed�under�a�master�service�agreement,�which�establishes�the�parameters�of�the�services�described�above. Recent�Developments Acquisition�of�eNett�and�Optal On �January �24, �2020, �the �Company �entered �into �a �purchase �agreement �to �purchase �eNett, �a �leading �provider �of �B2B �payments �solutions �to �the �travel industry,�and�Optal,�a�company�that�specializes�in�optimizing�B2B�transactions,�for�an�aggregate�purchase�price�comprised�of�$1.3�billion�in�cash�and�2.0�million shares�of�the�Company’s�common�stock,�subject�to�customary�closing�conditions,�including�the�absence�of�a�Material�Adverse�Effect�(as�defined�in�the�purchase agreement�between�WEX,�eNett�and�Optal,�among�others).�The�Company�concluded�that�the�COVID-19�pandemic�and�conditions�arising�in�connection�with�it�had a�Material�Adverse�Effect�on�the�eNett�and�Optal�businesses,�disproportionate�to�the�effect�on�others 5 in�the�relevant �industry.�Because �of�this �Material�Adverse �Effect,�WEX�formally �advised�eNett �and�Optal �on�May�4, �2020�that �it�was�not �required�to �close�the transaction�pursuant�to�the�terms�of�the�purchase�agreement.�On�May�11,�2020,�the�shareholders�of�eNett�and�Optal�each�initiated�separate�legal�proceedings�in�the High�Court�of�Justice�of�England�and�Wales�in�the�United�Kingdom�against�the�Company�seeking�a�declaration�that�no�Material�Adverse�Effect�had�occurred�and an �order�for�specific�performance�of�WEX's�obligations�under�the�purchase�agreement.�From�September �21,�2020�through�September�29,�2020,�a�London�court held�a�trial�of�certain�preliminary�issues.�On�October�12,�2020,�the�Court�handed�down�its�judgment,�which�concluded,�among�other�things,�that�the�Optal�and�eNett Groups �operate �in �the �payments �industry �and �the �B2B�payments �industry�and �that, �for �the �purpose �of �the �definition �of �the �Material �Adverse �Effect �clause, �the relevant�industry�is�the�B2B�payments�industry.�The�Court�found�that�there�was�no�travel�payments�industry,�as�argued�for�by�eNett�and�Optal.�This�finding�meant that�when�determining�whether�eNett�or�Optal�have�been�disproportionately�impacted�by�the�pandemic,�a�comparison�would�be�made�against�other�B2B�payments companies.�The�Company�and�the�claimants�each�sought�permission�to�appeal�certain�portions�of�the�Court’s�judgment. On�December�15,�2020,�the�Company�entered�into�a�Deed�of�Settlement�(the�“Settlement�Deed”)�with�eNett,�Optal�and�the�other�parties�thereto�providing for,�among�other�things,�(i)�the�dismissal�with�prejudice�of�the�legal�proceedings�and�appeals�described�above,�(ii)�the�amendment�of�original�purchase�agreement and�(iii)�the�release�of�all�claims�capable�of�arising�out�of,�or�in�any�way�connected�with�or�relating�to�the�COVID-19�pandemic,�but�excluding�any�claims�arising under�the�amended�purchase�agreement.�The�closing�of�the�acquisition�occurred�concurrent�with�the�execution�of�the�Settlement�Deed�on�December�15,�2020.�The amended�purchase�agreement�provided�for,�among�other�things,�a�reduction�of�the�aggregate�purchase�price�for�the�acquisition�to�$577.5�million�(subject�to�certain adjustments)�consisting�entirely�of�cash,�which�the�company�paid�with�cash�on�hand,�and�the�closing�of�the�acquisition�occurring�concurrent�with�the�execution�of the�Settlement�Deed�on�December�15,�2020.�The�Company�determined�the�aggregate�purchase�price�represents�consideration�paid�for�the�businesses�acquired�and for �the �settlement �of �legal �proceedings �described �above. �The �preliminary �fair �value �of �the �businesses �acquired �was �estimated �to �be �$415.0 �million �using �a discounted �cash�flow�analysis�and�guideline�transaction �method.�Since�the�Company �was�not�able �to�reliably�estimate �the�fair�value�of �the�legal�settlement, �the residual�value�of�$162.5�million�has�been�allocated�to�the�legal�proceedings�settlement,�which�has�been�included�in�legal�settlement�expense�in�the�consolidated statement�of�operations�for�the�year�ended�December�31,�2020. Sale�of�Subsidiary On�September�30,�2020,�the�Company�sold�its�wholly-owned�subsidiary�UNIK�S.A,�(the�"WEX�Latin�America"�business).�The�operations�of�WEX�Latin America �were�primarily�included�in�the �Health�and�Employee�Benefit�Solutions �segment �through�the�date�of�sale.�A �pre-tax �loss�on�sale�of�subsidiary�of �$46.4 million,�has�been�reflected�in�the�consolidated�statement�of�operations�for�the�year�ended�December�31,�2020.�The�Company�decided�to�sell�UNIK�S.A.�because�it no�longer�aligned�with�the�strategic�direction�of�the�Company. Overview FLEET�SOLUTIONS�SEGMENT ����Our�Fleet�Solutions�segment�is�a�leader�in�fleet�vehicle�payment�processing�services�specifically�designed�for�the�needs�of�large�fleets,�government�fleets,�over- the-road�carriers�and�small�businesses.�As�of�December�31,�2020,�15.8�million�vehicles�use�our�payment�solutions�for�fleet�management. Sales � � � �Payment �processing �transactions �are �the �primary �revenue �source �in �Fleet �Solutions �and �are �based �on �a �percentage �of �the �aggregate �dollar �amount �of �the customer’s�purchase,�a�fixed�amount�per�transaction�or�a�combination�of�both.�Normally,�in�a�domestic�payment�processing�transaction,�we�extend�short-term�credit to�the�fleet�cardholder�and�pay�the�merchant�within�ten�days,�on�average,�for�the�purchase�price,�less�the�fees�we�retain�and�record�as�revenue.�Revenue�from�our WEX �Europe�Services�and�Go�Fuel�Card�operations �is�primarily�derived�from�the�difference �between�the�negotiated�price �of�the�fuel�from�the�supplier�and �the price �charged �to�the�fleet�customer.�In�both�types�of�transactions,�we�collect�the�total�purchase�price �from �the�fleet�customer,�normally�within�25�days�from�the billing �date. �In �2020, �we �processed �approximately �464 �million �payment �processing �transactions, �compared �to �approximately �505 �million �payment �processing transactions�in�2019.���� ���� 6 The �following�illustration �depicts�our �business�process�for �a�typical �closed-loop�domestic�fuel �payment�processing �transaction�and �a�breakdown�of �the related�Fleet�Solutions�revenue�streams: ����At�the�point-of-sale,�we�capture�an�array�of�information�including�the�amount�of�the�expenditure,�the�driver,�the�vehicle,�the�odometer�reading,�the�fuel�or�vehicle maintenance�provider�and�the�items�purchased.�We�provide�standard�and�customized�information�to�customers�through�monthly�vehicle�analysis�reports,�custom reports�and�our�websites.�We�also�alert�customers�of�unusual�transactions�or�transactions�that�fall�outside�of�pre-established�parameters.�Customers�can�access�their account�information�through�our�website�including�account�history�and�recent�transactions�and�download�the�related�details.�In�addition,�fleet�managers�can�elect�to be�notified�by�email�when�limits�are�exceeded�in�specified�purchase�categories,�including�limits�on�transactions�within�a�time�range�and�gallons�per�day. ����In�the�over-the-road�space,�we�offer�customizable�payment�solutions�including�real-time�interactive�and�seamless�interfaces�delivering�data�integrity,�alternative payment �and �money �transfer �options, �comprehensive �settlement �solutions, �real-time �reports �and �analytics �for �compliance �and �cost-optimization �and �fuel reconciliation�and�mobile�optimization�tools. ����In�addition�to�revenue�derived�from�payment�processing�transactions,�we�recognize�account�servicing�revenue,�finance�fee�revenue�and�other�revenue�through the�following�products�and�services: • • • • Customer�service,�account�activation�and�account�retention:�We�offer�customer�service,�account�activation�and�account�retention�services�to�fleets,�fleet management �companies �and �the �fuel �and �vehicle �maintenance �providers �on �our �network. �Our �services �include �promoting �the �adoption �and �use �of �our products�and�programs�and�account�retention�programs�on�behalf�of�our�customers�and�partners. Authorization�and�billing�inquiries�and�account�maintenance:�We�handle�authorization�and�billing�questions,�account�changes�and�other�issues�for�fleets through�our�dedicated�customer�contact�centers,�which�are�available�24�hours�a�day,�seven�days�a�week.�Fleet�customers �also�have�self-service �options available�to�them�through�our�websites. Premium�fleet�services:�We�assign�designated�account�managers�to�businesses�and�government�agencies�with�large�fleets.�These�representatives�have�in- depth�knowledge�of�both�our�programs�and�the�operations�and�objectives�of�the�fleets�they�service. Credit�and �collections �services:� We �have�developed �proprietary�account �approval,�credit �management �and�fraud�detection �programs. �Our�underwriting model�produces�a�proprietary�score,�which�we�use�to�predict�the�likelihood�of�an�account�becoming�delinquent�at�application�and�on�an�ongoing�basis.�We have�developed�a�collections�scoring�model�that�we�use�to�rank�and�prioritize�past�due�accounts�for�collection�activities.�We�also�employ�fraud�specialists who�monitor�accounts,�alert�customers�and�provide�case�management�expertise�to�minimize�losses�and�reduce�program�abuse. • Merchant�services:�Our�representatives�work�with�fuel�and�vehicle�maintenance�providers�to�enroll�these�providers�in�our�network,�test�all�network�and terminal�software�and�hardware,�and�to�provide�training�on�our�sale,�transaction�authorization�and�settlement�processes. 7 • • Analytics �solutions: �We �provide �customers �with �access �to �web-based �data �analytics �platforms �and �custom �reporting �tools �that �offer �insights �to �fleet managers, �including �integrating �and �analyzing �business �fleet �fuel �purchases �to �uncover �fraud, �manage �product �type �controls �and �identify �cost �saving opportunities. Ancillary �services �and �offerings: �We �provide �a �variety �of �ancillary �services �and �tools �to �fleets �to �help �them �better �manage �expenses �and �capital requirements �including �tracking �driver �performance, �location �and �speed; �mobile �account �maintenance �and �payment �tools; �tax �reporting �and �permitting services. Marketing�Channels ����We�market �our�fleet�products�and�services�both�directly�and�indirectly�to�commercial�and�government �vehicle�fleet�customers�with�small,�medium�and�large fleets,�and�over-the-road,�long�haul�fleets.�Our�direct�product�suite�includes�payment�processing�and�transaction�processing�services,�WEX�branded�fleet�cards�in North �America �and �Motorpass/Motorcharge-branded �fleet �cards �in �Australia. �Additionally, �our �over-the-road �line �of �business �is �marketed �under �the �EFS, �EFS Transportation�Services,�T-Chek�and�Fleet�One�brands. ����We�also�market�our�products�and�services�indirectly�through�co-branded�and�private�label�relationships.�With�a�co-branded�relationship�product,�we�market�our products�and�services�for,�and�in�collaboration�with,�both�fuel�providers�and�fleet�management�companies�using�their�brand�names�and�our�logo�on�a�co-branded fleet �card. �These �companies �seek �to �offer �our �payment �processing �and �information �management �services �as �a �component �of �their �total �offering �to �their �fleet customers. ����Our�private�label�programs�market�our�products�and�services�for,�and�in�collaboration�with,�fuel�retailers,�using�only�their�brand�names.�The�fuel�retailers�with which�we�have�formed�strategic�relationships�offer�our�payment�processing�and�information�management�products�and�services�to�their�fleet�customers�in�order�to establish�and�enhance�customer�loyalty.�These�fleets�use�these�products�and�services�to�purchase�fuel�at�locations�of�the�fuel�retailer�with�whom�we�have�the�private label�relationship. Overview TRAVEL�AND�CORPORATE�SOLUTIONS�SEGMENT � � � �Our �Travel �and �Corporate�Solutions �segment �provides �innovative �corporate �purchasing �and �payment �capabilities �that �can �be �integrated �with �our �customers’ internal�systems�to�streamline�their�corporate�payments,�accounts�payable�and�reconciliation�processes. Sales ����The�Travel�and�Corporate�Solutions�segment�allows�businesses�to�centralize�purchasing,�simplify�complex�supply�chain�processes�and�eliminate�the�paper�check writing�associated�with�traditional�purchase�order�programs.�Our�product�suite�includes�electronic�payments�and�corporate�cards�offered�across�travel,�insurance�& warranty�and�other�industries. ����Our�electronic�payments�product�includes�virtual�payments�and�integrated�payables.�Our�virtual�payments�program�is�used�for�transactions�where�no�physical card�is�presented,�including�transactions�conducted�over�the�telephone,�by�mail,�by�fax�or�on�the�Internet�or�for�transactions�that�require�pre-authorization,�such�as hotel�reservations.�Under�our�virtual�payments�program,�each�transaction�is�assigned�a�unique�account�number�with�a�customized�credit�limit�and�expiration�date. These �controls �are �in �place �to �limit �fraud �and �unauthorized �spending. �The �unique �account �number �limits �purchase �amounts �and �tracks, �settles �and �reconciles purchases �more �easily, �creating �efficiencies �and �cost �savings �for �our �customers. �Our �electronic �accounts �payable �solution �is �a �cloud-based �web �platform �that manages �and �optimizes �all �accounts �payable �disbursements, �regardless �of �type. �Automated �clearing �house, �virtual �cards, �electronic �funds �transfer �and �check payments�are�streamlined�and�automated�through�our�centralized�application. ����We �offer�a�variety �of�corporate�cards, �designed�to�combine �all�of�a �customer’s�purchasing �needs�into�a�single�integrated�card, �streamline�the �procure-to-pay process�with�a�single�card�and�control�travel�and�entertainment�spending�and�provide�employees�with�greater�flexibility. ����Additionally,�WEX�Prepaid�Card�Australia�offers�prepaid�and�gift�card�products,�which�provide�secure�payment�and�financial�management�solutions�with�single card�options,�access�to�open�or�closed�loop�redemption,�load�limits�and�variable�expirations. ���� 8 The�following�illustration�depicts�our�business�process�for�a�typical�travel�virtual�card�product�transaction: �1��Guest�books�a�hotel�through�a�travel�website�owned�by�an�online�travel�company �2��Online�travel�company�reserves�room�at�hotel�through�reservation�system�using�a�WEX�VCN�to�reserve�the�room �3��Upon�checkout,�hotel�authorizes�payment�using�the�WEX�VPN �4��The�WEX�virtual�card�restricts�charge�to�predetermined�cost�of�room�and�incidental�expenses�are�paid�for�by�guest �5��Online�travel�company�pays�WEX.�WEX�earns�fee�by�retaining�percentage�of�the�online�travel�company�reimbursement�payment Marketing�Channels ��� �We �market �our �Travel�and �Corporate�Solutions �segment �products�and �services�both �directly �and�indirectly �to�new �and�existing�customers. �Our�products �are marketed�to�commercial�and�government�organizations�and�we�use�existing�open-loop�networks. HEALTH�AND�EMPLOYEE�BENEFIT�SOLUTIONS�SEGMENT Overview ����Our�Health�and�Employee�Benefit�Solutions�segment�is�comprised�of�our�healthcare�payment�products�and�SaaS�platforms�with�which�we�provide�simplified payment�capabilities�in�a�complex�healthcare�market. Sales ����Our�healthcare�payment�products�provide�consumer-directed�payments�in�the�complex�healthcare�market.�We�partner�with�employers,�health�plans,�third-party administrators, �financial �institutions, �payroll �companies �and �the �public �sector �to �provide �a �SaaS �product �to �support �healthcare �benefit �programs �and �administer COBRA,�flexible�spending,�health�saving�and�reimbursement�accounts,�and�other�healthcare�related�employee�and�dependent�benefits. ����We�currently�have�relationships�with�approximately�408,000�employers,�reaching�approximately�33.1�million�consumers.�Revenue�is�generated�primarily�from SasS �licensing �fees �charged �to �partners �and �interchange �fees �from �spending �on �customer �debit �cards �issued �under �flexible �spending, �health �savings �and reimbursement�accounts.�Cards�are�branded�with�either�Visa�or�MasterCard�and�operate�on�a�restricted�open�loop�network. � � � �Health �and �Employee �Benefit �Solutions �segment �revenues �are �generated �primarily �from �subscription �fees �and �interchange �fees �from�spending �on �the �WEX Health�payment�cards. ���� 9 The�following�illustration�depicts�our�business�process�and�parties�involved�in�our�healthcare�benefits�solution: BPO:�Business�Process�Outsourcing Marketing�Channels ����We�market�our�Health�and�Employee�Benefit�Solutions�products�and�services�to�consumers�through�an�extensive�partner�network,�which�includes�health�plans, third-party�administrators,�financial�institutions,�payroll�companies�and�software�providers,�as�well�as�individual�employer�groups. Markets OTHER�ITEMS � � � �We �face �competition �in �all �of �our �segments. �Our �competitors �vie �with �us �for �prospective �customers �as �well �as �for �companies �with �which �to �form �strategic relationships. �The �most �significant �competitive �factors �include �the �breadth �of �features �offered, �functionality, �servicing �capability �and �price. �We �compete �with companies�that�perform�payment�and�transaction�processing�or�similar�services.�Financial�institutions�that�issue�Visa,�MasterCard�and�American�Express�credit�and specialized�proprietary�cards�currently�compete�primarily�with�our�Fleet�Solutions�and�Travel�and�Corporate�Solutions�segments.�Our�Health�and�Employee�Benefit Solutions�segment�also�competes�with�other�healthcare�payment�service�providers.�For�more�information�regarding�risks�related�to�competition,�see�the�information in�Item�1A,�under�the�heading�“Our�industry�continues�to�become�increasingly�competitive,�which�makes�it�more�challenging�for�us�to�maintain�profit�margins�at historical�levels.” The�demand�for�our�payment�processing,�account�servicing�and�transaction�processing�services�combined�with�significant�operating�scale�has�historically driven �strong �revenue �growth �and �earnings �potential. �We �have �an �extensive �history �of �organic �revenue �growth �driven �by �our �various �marketing �channels, �our extensive�network�of�fuel�and�service�providers,�and�our�growth�in�transaction�volume.�Further,�we�have�completed�a�number�of�strategic�acquisitions�to�expand our�product�and�service�offerings,�which �have�contributed�to�our�revenue �growth�and�diversification�of�our�products �and�services.�We�have�an�experienced �and committed �management �team �that �has �substantial �industry �knowledge �and �a �proven �track �record �of �financial �success. �The �team �has �been �successful �in �driving strong�growth�with�consistent�operating�performance.�We�believe�that�our�management�team�positions�us�well�to�continue�successfully�implementing�our�growth strategy �and�capturing�operating �efficiencies. �In�addition,�we �believe�that�the�following �factors, �by�reportable�segment,�distinguish�us�from�our�competitors �and place�us�in�a�strong�competitive�position. 10 Fleet�Solutions • • Our �proprietary �closed-loop �fuel �networks �in �the�U.S. �and �Australia �are �among�the �largest �in �each �country. �We�describe �our �fleet �payment �processing networks �as �“closed-loop” �because �we �have �a �direct �contractual �relationship �with �both �the �merchant �and �the �fleet, �and �only �WEX�transactions �can �be processed�on�these�networks.�We�have�built�networks�that�management�estimates�provide�coverage�to�over�90�percent�of�fuel�locations�in�the�U.S.�and Australia,�as�well�as�wide�acceptance�in�Europe.�This�provides�our�customers�with�the�convenience�of�broad�acceptance. Our �proprietary �closed-loop �fuel �networks �provide �us �with �access �to �a �higher �level �of �fleet-specific �information �and �control �as �compared �to �what �is typically�available�on�an�open-loop�network.�This�provides�high-level�purchase�controls�at�the�point-of-sale,�including�the�flexibility�of�allowing�fleets�to restrict�purchases�and�receive�automated�alerts.�Additionally,�we�have�the�ability�to�refine�the�reporting�provided�to�our�fleet�customers�and�customers�of our�strategic�relationships. • We�offer�a�differentiated�set�of�products�and�services,�including�security�and�purchase�controls,�to�allow�our�customers�and�the�customers�of�our�strategic relationships �to�better�manage�their�vehicle�fleets.�We�provide�customized�analysis�and�reporting�on�the�efficiency�of�fleet�vehicles�and�the�purchasing behavior�of�fleet�vehicle�drivers.�We�make�this�data�available�to�fleet�customers�through�both�traditional�reporting�services�and�sophisticated�web-based data�analytics�tools. • • • Our�long-standing�strategic�relationships,�multi-year�contracts�and�high�contract�renewal�rates�have�contributed�to�the�stability�and�recurring�nature�of�our revenue�base.�We�believe�that�we�offer�a�compelling�value�to�our�customers�relative�to�our�competitors�given�the�breadth�and�quality�of�our�products�and services�and�our�deep�understanding�of�our�customers’�operational�needs.�We�have�a�large�installed�customer�base�and�co-branded�strategic�relationships with �some �of �the �largest �U.S. �fleet �management �providers �and �with �various �oil �companies �and �convenience �store �operators �that �use �our �private �label solutions. �Our �wide �site �acceptance, �together �with �our �private-label �portfolios �and �value-added �product �and �service �offerings, �drive �high �customer satisfaction�levels,�as�evidence�by�high�customer�retention�rates. Our�capabilities�in�the�over-the-road�market�space�enhance�our�ability�to�serve�fleet�customers�who�operate�both�heavy�duty�trucks�and�cars�or�light�duty vehicles�in�the�U.S.�and�Canada�as�well�as�to�blend�the�small�fleet�and�private�label�businesses�for�greater�scale. Our �European�commercial�fuel�card �programs,�which�use�a�closed-loop �network,�combined�with�long�term�supply �agreements�to�serve �the�current�and future�European�Fleet�business,�provides�us�with�a�strong�foundation�in�the�large�European�fleet�market. Travel�and�Corporate�Solutions • Our�travel�and�corporate�payment�products�offer�customers�enhanced�security�and�control�for�complex�payment�needs�and�the�accounts�payable�segment of �the �market. �Our �strategic �relationships �include �many �of �the �largest �online �travel �agencies �in �the �world. �We �continue �to �expand �our �online �travel payment�solution�capabilities�and�geographies,�which�currently�include�North�America,�South�America,�the�United�Kingdom,�Europe,�Africa,�Asia�and Australia/New�Zealand.�As�of�December�31,�2020,�we�settle�transactions�in�over�20�currencies. Health�and�Employee�Benefit�Solutions • The �U.S. �Health �business �uses �an �industry �leading �proprietary �cloud-based �platform �to �simplify �healthcare �benefits �administration �for �employers �and consumers. �We �provide�a �comprehensive�suite �of�products �and�services �that�can �be�customized �to �fit�the �needs�of �the�complex �healthcare�space. �As�a result�of�this�complete�solution,�which�distinguishes�us�from�competitors,�we�have�high�customer�retention�rates.�Our�large�partner�network�expands�our opportunities�in�the�healthcare�financial�technology�market�and�solidifies�our�strong�competitive�position. Another �factor �that �places �us �in �a �strong �competitive �position �is �that �we�have �an �enterprise-wide �risk �management �program �that �helps �us �identify �and manage�inherent�risks�related�to�our�liquidity,�extension�of�credit�and�interest�rates.�Our�ownership�of�WEX�Bank�provides�us�with�access�to�low�cost�sources�of capital,�which�provide�liquidity�to�fund�our�short-term�card�receivables.�We�have�maintained�a�long�record�of�low�credit�losses�due�to�the�short-term,�non-revolving credit�issued�to�our�customer�base.�Our�credit�risk�management�program�is�enhanced�by�our�proprietary�scoring�models,�managing�credit�lines�and�early�suspension policy.�Interest�rate�risk�is�managed�through�diversified�funding�sources�at�WEX�Bank�including�interest�bearing�money�market�deposits�and�certificates�of�deposit with�varying�maturities.�Some�of�our�merchant�contracts�provide�the�ability�to�raise�rates�if�interest�rates�rise. 11 Strategy The �Company’s �performance �during �the �year �ended �December �31, �2020, �was �shaped �by �a �newly �updated �corporate �strategy �and �the �global �COVID pandemic.�While�we�continue�to�prioritize�customers,�technology,�talent,�and�execution,�we�refined�our�strategy�to�more�specifically�focus�on�how�we�will�meet�the needs�of�an�evolving�landscape. • • • • • Continue �to �Win �& �Expand �Using �Customer �Relationships. �We �seek �to �drive �organic �growth �across �our �segments �by �nurturing �our �customer relationships�and�ensuring�we�are�a�trusted�strategic�partner.�We�have�successfully�integrated�the�two�major�oil�wins�and�those�portfolios�are�continuing�to perform�well.�Our�industry-leading�support�and�service�will�enable�us�to�grow�with�existing�customers�and�win�new�customers. Deliver�Modular�Solutions�on�Integrated�Platforms.�We�will�focus�on�differentiating�ourselves�by�anticipating�our�customers’�technology�needs�and providing�innovative�offerings.�We�will�do�this�through�integrating�and�continuously�improving�our�payment�platforms�and�by�embedding�intelligence, agility,�and�resiliency�everywhere�across�the�organization. Continuously�Reinvent�Through�Diversification.�As�global�markets�continue�to�evolve,�we�will�minimize�our�exposure�to�macro�forces�and�customer concentration.�We�will�accomplish�this�by�identifying�new�verticals,�business�models,�and�geographies�for�expansion.�Along�with�our�organic�growth,�we will�achieve�this�with�our�acquisition�strategy,�which�brings�further�scale�and�diversification�to�our�offerings.�In�December,�we�closed�the�acquisition�of eNett�and�Optal,�which�complements�our�existing�travel�business�by�expanding�our�presence�in�Europe�and�entering�into�new�markets�in�Asia. Transform �to �Mitigate �Risk �& �Maximize �Scale.� To �drive �efficiency, �we �will �optimize �operations �by �improving �technological �capabilities �and �risk management. �To�accomplish �this,�we �will�maximize �the�value�of �shared�services, �streamline�and �standardize�our�technologies, �and�automate �wherever possible.�This�year�we�built�out�a�new�data�team�and�platform�to�optimize�our�operations�and�identify�new�ways�to�drive�growth.�We�will�expand�our�use of�AI,�machine�learning,�and�other�innovative�tools�to�ensure�we�can�scale�with�our�growth�and�further�mature�our�risk�management. Leverage�Our�Culture�&�Grow�Our�Talent.�Through�leveraging�our�winning,�inclusive,�and�values-based�culture,�we�will�mine,�grow,�and�maximize talent �that�adapts �to�our �future�business.�During �the�pandemic, �the�safety�and �health�of �our�employees�have �taken�on�even �more�importance. �We�have made�significant�technology�investments�to�rapidly�support�our�remote�workforce,�we�gave�all�US�employees�an�additional�two�weeks�of�paid�time�off�to allow�for�personal�time �away�from�“the �office”,�and�we �leveraged �our�Compassion�Fund �to�help�both �furloughed �and�active�employees. �We�have�also invested�in�our�Diversity�and�Inclusion�efforts�including�the�launch�of�various�employee�resource�groups�to�support�our�current�employees�and�develop�a culture �of �inclusion �to �attract �new �talent. �One �of �the �benefits �of �supporting �the �remote �workforce �is �that �we �can �now �recruit �from �more �diverse geographies. Human�Capital We �believe �that �maintaining �our �continued �growth �and �position �as �a �leading �provider �of �financial �technology �solutions �requires �a �strategy �focused �on attracting, �developing�and�retaining�exceptional�talent,�as�well�as�fostering�a�culture�that �supports�innovation �and�collaboration �globally.�Each�of�our�employees contributes �to �our �growth �and �success. �As �of �December �31, �2020, �WEX �Inc. �and �its �subsidiaries �had �approximately �5,300 �employees, �of �which �approximately 4,300�were�located�in�the�United�States.�None�of�our�U.S.-based�employees�are�subject�to�a�collective�bargaining�agreement.�Certain�non�U.S.-based�employees�are members�of�trade�unions�or�works�councils. Values We �believe �our�core �values�of �Community, �Execution,�Innovation, �Integrity �and�Relationships �differentiate �us�from �our�competitors �and �meaningfully contribute�to�our�growth�and�business�success. Operating �with�transparency �and�authenticity �is�of�the�utmost�importance, �internally�and �externally.�Collaboration �across�the �organization,�a �culture�of curiosity �and �respectful �communication �support �the �development �and �retention �of �superior �talent �and �the �growth �of �our �business. �For �WEX, �it’s �all �about �the people. Along �with �being �a �growth-focused �company, �we �take �pride �in �prioritizing �and �maintaining �a �positive �corporate �environment �where �WEX�employees enjoy�their�work,�respect�and�support�their�colleagues�and�are�encouraged�to�innovate�and�collaborate.�We�strive�to�foster�a�culture�where�our�employees�recognize the�value�of�their�contributions—and�of�our�business—to�support�the�growth�and�development�of�the�communities�in�which�we�operate. 12 Talent�Management�Focused�on�Recruitment,�Development�and�Retention We�believe�that�attracting,�developing�and�retaining�key�employees�and�members�of�our�management�team�are�of�paramount�importance�to�the�success�of our�organization,�including �meeting�or �exceeding�our�business �and�growth�goals. �The�skills, �experience, �institutional �and�industry�knowledge �of�our�employees significantly�benefit�our�operations�and�performance. There�are�several�ways�in�which�we�attract,�develop,�and�retain�highly�qualified�talent.�Here�is�an�overview�on�key�programs�at�WEX�that�support�each�of these�pillars: • In�line�with�our�values,�we�encourage�creativity�and�innovation�and�regularly�reinforce�the�importance�of�integrity�and�respectful�communication. • We �strategically �recruit �diverse, �qualified �candidates �to �help �support�our �culture �of �innovation �and �fostering �creativity. �We �support �our �talent �pipeline through�internships,�co-ops,�and�partnerships�with�universities. • In�addition,�we�collaborate�with�a�broad�range�of�organizations�to�introduce�us�to�qualified�diverse�candidates. • We�provide�competitive�and�valuable�Total�Rewards�benefits�that�help�our�employees�thrive�while�protecting�what�is�most�important:�health,�families�and overall �well-being. �Our �Total �Rewards �program �consists �of �five �elements: �social; �health;�community; �financial; �and �career, �and �is �designed�to �support employees�in�reaching�their�personal�and�professional�goals.�We�offer�market-competitive�compensation�packages�as�well�as�a�variety�of�benefits�through our�Total �Rewards�program, �including �a �401(k)�employer �match, �incentive-based �cash �and/or �equity �based�compensation �awards, �company-subsidized medical�insurance�coverage,�recognition�programs,�paid�volunteer�time�off,�and�paid�time�off,�among�other�benefits. • We �provide�employees �with�comprehensive �training �programs,�tools �and�education �throughout�their �employment�with �us,�including �online�self-service learning�platforms,�professional�development,�leadership�and�mentoring�programs,�wellness�challenges,�incentives�to�foster�community�and�engagement, dedicated�well-being�campaigns�and�personal�financial�counseling. • Through�our�Great�Leader�Behaviors,�employees�are�provided�a�baseline�of�behaviors�and�qualities�to�embody�in�their�daily�interactions�with�colleagues, customers�and�partners.�We�believe�it’s�not�just�what�we�do,�but�how�we�do�it�that�matters,�and�our�Great�Leader�pillars�lay�the�foundation�for�clear�and consistent�behavior�at�all�levels.�In�turn,�we�are�better�able�to�maintain�an�inclusive,�innovative�and�collaborative�environment�for�all�employees�to�work, live�and�thrive. • We�do�not�limit�equity�awards�to�our�senior�leadership;�employees�at�different�levels�throughout�our�organization�are�eligible�to�receive�equity�awards�as part�of�their�annual�compensation,�including�a�number�of�individual�contributors.�Equity�compensation�supports�retention�of�key�employees�and�further aligns�the�interests�of�those�individuals�with�those�of�our�stockholders.�We�operate�in�a�highly�competitive�talent�marketplace,�and�our�approach�to�equity compensation�supports�WEX�having�the�right�people�in�the�right�roles�at�the�right�time�to�achieve�our�short-�and�long-term�goals. • Our�leadership�recognizes�that�small�tweaks�in�processes�or�in�the�way�we�engage�with�employees�or�customers�can�lead�to�big�successes.�We�believe�in continuous�improvement�and�regularly�evaluate,�and�consider�potential�enhancements�to,�our�internal�processes�and�technologies�to�support�and�increase employee�engagement,�productivity�and�efficiency. • One�way�we�capture�employee�feedback�is�employee�surveys,�which�measures�cultural�and�engagement�indicators. • We�regularly�review�talent�retention�at�different�levels�of�our�organization�relative�to�expectation,�over-time�trends�and�market�norms. Diversity,�Equity�and�Inclusion At�WEX,�we�strive�to�achieve�a�fully�inclusive�global�workplace�that�unifies�and�celebrates�the�diversity�of�our�people,�and�this�is�embedded�in�our�core values.�We�believe�that�to�fully�realize�our�potential�as�a�company,�we�must�continue�to�foster�a�workplace�that�ignites�a�sense�of�belonging�and�provides�equal opportunities�and�treatment�for�our�employees.�We�embed�diversity�and�inclusion�as�a�business�imperative�because�we�believe�the�best�solutions�happen�when�all individuals�are�treated�fairly�and�respectfully,�have�equal�access�to�opportunities�and�resources�and�can�contribute�fully�to�our�organization’s�success. 13 Our�commitment�to�diversity�and�inclusion�is�shown�in�many�ways,�including: • Our�blend�of�managers�comes�from�both�homegrown�talent�and�from�outside�the�company,�and�leveraging�talent�internally�and�from�companies�we�have acquired.�Our�leaders�hail�from�businesses�large�and�small,�and�bring�a�diversity�of�thought�and�approach�to�WEX. • We�furthered�our�commitment�to�diversity,�equity�and�inclusion�during�2020�by�expanding�the�responsibilities�section�of�the�charter�for�the�Compensation Committee�of�our�Board�of�Directors�to�specifically�include�providing�direction�and�perspective�to�management�on�key�diversity�initiatives,�among�other strategies,�policies�and�practices�with�significant�human�resource�implications. • • As �part �of �WEX’s �commitment �to �creating �a �diverse �and �inclusive �workplace, �we �proudly �sponsor �employee �resource �groups �(ERGs) �that �focus �on, among �other�employee �groups:�early�career �professionals;�parents;�the �LGBTQIA+�community; �women;�employees�of �color,�employees�with �differing abilities;�and�multicultural�employee�interests.�ERGs�are�part�of�our�larger�commitment�to�diversity,�equity�and�inclusion�and�our�long-term�strategy�of commitment �to �maintain �an �inclusive �community. �They �serve �as �a �key �diversity �tool �in �facilitating �the �recruitment �of �minority �staff, �raising �diversity awareness�across�the�company�and�driving�strategic�discussions�about�the�advancement�of�employees�and�a�more�inclusive�workplace.�We�continue�to sponsor�newly�formed�groups�and�employees�are�encouraged�to�form�groups�to�satisfy�their�individual�needs. Including �our �chair�and �CEO,�nearly �one-third �of�the �members �of�our �board�are �women, �and�40 �percent�of �our �executive�leadership �team�are�women. Women,�who�are�a�key�part�of�WEX’s�business�at�all�levels,�represent�nearly�half�of�our�global�workforce. Employee�Health�and�Safety We �are �committed �to �protecting �the �safety, �health �and �well-being �of �our �employees, �contractors �and �visitors �to �our �office �locations �and �to �ensuring compliance �with �local �health �and �safety �regulations. �The �health �and �safety �of �our �employees �has �been—and �continues �to �be—of �vital �importance �amidst �the COVID-19 �pandemic. �In �early �2020, �we �implemented �a �COVID-19 �global �task �force �to �prioritize �our �pandemic �response. �Operating �on �the �task �force’s recommendation,�we�pivoted�to�a�remote�work�environment�in�March�2020�and�instituted�a�series�of�employee-focused�initiatives,�such�as�increasing�flexibility�on when�and�where�we�work,�adding�an�additional�10�days�of�emergency�time�off�and�expanding�child-�and�elder-care�benefits.�As�the�pandemic�continues,�we�remain committed�to�developing�a�staged�plan�for�global�office�reentry�when�safe�to�do�so.�In�2020,�we�also�expanded�the�criteria�of�the�WEX�Cares�Foundation,�funded by�employees�and�the�WEX�Board�of�Directors,�to�include�support�for�employees�severely�impacted�by�COVID-19�hardships. We �continue �to �provide �frequent �communications �and �information �to �our �employees �through �a �dedicated �Chief �Human �Resource �Officer �COVID-19 newsletter �series, �town �hall �meetings, �an �internal �COVID-19 �Google �Site �and �external �website �page, �all �with �the �goal �of �keeping �our �employees, �customers, partners,�and�communities�healthy,�safe�and�informed. Technology ����We�believe�that�investment�in�technology�is�crucial�in�maintaining�and�enhancing�our�competitive�position�in�the�marketplace.�Our�technology�infrastructure�is supported�by�secure�and�redundant�data�centers�and�cloud�services�distributed�globally,�including�locations�in�the�United�States,�Europe,�Australia�and�Singapore. ����Our�fleet�fuel-based�closed-loop�proprietary�platforms�capture�detailed�information�from�the�fuel�and�maintenance�locations�within�our�network.�Operating�a proprietary�network�not�only�enhances�our�value�proposition,�it�also�enables�us�to�limit�dependence�on�third-party�processors�and�to�respond�rapidly�to�changing customer �needs �with �system �upgrades, �while �maintaining �a �more �secure �environment �than �an �open-loop �network �typically �allows. �The �majority �of �payments processed�on�our�virtual�card�open-loop�network�are�through�the�Company's�internally�developed�software,�while�a�smaller�portion�are�processed�using�third-party processors.�Our�infrastructure�has�been�designed�around�industry-standard�architectures�to�minimize�downtime�in�the�event�of�outages�or�catastrophic�occurrences. At�WEX�Health,�we�maintain�an�integrated�multi-account�payment�platform,�including�a�mobile�application.�In�Australia,�Asia�Pacific�and�the�United�Kingdom, we�use�standalone�platforms�to�support�operations. � � � �Our�secure �networks �are �designed �to�isolate �our �data �from�unauthorized �access. �We �use �secure�protocols �among �all �applications, �and �our�employees �access critical �components �on �a �need-to-know�basis. �We �are �not �aware �of �any �material �data �breaches �experienced �by �the �Company �during �2020. �We �are �continually improving�our�technology�to�enhance�customer�experience�and�to�increase�efficiency�and�security.�We�also�review�technologies�and�services�provided�by�others�in order�to�maintain�the�high�level�of�service�expected�by�our�customers�and�continue�to�invest�in�our�technology�infrastructure. 14 ����For�information�regarding�technology�related�risks,�see�the�information�in�Item�1A�under�the�headings�“Our�business�is�regularly�subject�to�cyberattacks�and attempted�security�and�privacy�breaches�and�we�may�not�be�able�to�adequately�protect�our�information�systems,�including�the�data�we�collect�about�our�customers, which�could�subject�us�to�liability�and�damage�our�reputation”,�“Our�failure�to�effectively�implement�new�technology�could�jeopardize�our�position�as�a�leader�in our�industry,”�“We�are�dependent�on�technology�systems�and�electronic�communications�networks�managed�by�third�parties,�which�could�result�in�our�inability�to prevent�service�disruptions”�and�“If�the�technologies�we�use�in�operating�our�business�and�interacting�with�our�customers�fail,�are�unavailable,�or�do�not�operate�to expectations,�or�we�fail�to�successfully�implement�technology�strategies�and�capabilities�in�connection�with�our�outsourcing�arrangements,�our�business�and�results of�operation�could�be�adversely�impacted.” Seasonality ����Our�businesses�are�affected�by�seasonal�variations.�For�example,�in�a�typical�year,�fuel�prices�are�typically�higher�during�the�summer�and�online�travel�sales�are typically �higher �during �the �third �quarter. �In �addition, �we �experience �seasonality �in �our �Health �and �Employee �Benefit �Solutions �segment �as �consumer �spend �is correlated�with�insurance�deductibles,�typically�resulting�in�higher�spend�in�the�early�part�of�the�year�until�employees�meet�their�deductibles. Resources ����We�rely�on�a�combination�of�patent,�copyright,�trade�secret�and�trademark�laws,�confidentiality�procedures,�contractual�provisions�and�other�similar�measures�to protect�the�proprietary�information�and�technology�used�in�our�business.�We�generally�enter�into�agreements�with�clients,�consultants,�service�providers�and�other partners, �whether�current�or �prospective, �that�contain�provisions �restricting�use�and �disclosure�of�our�proprietary �information�and�technology. �Operationally,�we have �implemented �certain �safeguards �designed �to �control �access �to �and �distribution �of �our �proprietary �information �and �technology. �Despite �these �efforts, unauthorized�parties�may�attempt�to�access�or�use�our�proprietary�information�and�technology,�and�third�parties�may�develop�similar�and/or�competing�technology independently.�We�pursue�registration�and�protection�of�certain�trademarks�in�the�U.S.�and�other�countries�in�which�we�operate�or�plan�to�operate.�We�market�our products�and�services�using�the�WEX�brand�name�globally,�as�well�as�other�brand�names�such�as�Fleet�One,�EFS,�WEX�Health�Cloud�and�Discovery�Benefits�in the�U.S.,�and�Motorpass�in�Australia.� Regulation ����The�Company�and�its�affiliates�are�subject�to�a�substantial�number�of�laws�and�regulations,�both�in�the�United�States�and�other�foreign�jurisdictions,�which�apply to�businesses�offering�financial�technology�services�and�payment�cards�to�customers�or�processing�or�servicing�for�payment�cards�and�related�accounts.�In�addition, a�substantial�number�of�laws�and�regulations�govern�insured�depository�institutions�and�their�affiliates,�such�as�WEX�Bank,�and�our�operations�in�the�healthcare market. ����The�laws�and�regulations�that�apply�to�the�Company�and�its�affiliates�are�often�evolving�and�sometimes�ambiguous�or�inconsistent,�and�the�extent�to�which�they apply�to�us�is�at�times�unclear.�Failure�to�comply�with�regulations�may�result�in�the�suspension�or�revocation�of�licenses�or�registrations,�the�limitation,�suspension or�termination�of�services,�and/or�the�imposition�of�civil �and�criminal�penalties,�including�fines.�The�following,�while�not�exhaustive, �is�a�description�of�certain federal�and�state�laws�and�regulations�in�the�United�States,�as�well�as�foreign�laws�and�regulations,�that�are�applicable�to�our�business,�and�therefore�can�materially affect�our�capital�expenditures,�earnings,�and�competitive�position.�In�addition,�the�legal�and�regulatory�framework�governing�our�business�is�subject�to�ongoing revision,�and�changes�in�that�framework�could�have�a�significant�effect�on�us. Regulation�-�United�States Exemption�from�Certain�Requirements�of�the�Bank�Holding�Company�Act ��� �As�an�industrial�bank�organized�under�the�laws�of�Utah�that�does�not�accept�demand�deposits�that�may�be�withdrawn�by�check�or�similar�means,�WEX�Bank currently�meets�the�criteria�for�exemption�as�an�industrial�bank�from�the�definition�of�“bank”�under�the�Bank�Holding�Company�Act.�As�a�result,�the�Company�is generally,�except�as�stated�above,�not�subject�to�the�Bank�Holding�Company�Act. Restrictions�on�Intercompany�Borrowings�and�Transactions � ���Sections �23A �and�23B �of�the �FRA�and �the �implementing �regulations�limit�the �extent �to�which �the �Company�can �borrow�or �otherwise �obtain�credit �from �or engage�in�other�“covered�transactions”�with�WEX�Bank.�“Covered�transactions”�include�loans�or�extensions�of�credit,�purchases�of�or�investments�in�securities, purchases�of�assets,�including�assets�subject�to�an�agreement�to�repurchase,�acceptance�of�securities�as�collateral�for�a�loan�or�extension�of�credit,�or�the�issuance�of a 15 guarantee, �acceptance,�or�letter�of�credit.�Although�the�applicable�rules�do�not�serve�as�an�outright �ban�on�engaging�in�“covered�transactions,”�they�do�limit�the amount �of �covered �transactions �WEX �Bank �may �have �with �any �one �affiliate �and �with �all �affiliates �in �the �aggregate. �The �applicable �rules �also �require �that �the Company�engage�in�such�transactions �with�WEX�Bank�only �on�terms�and�under �circumstances �that�are�substantially�the�same,�or �at�least�as�favorable �to�WEX Bank, �as�those�prevailing�at �the�time�for�comparable �transactions �with�nonaffiliated�companies. �Furthermore,�with�certain �exceptions,�each�loan�or�extension �of credit �by �WEX �Bank �to �the �Company �or �its �other �affiliates �must �be �secured�by �collateral �with �a �market �value �ranging �from �100 �percent �to �130 �percent �of �the amount�of�the�loan�or�extension�of�credit,�depending�on�the�type�of�collateral. The�Dodd-Frank�Act�and�the�Consumer�Financial�Protection�Bureau ����The�Dodd-Frank�Act�created�the�CFPB�to�regulate�the�offering�of�consumer�financial�products�or�services�under�the�federal�consumer�financial�laws.�The�CFPB assumed�rulemaking�authority�under�the�existing�federal�consumer�financial�protection�laws,�and�enforces�those�laws�against�and�examines�certain�non-depository institutions�and�insured�depository�institutions�with�total�assets�greater�than�$10�billion�and�their�affiliates.�In�addition,�the�CFPB�was�granted�general�authority�to prevent�covered�persons�or�service�providers�from�committing�or�engaging�in�unfair,�deceptive�or�abusive�acts�or�practices�under�federal�law�in�connection�with any�transaction�with�a�consumer�for�a�consumer�financial�product�or�service,�or�the�offering�of�a�consumer�financial�product�or�service.�The�CFPB�is�also�engaged in �regulating �the �payments �industry, �including �with �respect �to �prepaid �cards. �The �CFPB �amended �several �aspects �of �its �prepaid �accounts �rule, �which �became effective �on �April �1, �2019. �Among �other �things, �the �rule �established �requirements �for �the �treatment �of �funds �on �lost �or �stolen �cards, �error �resolution �and investigation,�upfront�fee�disclosures,�access�to�account�information,�and�overdraft�features�if�offered�in�conjunction�with�prepaid�accounts.�The�extensive�nature�of these�types�of�regulations�and�the�implementation�dates�for�any�such�additional�rulemaking�may�result�in�additional�compliance�obligations�and�expense�for�our business �and �our �customers. �From �an �enforcement �perspective, �the �legislation �also �gives �the �state �attorneys �general �the �ability �to �enforce �applicable �federal consumer �protection �laws, �expanding �the �sources �of �regulatory �oversight. �Relatedly, �the �Utah �DFI �is �responsible �for �examining �and �supervising �WEX �Bank's compliance�with�state�consumer�protection�laws�and�regulations. ����In�addition,�the�Durbin�Amendment�to�the�Dodd-Frank�Act�provided�that�interchange�fees�that�a�card�issuer�or�payment�network�receives�or�charges�for�debit transactions�will�now�be�regulated�by�the�Federal�Reserve�and�must�be�“reasonable�and�proportional”�to�the�cost�incurred�by�the�card�issuer�in�authorizing,�clearing and�settling�the�transaction.�Payment�network�fees�may�not�be�used�directly�or�indirectly�to�compensate�card�issuers�in�circumvention�of�the�interchange�transaction fee�restrictions.�In�July�2011,�the�Federal�Reserve�published�the�final�rules�governing�debit�interchange�fees.�Effective�in�October�2011,�with�certain�exemptions, debit�interchange�rates�were�capped�at�$0.21�per�transaction�with�an�additional�component�of�five�basis�points�of�the�transaction’s�value�to�reflect�a�portion�of�the issuer’s�fraud�losses�plus,�for�qualifying�issuing�financial�institutions,�an�additional�$0.01�per�transaction�in�debit�interchange�for�fraud�prevention�costs. The �Dodd-Frank �Act �also �establishes �federal �oversight �and �regulation �of �the �over-the-counter �derivatives �market �and �entities �that �participate �in �that market. �Compliance �with �derivatives�regulations �have �added�costs �to �our�business, �and�any �additional �requirements, �such�as �future �registration�requirements �or increased�regulation�of�derivative�contracts,�may�add�additional�costs�or�may�require�us�to�change�any�fuel�price,�currency�and�interest�rate�hedging�practices�we may �then �use �to �comply �with �new �regulatory �requirements. �Potential �changes �could �also �include �clearing �and �execution �methodology �of �our �derivatives transactions. Brokered�Deposits � � � �As �of �December �31, �2020, �the �most �recent �FDIC �exam �report �categorized �WEX �Bank �as �“well �capitalized” �under �the �regulatory �framework �for �prompt corrective�action.�Under�applicable�regulations,�however,�if�WEX�Bank�were�to�be�no�longer�categorized�as�"well�capitalized"�under�such�framework,�it�would�not be�able�to�finance�its�operations�through�the�acceptance�of�brokered�deposits�without�the�approval�of�the�FDIC.�Moreover,�in�December�2020,�the�FDIC�amended its�brokered�deposits�regulations,�effective�April�1,�2021,�and�may�in�the�future�change�the�definition�of�brokered�deposits�or�extend�the�classification�to�deposits not�currently�classified�as�brokered�deposits. Anti-Money�Laundering�and�Counter�Terrorist�Regulations ����The�applicable�laws�and�regulations�in�the�various�jurisdictions�in�which�we�operate�impose�significant�anti-money�laundering�compliance�and�due�diligence obligations �on �its �local �entities. �We �must �verify �the �identity �of �customers, �monitor �and �report �unusual �or �suspicious �account �activity, �as �well �as �transactions involving�amounts�in�excess�of�prescribed�limits,�and�refrain�from�transacting �with�designated�persons�or�in�designated�regions,�in�each�case�as�required�by�the applicable�laws�and�regulations�(such�as�the�Bank�Secrecy�Act�and�regulations�of�the�United�States�Treasury�Department�and�the�Internal�Revenue�Service�in�the United�States).�Financial�regulators�have�issued�various�implementing�regulations�and�have�made�enforcement�a�high�priority. 16 The �U.S. �federal �government �has �imposed �economic �sanctions �that �affect �transactions �with �designated �foreign �countries, �nationals �and �others. �These sanctions,�which�are�administered�by�the�OFAC,�take�many�different�forms�but�generally�include�one�or�more�of�the�following�elements:�(i)�restrictions�on�trade with�or�investment�in�a�sanctioned�country,�including�prohibitions�against�direct�or�indirect�imports�from�and�exports�to�a�sanctioned�country�and�prohibitions�on “U.S.�persons”�engaging�in�financial�transactions�relating�to�making�investments�in,�or�providing�investment-related�advice�or�assistance�to,�a�sanctioned�country; and �(ii) �a �blocking �of �assets �in �which �the �government �or �specially �designated �nationals �of �the �sanctioned �country �have �an �interest, �by �prohibiting �transfers �of property�subject �to�U.S.�jurisdiction�(including�property�in�the�possession�or�control�of�U.S.�persons).�Blocked�assets�(for�example,�property�and�bank�deposits) cannot�be�paid�out,�withdrawn,�set�off�or�transferred�in�any�manner�without�a�license�from�OFAC.�We�have�implemented�measures�designed�to�ensure�compliance with�these�sanctions�and�failure�to�comply�with�these�sanctions�could�have�serious�legal�and�reputational�consequences. Privacy�and�Information�Security�Regulations ����Under�the�Financial�Services�Modernization�Act�of�1999,�also�referred�to�as�the�Gramm-Leach-Bliley�Act�or�GLBA,�and�certain�state�laws,�we�and�WEX�Bank are�required�to�maintain�a�comprehensive�written�information�security�program�that�includes�administrative,�technical�and�physical�safeguards�relating�to�consumer information. �This �requirement �generally �does �not �extend �to �information �about �companies �or �about �individuals �who �obtain �financial �products �or �services �for business,�commercial,�or�agricultural�purposes. The �GLBA�also �requires �us �and �WEX�Bank �to �provide �initial �and �annual �privacy �notices �to �customers �that �describe �in �general �terms �our �information �sharing practices.�If�we�or�WEX�Bank�intend�to�share�nonpublic�personal�information�about�consumers�with�affiliates�and/or�nonaffiliated�third�parties,�we�and�WEX�Bank must�provide�customers�with�a�notice�and�a�reasonable�period�of�time�for�each�customer�to�“opt�out”�of�any�such�disclosure.�In�addition�to�U.S.�federal�privacy laws �with �which �we �must �comply, �states �also �have �adopted �statutes, �regulations �and �other �measures, �such �as �the �California �Consumer �Protection �Act �(CCPA), governing�the�collection�and�distribution�of�nonpublic�personal�information�about�customers.�In�some�cases,�these�state�measures�are�preempted�by�federal�law,�but if�not,�we�and�WEX�Bank�must�monitor�and�seek�to�comply�with�individual�state�privacy�laws�in�the�conduct�of�our�businesses. FACT�Act The�Fair�and�Accurate�Credit�Transactions�Act�of�2003�amended�the�Fair�Credit�Reporting�Act�and�requires�creditors�to�adopt�identity�theft�prevention programs�to�detect,�prevent�and�mitigate�identity�theft�in�connection�with�covered�accounts,�which�can�include�business�accounts�for�which�there�is�a�reasonably foreseeable�risk�of�identity�theft. Truth�in�Lending�Act The�Truth�in�Lending�Act,�or�TILA,�was�enacted�as�a�consumer�protection�measure�to�increase�consumer�awareness�of�the�cost�of�credit�and�to�protect consumers �from�unauthorized �charges�or�billing�errors,�and�is �implemented�by�the �Federal�Reserve’s�Regulation �Z.�Most�provisions �of�TILA�and �Regulation�Z apply�only�to�the�extension�of�consumer�credit,�but�a�limited�number�of�provisions�apply�to�commercial�cards�as�well.�One�example�where�TILA�and�Regulation�Z are�generally�applicable �is�a�limitation�on�liability �for�unauthorized�use,�although�a�business�that�acquires�10�or�more�credit�cards�for�its�personnel�can�agree�to more�expansive�liability. Money�Transmission�and�Payment�Instrument�Licensing�Regulations We�are�subject�to�various�U.S.�laws�and�regulations�governing�money�transmission�and�the�issuance�and�sale�of�payment�instruments�relating�to�certain aspects�of�our�business.�In�the�United�States,�most�states�license�money�transmitters�and�issuers�of�payment�instruments.�Through�our�subsidiaries,�we�are�licensed in�all�states�where�required�for�business.�Many�states�exercise�authority�over�the�operations�of�our�services�related�to�money�transmission�and�payment�instruments and, �as �part �of �this �authority, �subject �us �to �periodic �examinations, �which �may �include �a �review�of �our �compliance �practices, �policies �and �procedures, �financial position�and�related�records,�privacy�and�data�security�policies�and�procedures,�and�other�matters�related�to�our�business. As �a�licensee,�we �are�subject �to�certain�restrictions �and�requirements, �including�net�worth �and�surety�bond �requirements,�record �keeping�and�reporting requirements,�requirements�for�regulatory�approval�of�controlling�stockholders�or�direct�and�indirect�changes�of�control�of�the�licensee�and�certain�other�corporate events,�and�requirements�to�maintain�certain�levels�of�permissible�investments�in�an�amount�equal�to�our�outstanding�payment�obligations.�Many�states�also�require money�transmitters�and�issuers�of�payment�instruments�to�comply�with�federal�and�state�anti-money�laundering�laws�and�regulations. In�addition,�non-banks�that�provide�certain�financial�services�are�required�to�register�with�FinCEN�as�“money�services�businesses”�(“MSBs”).�Through�a subsidiary�we�are�registered�as�a�MSB.�As�a�result,�we�have�established�anti-money�laundering�compliance�programs�that�include:�(i)�internal�policies�and�controls; (ii)�designation�of�a�compliance�officer;�(iii) 17 ongoing �employee �training; �and �(iv) �an �independent �review �function. �We �have �developed �and �implemented �compliance �programs �comprised �of �policies, procedures,�systems�and�internal�controls�to�monitor�and�address�various�legal�requirements�and�developments. Government �agencies �may �impose �new �or �additional �requirements �on �money �transmission �and �sales �of �payment �instruments, �and �we �expect �that compliance�costs�will�increase�in�the�future�for�our�regulated�subsidiaries. Escheat�Laws � � � �We �are �subject �to �unclaimed �or �abandoned �property �state �laws �in �the �United �States �and �in �certain �foreign �countries �that �require �us �to �transfer �to �certain government�authorities�the�unclaimed�property�of�others�that�we�hold�when�that�property�has�been�unclaimed�for�a�certain�period�of�time.�Moreover,�we�are�subject to�audit�by�state�and�foreign�regulatory�authorities�with�regard�to�our�escheatment�practices. Restrictions�on�Dividends � � � �WEX�Bank �is �subject �to �various �regulatory �requirements �relating �to �the �payment �of �dividends, �including �requirements �to �maintain �capital �above �regulatory minimums.�A�banking�regulator�may�determine�that�the�payment�of�dividends�would�be�inappropriate�and�could�prohibit�payment.�Further,�WEX�Bank�may�not pay�a�dividend�if�it�is�undercapitalized�or�would�become�undercapitalized�as�a�result�of�paying�the�dividend.�Utah�law�permits�WEX�Bank�to�pay�dividends�out�of the�net�profits�of�the�industrial�bank�after�providing�for�all�expenses,�losses,�interest,�and�taxes�accrued�or�due,�but�if�WEX�Bank’s�surplus�account�is�less�than�100 percent�of�its�capital�stock,�WEX�Bank�must�transfer�up�to�10�percent�of�its�net�profits�to�the�surplus�account�prior�to�the�payment�of�any�dividends. �Company�Obligations�to�WEX�Bank ����Any�non-deposit�obligation�of�WEX�Bank�to�the�Company�is�subordinate,�in�right�of�payment,�to�deposits�and�other�indebtedness�of�WEX�Bank.�In�the�event�of the�Company’s�bankruptcy,�any�commitment�by�the�Company�to�a�federal�bank�regulatory�agency�to�maintain�the�capital�of�WEX�Bank�will�be�assumed�by�the bankruptcy�trustee�and�entitled�to�priority�of�payment. Restrictions�on�Ownership�of�WEX�Inc.�Common�Stock ����WEX�Bank,�and�therefore�the�Company,�is�subject�to�banking�regulations�that�impose�requirements�on�entities�that�might�control�WEX�Bank�through�control�of the�Company.�These�requirements�are�discussed�in�Item�1A�under�the�heading�“Provisions�in�our�charter�documents,�Delaware�law,�applicable�banking�law�and�the Convertible�Notes�may�delay�or�prevent�our�acquisition�by�a�third�party.” Healthcare�Regulation ����The�federal�and�state�governments�in�the�U.S.�continue�to�enact�and�consider�many�broad-based�legislative�and�regulatory�proposals�that�could�materially�impact various�aspects�of�our�health-related�business.�The�plans�that�our�partners�administer�feature�consumer�accounts�that�pay�for�out-of-pocket�expenses�incurred�by employees�and�qualified�dependents.�These�accounts�include�CDH�accounts�such�as�HSAs,�FSAs�and�HRAs,�as�well�as�wellness�incentives,�commuter�benefits, and�other�account-based�arrangements.�Most�of�these�accounts�are�tax-advantaged�under�the�appropriate�law. Employers �are�continuing �to�use�CDH�approaches �to�manage�the �rate�of�increase �in�healthcare�expenditures �and�to �enable�employees�to �make�decisions about�the�use�of�their�healthcare�savings.�CDH�programs�provide�consumers�with�visibility�into�and�control�over�payment�for�healthcare�expenses. The�products�that�WEX�Health’s�software�and�payment�solutions�support�are�subject�to�various�state�and�federal�laws,�including�the�Patient�Protection�and Affordable�Care�Act�and�the�Health�Care�and�Education�Reconciliation�Act�(collectively�referred�to�as�“Health�Care�Reform”),�and�regulations�promulgated�by�the Internal�Revenue�Service,�the�Department�of�Health�and�Human�Services,�the�Department�of�Labor,�and�the�Consumer�Financial�Protection�Bureau,�and�similar state�laws�and�regulatory�authorities.�As�such,�changes�in�the�status�of�tax-advantaged�CDH�accounts�could�affect�the�attractiveness�of�these�products. ����In�addition�to�tax-related�regulation,�the�Health�Care�Reform�law�imposes�coverage�standards�affecting�insured�and�self-insured�health�benefit�plans�that�impact our�current�business�model,�including�our�relationships�with�current�and�future�customers,�producers�and�health�care�providers,�products,�services,�processes�and technology. �Health �Care�Reform�left �many�details �to�be �established�through �regulations.�The �2017�Tax�Act �repealed�certain�provisions�of �Health�Care �Reform, including�reducing�to�zero�the�tax�penalty�for�individuals�who�decline�to�obtain�Health�Care�Reform-compliant�healthcare�coverage.�Since 18 the �enactment �of �Health �Care �Reform, �there �has �been �persistent �political �pressure �to �significantly �modify �or �completely �repeal �Health �Care �Reform �and �the associated�implementing�regulations,�while�the�incoming�Biden�Administration�has�committed�to�pursuing�significant�expansion�of�the�Health�Care�Reform�and�is likely�to�reverse�actions�taken�by�the�previous�U.S.�Administration�to�reduce�enrollment�and�coverage�requirements�under�Health�Care�Reform.�There�have�been judicial�and�Congressional�challenges�to�certain�aspects�of�Health�Care�Reform,�and�we�expect�there�will�be�additional�challenges�and�amendments�to�the�ACA�in the�future.�In�addition,�portions�of�Health�Care�Reform�were�ruled�unconstitutional�by�a�federal�appeals�court�in�2019.�This�ruling�is�under�review�by�the�United States�Supreme�Court,�which�is�expected�to�rule�on�the�validity�of�Health�Care�Reform�during�the�Court�term�that�ends�in�June�2021.�It�is�unclear�what,�if�any, additional �legislative�or�regulatory�actions�may�be�taken�in�this�regard.�Accordingly,�there�may�be�an�extended�period�of�uncertainty�and�unpredictability�in�the U.S.�health�care�market,�which�may�materially�affect�the�availability�and�cost�of�health�coverage,�the�viability�of�health�care�providers�and�health�benefit�plans,�the proportion �of�persons�in�the�U.S.�who�have�health�insurance;�the�distribution �between�privately�funded�and�government�funded�health�insurance;�and�the�future demand�for,�and�profitability�of,�the�offerings�of�our�health-related�business�under�our�current�business�model. ����In�connection�with�the�processing�of�data,�we�frequently�undertake�or�are�subject�to�specific�compliance�obligations�under�privacy�and�data�security-related�laws, including�the �Health �Insurance�Portability �and�Accountability �Act�of �1996,�or �HIPAA,�GLBA,�and �similar�state �and�federal �laws�governing�the �collection,�use, protection�and�disclosure�of�nonpublic�personally�identifiable�information,�including�individually�identifiable�health�information. � � � �HIPAA �and �its �implementing �regulations, �as �amended �by �the �Health �Information �Technology �for �Economic �and �Clinical �Health �Act, �or �the �HITECH �Act, impose�requirements�relating�to�the�privacy,�security�and�transmission�of�individually�identifiable�health�information.�Among�other�things,�HIPAA,�as�amended�by the�HITECH�Act,�and�its�implementing�regulations,�subjects�us�to�regulations�and�contractual�obligations�that�impose�privacy�and�security�standards�and�breach notification�and�reporting�requirements.�An�amendment�to�the�HITECH�Act�enacted�in�January�2021�will�require�consideration�of�a�company’s�implementation�of recognized�security�standards�in�assessing�administrative�fines�and�penalties�under�the�HIPAA�security�standards. ����In �addition�to�tax, �federal �data�privacy, �security�laws�and�regulations, �we�are�subject �to�state�laws, �such�as�the �California�Consumer�Privacy �Act,�governing confidentiality�and�security�of�personally�identifiable�information�and�additional�state-imposed�breach�notification�and�reporting�requirements. Anti-Bribery�Regulations The �FCPA �prohibits �the �payment �of �bribes �to �foreign �government �officials �and �political �figures �and �includes �anti-bribery �provisions �enforced �by �the Department �of �Justice �and�accounting �provisions �enforced�by�the �SEC.�The �statute�has �a �broad�reach, �covering�all�U.S. �companies �and�citizens �doing �business abroad,�among�others,�and�defining�a�foreign�official�to�include�not�only�those�holding�public�office�but�also�local�citizens�affiliated�with�foreign�government-run or�-owned �organizations. �The �statute �also �requires �maintenance �of �appropriate �books�and �records �and �maintenance �of �adequate �internal�controls �to �prevent �and detect�possible�FCPA�violations. Regulation�-�Foreign�Jurisdictions Australia ����The�Company’s�Australian�operations�are�subject�to�laws�and�regulations�of�the�Commonwealth�of�Australia�governing�banking�and�payment�systems,�financial services,�credit�products�and�money�laundering.�Because�none�of�WEX�Australia,�WEX�Fuel�Cards�Australia�or�WEX�Prepaid�Cards�Australia�holds�an�Australian Financial �Services �License �or �credit �license �or �is �an �authorized �deposit-taking �institution, �they �operate �within �a �framework �of �regulatory �relief �and �exemptions afforded �them �on �the �basis �that �they �satisfy �the �requisite �conditions. �The �Company’s �Australian �operations �are �also �subject �to �the �Privacy �Act �(1988) �and �the Australian�Privacy�Principles. Asia,�including�Singapore ����The�Company’s�operations�in�Asia�are�subject�to�the�operation�of�the�laws�and�regulation�of�the�countries�in�which�we�operate,�including�laws�with�regards�to banking�and�payment�systems,�financial�services,�money�laundering�and�data�protection. Europe�and�the�United�Kingdom ����The�Company’s�European�and�United�Kingdom�operations�are�subject�to�laws�and�regulations�of�the�European�Union�and�United�Kingdom�and�the�countries�in which�we�operate�including,�among�others,�those�governing�payment�services,�data�protection,�including�General�Data�Protection�Regulation�(commonly�referred to�as�“GDPR”),�anti-money�laundering�and 19 counter �terrorist�regulations,�including �the�Money�Laundering�and�Terrorist �Financing�Regulations�2019�in�the�UK�and�the�Act�on�Financial �Supervision�in�the Netherlands,�and�information�security,�and�consumer�credit. Available�Information ����The�Company’s�principal�executive�offices�are�located�at�1�Hancock�St,�Portland,�ME�04101.�Our�telephone�number�is�(207)�773-8171,�and�our�Internet�address is �www.wexinc.com. �The �Company’s �annual, �quarterly �and �current �reports, �proxy �statements �and �certain �other �information �filed �with �the �SEC, �as �well �as amendments�thereto,�may�be�obtained�free�of�charge�from�our�website.�These�documents�are�posted�to�our�website�as�soon�as�reasonably�practicable�after�we�have filed�or�furnished�these�documents�with�the�SEC.�The�SEC�maintains�an�Internet�site�that�contains�reports,�proxy�and�information�statements�and�other�information regarding �issuers �that �file �electronically �with �the �SEC �at �www.sec.gov. �The �Company’s �Audit �Committee �Charter, �Compensation �Committee �Charter, �Finance Committee�Charter,�Corporate�Governance�Committee�Charter,�Technology�Committee�Charter,�Corporate�Governance�Guidelines�and�Code�of�Business�Conduct and�Ethics�are�available�without�charge�through�the�“Corporate�Governance”�portion�of�the�Investor�Relations�page�of�the�Company’s�website.�Copies�will�also�be provided,�free�of�charge,�to�any�stockholder�upon�written�request�to�Investor�Relations�at�the�address�above�or�by�telephone�at�(866)�230-1633. ����The�Company’s�Internet�site�and�the�information�contained�on�it�are�not�incorporated�into�this�Form�10–K�and�should�not�be�considered�part�of�this�report. 20 ITEM�1A.�RISK�FACTORS ����The�risks�and�uncertainties�described�below�are�not�the�only�risks�and�uncertainties�that�we�face.�Additional�risks�and�uncertainties�not�presently�known�to�us�or that�we�currently�deem�immaterial�may�also�impair�our�business�operations.�If�any�of�those�risks�actually�occurs,�our�business,�financial�condition,�results�of operations�and�cash�flows�could�suffer.�The�risks�and�uncertainties�discussed�below�also�include�forward-looking�statements�and�our�actual�results�may�differ materially�from�those�discussed�in�these�forward-looking�statements. Risks�Relating�to�Our�Business�and�Industry Our�operations,�business,�and�financial�condition�have�been�and�are�expected�to�continue�to�be�adversely�affected�by�the�COVID-19�pandemic. In�December�2019,�a�novel�strain�of�coronavirus,�known�as�COVID-19,�was�first�reported�and�was�subsequently�declared�a�pandemic�by�the�World�Health Organization �in �March �2020. �The �spread �and �continued �outbreak �of �the �COVID-19 �pandemic �has �significantly �increased �economic �uncertainty �while �reducing economic�activity.�The�pandemic�has�resulted�in�transformational�change�in�business�and�consumer�behavior,�as�well�as�the�implementation�by�authorities�around the�world�of�numerous�measures�aimed�at�containing�the�virus,�such�as�travel�bans�and�restrictions,�quarantines,�shelter�in�place�orders,�and�business�shutdowns, among�others,�while�some�markets�have�also�implemented�multi-step�policies�with�the�goal�of�resuming�activities�that�are�or�have�previously�been�restricted.�The effects�of�the�pandemic,�along�with�the�measures�implemented�to�combat�the�pandemic,�will�continue�to�change�and�evolve�as�the�pandemic�changes�and�evolves. The�regions�in�which�we�operate�are�continuously�in�varying�stages�of�dealing�with,�and�suffering�impacts�from,�the�COVID-19�pandemic.�Certain�jurisdictions have�experienced�recoveries�from�the�various�stages�of�the�pandemic,�only�to�then�face�a�resurgence�or�increase�in�new�COVID-19�cases.�New�variants�of�the�virus that �causes �COVID-19 �have�recently �been �discovered. �These�events �have �not �only�negatively �impacted �business �and�consumer �spending �habits, �they�have �also impacted�and�may�further�impact�our�workforce�and�operations�and�the�operations�of�our�customers,�suppliers�and�business�partners. In�particular,�we�expect�that�we�will�continue�to�experience�impacts�on�our�business�and�results�of�operations�due�to�a�number�of�factors,�including,�but not�limited�to: • • • • • • The�effect�of�COVID-19�on�worldwide�economic�and�financial�market�conditions,�including�conditions�in�the�regions�in�which�we�operate. The�negative�impact�of�COVID-19�on�the�demand�for�worldwide�travel�and�the�length�of�time�it�may�take�for�the�travel�industry�to�experience�a�rebound after�the�effects�of�the�COVID-19�pandemic�have�subsided. Volatility�in�the�demand�for,�and�the�price�of,�fuel,�caused�by�declines�in�demand�as�a�result�of�the�impact�of�COVID-19,�economic�conditions,�and geopolitical�pressures�affecting�supply,�which�impact�our�operating�results�and�may�continue�to�do�so�if�such�trends�continue. Losses�arising�from�customer,�partner�and�merchant�failures,�and�credit�settlement�risks. Increased�exposure�to�industries�substantially�affected�by�the�COVID-19�pandemic,�including�as�a�result�of�acquisitions�such�as�our�December�2020 acquisition�of�eNett�and�Optal. The�modification�of�our�business�practices�(including�restricting�employee�travel,�social�distancing�and�remote�working�plans�for�our�employees,�and�the cancellation�of�physical�participation�in�meetings,�events�and�conferences). These�and�other�factors�may�remain�prevalent�for�a�significant�and�unknown�period�of�time�and�may�continue�to�materially�affect�our�business,�results�of operations�and�financial�condition�even�after�the�COVID-19�pandemic�has�subsided.�There�are�no�comparable�recent�events�that�provide�guidance�as�to�the�ultimate and�total�impact�of�the�COVID-19�global�pandemic,�and�therefore�the�ultimate�effects�are�highly�uncertain�and�subject�to�change.�The�extent�to�which�the�COVID- 19�pandemic�will�continue�to�impact�our�business,�results�of�operations�and�financial�condition�will�depend�on�future�developments,�which�are�highly�uncertain�and are�difficult�to�predict,�including,�but�not�limited�to,�the�duration�and�spread�of�the�pandemic,�its�continued�severity,�whether�resultant�changes�in�business�and consumer�behavior�continue�for�extended�periods�of�time,�the�success�of�the�actions�to�contain�the�virus�or�treat�its�impact,�the�emergence�and�effect�of�new�virus variants,�and�how�quickly�and�to�what�extent�normal�economic�and�operating�conditions�can�resume. 21 In�addition,�failure�by�the�relevant�governments�to�enact�or�implement�adequate�or�necessary�stimulus�packages�could�exacerbate�the�effect�of�COVID-19 on�us,�particularly�the�credit�risks�listed�above.�Increased�volatility�or�significant�disruption�of�global�financial�markets�due�in�part�to�COVID-19�could�have�a negative�impact�on�our�ability�to�access�capital�markets�and�other�funding�sources�on�acceptable�terms�or�at�all�and�impede�our�ability�to�comply�with�debt covenants.�Even�after�the�COVID-19�pandemic�has�subsided,�we�may�continue�to�experience�impacts�to�our�business�as�a�result�of�the�virus’s�global�economic impact�and�its�potential�effect�on�the�ways�people�and�businesses�conduct�themselves,�including�the�availability�of�credit,�impacts�on�our�liquidity,�continued governmental�restrictions,�continued�reduced�demand�for�worldwide�travel,�and�continued�volatility�in�fuel�demand�and�prices. The�foregoing�and�other�continued�effects�on�our�business�as�a�result�of�the�COVID-19�pandemic�could�result�in�a�material�adverse�effect�on�our�business, results�of�operations,�financial�condition,�cash�flows�and�our�ability�to�service�our�indebtedness�and�could�heighten�the�risks�in�certain�of�the�other�risk�factors described�herein. A�significant�portion�of�our�revenues�is�related�to�the�dollar�amount�of�fuel�purchased�by�or�through�our�customers�and�from�our�fuel�retailer�partners,�and,�as a�result,�a�reduction�in�the�demand�for�fuel�and�other�vehicle�products�and�services�and/or�volatility�in�fuel�prices�could�have�a�material�adverse�effect�on�our revenues�and�financial�condition. ����Our�Fleet�Solutions�segment�is�our�largest�segment�and�customers�and�fuel�retailer�partners�in�this�segment�primarily�purchase�or�sell�fuel.�Accordingly,�a significant�part�of�our�overall�revenue�is�derived�from�fuel�purchases,�making�us�dependent�on�fuel�prices,�which�are�historically�prone�to�volatility.�As�of December�31,�2020,�management�estimates�that�approximately�20�percent�of�our�total�segment�revenues�result�from�fees�paid�to�us�by�fuel�providers�based�on�a negotiated�percentage�of�the�purchase�price�of�fuel�purchased�by�our�customers.�We�estimate�that�during�2021,�each�one�cent�decline�in�average�domestic�fuel prices�below�average�actual�prices�would�result�in�a�$1.5�million�decline�in�2021�revenue.�We�are�currently�exposed�to�the�full�impact�of�fuel�price�declines�and�our net�income�is�exposed�to�fuel�price�volatility.�Therefore,�extended�declines�in�the�price�of�fuel,�as�well�as�declines�in�the�amount�of�fuel�purchased�by�our�customers or�sold�by�our�fuel�retailer�partners�would�have�a�material�adverse�effect�on�our�total�revenues�and�therefore�our�business,�financial�condition,�and�operating�results. ����Fuel�prices�are�volatile�and�influenced�by�many�factors,�all�of�which�are�beyond�our�control.�These�factors�include,�but�are�not�limited�to:� • • • • • • • • • • • • • domestic�and�foreign�supply�and�demand�for�oil�and�gas,�and�market�expectations�regarding�such�supply�and�demand; investor�speculation�in�commodities; actions�by�major�oil�exporting�nations,�including�members�of�the�Organization�of�Petroleum�Exporting�Countries,�and�the�ability�of�the�same�to maintain�oil�price�and�production�controls; level�of�domestic�and�foreign�oil�production; advances�in�oil�production�technologies; excess�or�overbuilt�infrastructure; political�conditions�in�oil-producing,�gas-producing�or�supply-route�regions�or�countries,�including�revolution,�insurgency,�environmental activism,�terrorism,�or�war; oil�refinery�capacity�and�utilization�rates; weather,�including�climate�change�and�natural�disasters; the�value�of�the�U.S.�dollar�(or�other�relevant�currencies)�versus�other�major�currencies; implementation�of�fuel�efficiency�standards�and�the�adoption�by�fleet�customers�of�vehicles�with�greater�fuel�efficiency�or�alternative�fuel sources,�such�as�electricity,�ethanol,�biodiesel,�hydrogen,�and�natural�gas; general�local,�regional,�or�worldwide�economic�conditions;�and governmental�regulations,�taxes�and�tariffs. Some�of�these�factors�can�vary�by�region�and�may�change�quickly,�adding�to�market�volatility,�while�others�may�have�longer-term�effects.�The�long-term effects�of�these�and�other�factors�on�prices�for�fuel�could�be�substantial. Another�component�of�our�revenue�stream�comes�from�the�late�fees�that�our�customers�pay�on�past�due�balances.�As�a�result,�a�decrease�in�the�price�of fuel�may�lead�to�a�decline�in�the�amount�of�late�fees�we�earn�from�customers�who�fail�to�pay�us�timely. 22 In�addition�to�its�impact�on�the�price�of�fuel,�the�market�demand�for�and�supply�of�fuel�and�other�vehicle�products�and�services�may�affect�the�number�of transactions�or�the�volume�of�fuel�sold.�Fewer�gallons�sold�equates�to�a�lesser�purchase�price�of�fuel�on�which�our�negotiated�percentage�revenue�is�determined. Another�of�our�revenue�streams�comes�from�a�flat�fee�derived�from�a�fuel�purchase�transaction.�Accordingly,�in�a�soft�fuel�demand�environment,�fewer�transactions will�occur�resulting�in�less�revenue�to�us.�The�factors�that�affect�the�demand�for�and�supply�of�fuel�are�beyond�our�control�and�include�general�local,�regional,�or worldwide�economic�conditions,�the�implementation�of�fuel�efficiency�standards,�and�the�development�by�vehicle�manufacturers�and�adoption�by�our�fleet customers�and�others�of�vehicles�with�greater�fuel�efficiency,�or�alternative�fuel�sources,�such�as�electric,�hydrogen,�or�natural�gas�powered�vehicles,�among�other factors.�Therefore,�although�alternative�fuel�vehicles�currently�make�up�a�small�portion�of�vehicle�sales,�any�substantial�increase�in�their�production�or�usage�or their�expansion�to�heavier�duty�vehicles�such�as�over-the-road�trucks,�could�adversely�affect�our�revenues�over�time�through�reduced�fuel�demand.�On�the�supply side,�disruptions�to�supply�caused�by�factors�such�as�geopolitical�issues,�weather,�infrastructure,�or�economic�conditions�could�also�affect�the�amount�of�fuel purchased�by�our�customers.�To�the�extent�that�our�customers�require,�or�have�access�to,�less�fuel,�that�decline�in�purchase�volume�or�transactions�could�reduce�our revenues,�or�any�growth�in�our�revenues,�and�have�a�material�adverse�effect�on�our�business,�financial�condition�and�operating�results. If�we�fail�to�comply�with�the�applicable�requirements�of�MasterCard�or�Visa,�they�could�seek�to�fine�us,�suspend�us�or�terminate�our�registrations. A�significant�source�of�our�revenue�in�our�Travel�and�Corporate�Solutions�segment�and�Health�and�Employee�Benefit�Solutions�segment�comes�from processing�transactions�through�the�MasterCard�and�Visa�networks.�Licensing�with�the�MasterCard�and�Visa�schemes�is�achieved�through�WEX�Bank,�our regulated�subsidiaries�in�Hong�Kong,�Singapore,�and�Australia,�and�our�Dutch,�UK,�and�Irish�licensed�e-money�institutions.�In�the�case�of�the�Health�and�Employee Benefit�Solutions�segment,�the�scheme�license�is�held�by�a�third�party�sponsor�bank.�We�will�establish�additional�licensed�e-money�institutions�or�regulated subsidiaries�to�license�with�the�MasterCard�and�Visa�schemes�as�necessary.�If�our�licensed�or�regulated�subsidiaries�or�our�third�party�sponsor�bank�should�stop providing,�or�are�otherwise�unable�to�provide,�services,�for�any�reason,�or,�in�the�case�of�our�third�party�sponsor�bank,�determine�to�provide�sponsorship�on materially�less�favorable�terms,�we�would�need�to�find�other�appropriate�institutions�to�provide�those�services�in�the�applicable�jurisdictions.�In�addition, MasterCard�and�Visa�routinely�update�and�modify�their�requirements.�Changes�in�the�requirements�may�make�it�significantly�more�expensive�for�us�to�maintain compliance�with�our�license�conditions.�If�we�do�not�comply�with�the�MasterCard�or�Visa�scheme�requirements,�as�the�case�may�be,�we�could�face�fines, suspensions�or�termination�of�registration.�Any�suspension�of�a�license�could�limit�or�eliminate�our�ability�to�provide�MasterCard�or�Visa�payment�processing services�in�a�given�jurisdiction,�which�would�materially�affect�our�operations�and�revenues.�Further,�the�termination�of�a�registration,�or�any�changes�in�the�payment network�rules�that�would�impair�a�registration,�could�require�us�to�stop�providing�MasterCard�or�Visa�payment�processing�services�in�the�applicable�jurisdictions.�If we�are�unable�to�find�a�replacement�financial�institution�to�provide�sponsorship,�we�may�no�longer�be�able�to�provide�such�payment�processing�services�to�affected customers,�which�would�materially�affect�our�operations�and�have�a�material�adverse�effect�on�our�business,�financial�condition�and�results�of�operations. Changes�in�or�limits�on�interchange�fees�could�decrease�our�revenue. A�substantial�portion�of�our�revenue�is�generated�by�network�processing�fees�charged�to�merchants,�known�as�interchange�fees,�associated�with transactions�processed�using�our�payment�systems,�including�those�using�MasterCard�or�Visa�branded�cards�or�using�the�MasterCard�or�Visa�system.�Interchange fee�amounts�associated�with�these�payment�methods�are�affected�by�a�number�of�factors,�including�regulatory�limits�in�certain�of�the�markets�in�which�we�operate and�fee�or�program�changes�imposed�or�allowed�by�our�third-party�partners,�including�MasterCard�and�Visa.�In�addition,�interchange�fees�are�continually�the subject�of�intense�legal,�regulatory,�and�legislative�scrutiny�and�competitive�pressures�in�the�markets�in�which�we�operate,�any�of�which�could�result�in�interchange fees�being�limited,�lowered,�or�eliminated�altogether�in�any�given�jurisdiction�in�the�future.�Future�changes�may�further�restrict�or�otherwise�impact�the�way�we�do business�or�limit�our�ability�to�charge�certain�fees�to�customers.�Moreover,�temporary�or�permanent�decreases�in,�limitations�on�or�elimination�of�the�interchange fees�associated�with�our�card�or�virtual�payment�transactions,�could�have�a�material�adverse�effect�on�our�business,�financial�condition,�and�operating�results. A�portion�of�our�Fleet�Solutions�segment�revenue�in�Europe�is�derived�from�the�difference�between�the�negotiated�price�of�the�fuel�from�the�supplier�and�the price�charged�to�the�fleet�customer.�As�a�result,�a�contraction�in�these�differences�would�reduce�revenues�and�could�adversely�affect�our�operating�results. ����Revenue�from�our�European�Fleet�business�is�primarily�derived�from�transactions�in�which�our�revenue�is�tied�to�the�difference�between�the�negotiated�price�of the�fuel�from�the�supplier�and�the�price�charged�to�the�fleet�customer.�The�merchant’s�cost�of�fuel�and�the�amount�we�charge�to�our�fleet�customer�for�fuel�are dependent�on�several�factors�including, 23 among�others,�the�factors�described�elsewhere�in�this�Item�1A,�“Risk�Factors”�affecting�fuel�prices.�We�experience�fuel-price�related�revenue�contraction�when�the merchant’s�cost�of�fuel�increases�at�a�faster�rate�than�the�fuel�price�we�charge�to�our�fleet�customers,�or�the�fuel-price�we�charge�to�our�fleet�customers�decreases�at a�faster�rate�than�the�merchant’s�cost�of�fuel.�If�the�foregoing�scenarios�exist�or�persist�we�would�generate�less�revenue,�which�could�have�a�material�adverse�effect on�our�business,�financial�condition�and�operating�results. If�we�fail�to�adequately�assess�and�monitor�credit�risks�posed�by�our�counterparties�or�there�is�fraudulent�use�of�our�payment�cards�or�systems,�we�could experience�an�increase�in�credit�loss�and�other�adverse�effects. ����We�are�subject�to�credit�risks�posed�by�our�counterparties,�many�of�which�are�small-to�mid-sized�businesses.�Because�we�often�fund�a�counterparty’s�entire receivable�or�payable,�as�the�case�may�be,�while�our�revenue�is�generated�from�only�a�small�percentage�of�that�amount,�our�risk�of�loss�is�amplified�by�a counterparty’s�failure�to�pay.�Although�we�use�various�formulas�and�models�to�screen�potential�counterparties�and�establish�appropriate�credit�limits,�these formulas�and�models�cannot�eliminate�all�potential�credit�risks�and�may�not�prevent�us�from�approving�applications�that�are�fraudulently�completed.�Moreover, businesses�that�are�good�credit�risks�at�the�time�of�application�may�deteriorate�over�time�and�we�may�fail�to�detect�such�changes.�In�addition,�changes�to�our policies�on�the�types�and�profiles�of�businesses�to�which�we�extend�credit�could�also�have�an�adverse�impact�on�our�credit�losses.�In�times�of�economic�slowdown, the�number�of�our�counterparties�who�default�on�payments�owed�to�us�tends�to�increase.�In�particular,�the�effects�of�the�COVID-19�global�pandemic�have�affected, and�may�continue�to�affect�for�an�unknown�period�of�time,�our�counterparties�and�the�risk�that�they�default�on�amounts�owed�to�us.�Accordingly,�if�we�fail�to adequately�manage�our�credit�risks,�or�if�economic�conditions�affect�the�businesses�of�our�counterparties�or�of�their�customers,�credit�defaults�could�increase�and our�provision�for�credit�losses�on�the�income�statement�could�be�significantly�higher,�all�of�which�could�have�a�material�adverse�effect�on�our�business,�financial condition�and�operating�results. ����When�we�fund�transactions�with�counterparties,�we�may�also�bear�the�risk�of�substantial�losses�due�to�fraudulent�use�of�our�payment�cards�or�payment�systems. We�are�also�subject�to�risk�from�fraudulent�acts�of�employees�or�contractors.�Although�we�maintain�insurance�for�certain�types�of�losses,�the�coverage�may�be insufficient�or�limited�and�may�not�fully�protect�against�those�losses.�Additionally,�criminals�use�sophisticated�illegal�activities�to�target�us,�including�“skimming”, counterfeit�cards�and�accounts,�and�identity�theft.�A�single,�significant�incident�or�a�series�of�incidents�of�fraud�or�theft�could�lead�to,�among�other�things,�increased overall�levels�of�fraud;�direct�financial�losses�as�a�result�of�fraudulent�activity;�reputational�harm;�decreased�desirability�of�our�services;�greater�regulation; increased�compliance�costs;�the�imposition�of�regulatory�sanctions;�or�significant�monetary�fines.�Accordingly,�if�material�fraud,�as�described�above�or�otherwise, were�to�occur,�the�result�could�be�a�material�adverse�effect�on�our�operations,�business�success,�financial�condition�and�results�of�operations. Fluctuations�in�foreign�currency�exchange�rates�could�affect�our�financial�results. ����We�earn�revenues,�pay�expenses,�own�assets�and�incur�liabilities�in�countries�using�currencies�other�than�the�U.S.�dollar.�Such�currencies�include,�but�are�not limited�to,�the�Australian�dollar,�the�Canadian�dollar,�the�Euro,�British�Pound�sterling,�and�the�New�Zealand�dollar.�Because�our�consolidated�financial�statements are�presented�in�U.S.�dollars,�we�must�translate�revenues,�income�and�expenses,�as�well�as�assets�and�liabilities,�into�U.S.�dollars�at�exchange�rates�in�effect�during or�at�the�end�of�each�reporting�period.�Realized�and�unrealized�gains�and�losses�on�foreign�currency�transactions�as�well�as�the�re-measurement�of�our�cash, receivable�and�payable�balances�that�are�denominated�in�foreign�currencies,�are�recorded�directly�in�the�consolidated�statements�of�operation.�Therefore,�increases or�decreases�in�the�value�of�the�U.S.�dollar�against�other�major�currencies�that�we�use�to�conduct�our�business�will�affect�our�revenues,�net�income�and�the�value�of balance�sheet�items�denominated�in�those�currencies.�Volatility�in�foreign�currency�exchange�rates,�particularly�fluctuations�in�the�U.S.�dollar�against�other currencies,�could�have�a�material�adverse�effect�on�our�business,�financial�condition,�and�operating�results. The�payment�solutions�industry�is�highly�competitive.�Such�competition�could�adversely�affect�the�fees�we�receive,�our�revenues�and�margins,�and�our�ability�to gain,�maintain,�or�expand�customer�relationships,�all�on�favorable�terms. ����We�face�and�expect�to�continue�to�face�competition�in�each�of�our�segments�from�multiple�companies�that�seek�to�offer�competing�capabilities�and�services. Historically,�we�have�been�able�to�provide�customers�with�a�wide�spectrum�of�services�and�capabilities�and,�therefore,�we�have�not�considered�price�to�be�the exclusive�or�even�the�primary�basis�on�which�we�compete.�As�our�competitors�have�continued�to�develop�their�service�offerings,�it�has�become�increasingly�more challenging�for�us�to�compete�solely�on�the�basis�of�superior�capabilities,�technology,�customer�integration�or�service�and�price�has�become�an�increasingly important�decision�factor�for�our�customers.�In�some�areas�of�our�business�we�have�been�forced�to�respond�to�competitive�pressures�by�reducing�our�fees�and�our margins.�We�have�seen�erosion�of�our�historical 24 profit�margins�as�we�encourage�existing�strategic�relationships�to�sign�long-term�contracts.�If�these�trends�continue�and�if�competition�intensifies,�our�profitability may�be�adversely�impacted. ����While�we�offer�our�services�to�several�sectors�of�the�payments�industry,�with�a�focus�on�the�fleet,�travel�and�corporate�payments,�and�health�categories,�some�of our�competitors�have�successfully�garnered�significant�share�in�particular�categories�of�payments.�To�the�extent�that�our�competitors�are�regarded�as�leaders�in specific�categories,�they�may�have�an�advantage�over�us�as�we�attempt�to�further�penetrate�these�categories. ���� We�also�face�increased�competition�in�our�efforts�to�enter�into�new�customer�agreements�or�strategic�relationships,�renew�or�maintain�existing�agreements or�relationships�on�similar�or�favorable�terms,�and�grow�volumes�under�existing�relationships�on�favorable�terms.�For�example,�the�termination�of�agreements�with major�oil�companies,�fuel�retailers,�and�truck�stop�merchants,�would�reduce�the�number�of�locations�where�our�payment�processing�services�are�accepted.�As�a result,�we�could�lose�our�competitive�advantage�and�our�operating�results�could�be�adversely�affected.�While�we�regularly�monitor�these�relationships,�there�can�be no�guarantee�that�we�will�be�able�to�maintain�them�in�the�future.In�addition,�we�are�also�subject�to�risks�as�a�result�of�changes�in�business�habits�of�our�vendors�and customers�as�they�adjust�to�the�competitive�marketplace.�Because�many�of�our�standing�arrangements�and�agreements�with�customers�or�other�partners�contain�no minimum�purchase,�sale�or�volume�obligations�and�may�be�terminable�by�either�party�upon�no�or�relatively�short�notice,�customers�or�other�partners�may�not�be required�to�use�the�services�that�we�provide�to�a�specific�degree�or�at�all,�even�though�we�are�under�contract�with�them.�Accordingly,�we�are�subject�to�significant risks�associated�with�the�loss�or�change�in�the�business�habits�and�financial�condition�of�these�key�constituencies�as�they�consider�changes�in�the�market�or�different or�less�expensive�services�from�competitors�or�otherwise. As�set�forth�above,�the�competitive�landscape�in�which�we�operate�could�affect�our�revenues�and�margins�and�have�a�material�adverse�effect�on�our business,�operations,�and�operating�results. Our�failure�to�effectively�implement�new�technology�could�jeopardize�our�position�as�a�leader�in�our�industry. ����As�a�provider�of�information�management�and�financial�technology�and�payment�services,�we�must�constantly�adapt�and�respond�to�the�technological�advances offered�by�our�competitors�and�the�informational�requirements�of�our�customers,�including�those�related�to�the�Internet�and�the�cloud,�in�order�to�maintain�and improve�upon�our�competitive�position.�We�may�not�be�able�to�expand�our�technological�capabilities�and�service�offerings�as�rapidly�as�our�competitors,�which could�jeopardize�our�position�as�a�leader�in�our�industry. We�may�not�be�able�to�successfully�execute�our�strategy�of�growth�through�acquisitions. We�have�been�an�active�asset�acquirer,�and,�as�part�of�our�growth�strategy,�we�expect�to�seek�to�continue�to�acquire�businesses,�commercial�account�portfolios and�other�assets�in�the�future.�We�have�substantially�expanded�our�overall�business,�operating�segments,�customer�base,�headcount�and�operations�through acquisitions.�Our�future�growth�and�profitability�depend,�in�part,�upon�our�continued�successful�expansion�within�the�business�segments�in�which�we�currently operate.�As�part�of�our�strategy�to�expand,�we�look�for�acquisition�opportunities�and�partnerships�with�other�businesses�that�will�allow�us�to�increase�our�market penetration,�technological�capabilities,�product�offerings�and�distribution�capabilities. Any�or�all�of�the�following�risks�could�adversely�affect�our�growth�strategy,�including�that: • • • • • • we�may�not�be�able�to�identify�suitable�acquisition�candidates�or�acquire�additional�assets�on�favorable�terms; we�may�compete�with�others�to�acquire�assets,�which�competition�may�increase,�and�any�level�of�competition�could�result�in�decreased�availability�or increased�prices�for�acquisition�candidates; we�may�compete�with�others�for�select�acquisitions�and�our�competition�may�consist�of�larger,�better-funded�organizations�with�more�resources�and�easier access�to�capital; we�may�experience�difficulty�in�anticipating�the�timing�and�availability�of�acquisition�candidates; we�may�not�be�able�to�obtain�the�necessary�funding,�on�favorable�terms�or�at�all,�to�finance�any�of�our�potential�acquisitions;�and we�may�not�be�able�to�generate�cash�necessary�to�execute�our�acquisition�strategy. 25 We�may�never�realize�the�anticipated�benefits�of�acquisitions�we�have�completed�or�may�undertake,�and�we�may�encounter�difficulties�in�trying�to�integrate such�acquisitions�and�incur�significant�expenses�or�charges�as�a�result�of�an�acquisition. ����The�acquisition�and�integration�of�a�business�involves�a�number�of�risks�and�may�result�in�unforeseen�operating�difficulties�in�assimilating�or�integrating�the businesses,�technologies,�products,�personnel�or�operations�of�the�acquired�business. In�evaluating�and�determining�the�purchase�price�for�a�prospective�acquisition,�we�estimate,�among�other�things,�the�future�revenues�and�profits�from�that acquisition�based�largely�on�historical�financial�performance�as�well�as�any�synergies�that�we�believe�we�may�benefit�from�as�a�result�of�the�acquisition.�Following an�acquisition,�we�may�not�operate�the�acquired�business�as�successfully�as�it�was�previously�operated,�or�adequately�address�all�of�the�risks�uncovered�during�the due�diligence�process.�We�may�also�experience�some�attrition�in�the�number�of�clients�serviced�by�the�acquired�business,�causing�us�to�us�not�achieve�the forecasted�revenues�and�profits�from�an�acquisition�or�not�achieving�the�level�of�synergies�that�we�anticipated�when�entering�into�an�acquisition.�Moreover, although�we�perform�a�due�diligence�review�of�each�of�our�acquisition�partners,�this�review�may�not�adequately�uncover�all�of�the�contingent,�undisclosed,�or previously�unknown�liabilities�or�risks�we�may�incur�as�a�consequence�of�the�proposed�acquisition,�exposing�us�to�potentially�significant,�unanticipated�costs,�as well�as�potential�impairment�charges.�An�acquisition�may�also�subject�us�to�additional�regulatory�burdens�that�may�significantly�affect�our�business�in unanticipated�and�negative�ways. Further,�an�acquisition�may�affect�our�financial�condition�in�that�it�may�require�us�to�incur�other�charges,�such�as�severance�expenses,�restructuring charges�or�change�of�control�payments,�and�substantial�debt�or�other�liabilities.�An�acquisition�may�also�cause�adverse�tax�consequences,�substantial�depreciation and�amortization�or�deferred�compensation�charges,�may�require�the�amortization,�write-down�or�impairment�of�amounts�related�to�deferred�compensation, goodwill�and�other�intangible�assets,�may�include�substantial�contingent�consideration�payments�or�other�compensation�that�could�reduce�our�earnings�during�the quarter�in�which�incurred,�or�may�not�generate�sufficient�financial�return�to�offset�acquisition�costs.�These�expenses,�charges�or�payments,�as�well�as�the�initial costs�of�integrating�the�personnel�and�facilities�of�an�acquired�business�with�those�of�our�existing�operations,�may�adversely�affect�our�operating�results. In�addition,�the�process�of�integrating�and�operating�any�acquired�business,�technology,�service�or�product�requires�significant�management�attention�and resources.�Thus,�the�integration�may�divert�significant�management�attention�from�our�ongoing�business�operations�and�could�lead�to�a�disruption�of�our�ongoing business�or�inconsistencies�in�our�services,�standards,�controls,�procedures�and�policies,�any�of�which�could�affect�our�ability�to�achieve�the�anticipated�benefits�of an�acquisition�or�otherwise�adversely�affect�our�business�and�financial�results. For�example,�on�December�15,�2020,�we�consummated�the�acquisition�of�Optal�and�eNett,�acquiring�travel�focused�electronic�payments�companies�that were�significantly�impacted�by�the�global�COVID-19�pandemic�after�we�entered�into�the�definitive�agreement�for�the�acquisition.�The�global�COVID-19�pandemic has�had,�and�will�likely�continue�to�have,�a�large�effect�on�the�travel�industry.�There�can�be�no�guarantee�that�we�will�achieve�any�of�the�anticipated�benefits�from this�acquisition�or�that�we�uncovered�all�of�eNett�and�Optal’s�the�unknown�or�undisclosed�liabilities�or�risks�. A�decline�in�general�economic�conditions,�and�in�particular,�a�decline�in�demand�for�fuel,�travel�related�services�or�health�care�services,�and�other�business related�products�and�services�would�adversely�affect�our�business,�operating�results�and�financial�condition. Our�operating�results�are�materially�affected�by�general�conditions�in�the�economy,�both�in�the�U.S.�and�internationally.�We�generate�a�substantial�part�of our�revenue�based�on�the�volume�of�purchase�and�other�transactions�we�process.�Our�transaction�volume�is�correlated�with�general�economic�conditions�and�the amount�of�business�activity�in�the�economies�in�which�we�operate,�particularly�in�the�U.S.,�Europe,�the�United�Kingdom,�Asia,�Australia,�and�New�Zealand. Downturns�in�these�economies�are�generally�characterized�by�reduced�commercial�activity�and,�consequently,�reduced�demand�and�use�of�fuel,�travel�related services,�health�care�services,�health�savings�accounts,�and�other�business�related�products�and�services�by�our�customers�or�partners�and�our�customers'�or�partners' customers.�The�commercial�payments�industry�in�general,�and�our�commercial�payment�solutions�business�specifically,�depend�heavily�upon�the�overall�level�of spending.�Unfavorable�changes�in�economic�conditions,�including�declining�consumer�confidence,�increasing�unemployment,�inflation,�recession,�changes�in�the political�climate�or�other�changes,�may�lead�to�a�reduction�or�plateau�in�spending�by�those�whose�spending�directly�or�indirectly�contributes�to�our�revenues, resulting�in�reduced�or�stagnant�demand�for,�or�use�of,�our�products�and�services.�As�a�result,�a�sustained�decline�in�general�economic�conditions�in�the�U.S.�or internationally�could�have�a�material�adverse�effect�on�our�business,�financial�condition,�and�operating�results. 26 We�are�exposed�to�risks�associated�with�operations�outside�of�the�United�States,�which�could�harm�both�our�U.S.�and�international�operations. ����In�addition�to�our�operations�in�the�United�States,�we�conduct�operations�internationally�in�many�foreign�countries.�On�December�15,�2020,�we�consummated�our acquisition�of�Optal�and�eNett,�which�substantially�increased�our�Travel�and�Corporate�Payment�Solutions�segment's�exposure�to�the�Asian,�Australian,�European, and�United�Kingdom�markets.�This�acquisition�and�any�further�expansion�of�our�international�operations�could�impose�substantial�burdens�on�our�resources,�divert management’s�attention�from�U.S.�operations�and�otherwise�harm�our�business.�In�addition,�we�are�subject�to�risks�from�operating�internationally,�some�of�which we�may�not�typically�encounter�in�the�United�States,�including:� • • • • • • • • • • • • • • fluctuation�in�foreign�currencies; changes�in�the�relations�between�the�United�States�and�foreign�countries; actions�of�foreign�or�United�States�governmental�authorities�affecting�trade�and�foreign�investment; increased�expense�due�to�the�introduction�of�our�corporate�policies�and�controls�in�our�international�operations; increased�expense�related�to�localization�of�our�products�and�services,�including�language�translation�and�creation�of�localized�agreements; increased�infrastructure�costs,�burdens�and�complexities�with�respect�to�legal,�tax,�accounting�and�information�technology�laws,�matters,�and�treaties; interpretation�and�application�of�local�laws�and�regulations,�including,�among�others,�those�impacting�anti-money�laundering,�bribery,�financial transaction�reporting,�privacy,�licensing,�and�positive�balance�or�prepaid�cards; enforceability�of�intellectual�property�and�contract�rights; potentially�adverse�tax�consequences�due�to,�but�not�limited�to,�the�value�added�tax�systems,�the�repatriation�of�cash,�and�any�adverse�consequences�from changes�in�tax�rates�and�changes�or�interpretations�of�tax�laws; competitive�pressure�on�products�and�services�from�companies�based�outside�the�U.S.�that�can�leverage�lower�costs�of�operations; terrorist�attacks�and�security�concerns�in�general; increased�expense�to�comply�with�U.S.�laws�that�apply�to�foreign�operations,�including�the�FCPA�and�OFAC�regulations; political,�social,�and�economic�instability;�and local�labor�conditions�and�regulations. ����We�cannot�assure�you�that�our�investments�or�businesses�outside�the�United�States�will�produce�desired�levels�of�revenue�or�costs,�or�that�one�or�more�of�the factors�listed�above�will�not�harm�our�business. The�United�Kingdom’s�departure�from�the�EU,�or�Brexit,�and�the�resulting�Trade�Agreement�could�adversely�affect�us. During�June�2016,�the�U.K.�held�a�referendum�in�which�voters�approved�an�exit�from�the�European�Union�(the�"EU"),�commonly�referred�to�as�Brexit.�On January�24,�2020,�the�U.K.�Parliament�approved�a�withdrawal�agreement�(the�“Withdrawal�Agreement”)�between�the�U.K.�and�the�EU.�On�December�24,�2020, after�an�eleven�month�transition�period,�the�United�Kingdom�and�the�EU�entered�into�a�trade�deal,�effective�January�1,�2021,�in�which�they�agreed�upon�many�trade terms�(the�"Trade�Agreement")�as�a�result�of�Brexit. The�uncertainty�with�respect�to�the�ultimate�effect�on�the�U.K.’s�legal,�political�and�economic�relationship�with�the�EU�as�a�result�of�Brexit�and�the�Trade Agreement�could�contribute�to�instability�in�global�financial�and�foreign�exchange�markets,�including�volatility�in�the�value�of�the�British�Pound�Sterling�and�Euro, which�in�turn�could�adversely�affect�us�or�our�customers�and�companies�that�do�business�with�us.�Such�uncertainties�could�also�trigger�a�general�deterioration�in credit�conditions,�a�downturn�in�consumer�sentiment�and�overall�negative�economic�growth.�Any�of�these�scenarios�could�have�an�adverse�effect�on�our�business�or on�our�customers. 27 The�long-term�effects�of�Brexit�will�depend�on�the�effects�and�implementation�of�the�Trade�Agreement.�A�withdrawal�from�the�EU,�such�as�Brexit,�is unprecedented,�and�it�currently�remains�unclear�how�the�implementation�of�the�Trade�Agreement�and�the�U.K.’s�access�to�the�European�single�market�for�goods, capital,�services�and�labor�within�the�EU�and�the�wider�commercial,�legal�and�regulatory�environment,�will�impact�our�U.K.�operations. In�addition,�Brexit�could�lead�to�legal�uncertainty�and�increased�complexity�as�national�laws�and�regulations�in�the�U.K.�start�to�diverge�from�EU�laws�and regulations.�In�particular,�we�may�face�new�regulatory�costs�and�challenges,�including�the�following: • • • we�could�be�required�to�comply�with�regulatory�requirements�in�the�U.K.�that�are�in�addition�to,�or�inconsistent�with,�the�regulatory�requirements�of the�EU,�leading�to�increased�complexity�and�costs�for�our�EU�and�U.K.�operations; the�implementation�of�limitations�on�the�interchange�fees�we�are�allowed�to�charge�our�customers�in�either�the�U.K.�or�the�EU;�and adverse�impacts�on�our�ability�to�attract�and�retain�the�necessary�human�resources�in�appropriate�locations�to�support�the�U.K.�business�and�the�EU business. ����These�and�other�factors�related�to�Brexit�and�the�Trade�Agreement�could,�individually�or�in�the�aggregate,�have�a�material�adverse�impact�on�our�business, financial�condition,�and�results�of�operations. We�may�incur�impairment�charges�on�goodwill�or�other�intangible�assets. ����Our�goodwill�resides�in�multiple�reporting�units.�The�profitability�of�individual�reporting�units�may�suffer�periodically�from�downturns�in�customer�demand,�the high�level�of�competition�existing�within�our�industry,�the�level�of�overall�economic�activity�and�other�factors.�Individual�reporting�units�may�be�relatively�more impacted�by�these�factors�than�the�Company�as�a�whole.�As�a�result,�demand�for�the�services�of�one�or�more�of�the�reporting�units�could�decline,�which�could adversely�affect�our�operations�and�cash�flow,�and�could�result�in�an�impairment�of�goodwill.�Our�reporting�units�are�tested�annually�during�the�fourth�fiscal�quarter of�each�year,�or�on�an�interim�basis�if�impairment�indicators�exist�in�order�to�determine�whether�their�carrying�value�exceeds�their�fair�value.�We�use�a�combination of�discounted�cash�flow�analyses�and�comparable�company�pricing�multiples�to�determine�the�fair�value�of�our�reporting�units�and�to�determine�the�amount�of�any goodwill�impairment.�In�addition,�our�definite-lived�intangible�assets�are�tested�for�impairment�if�an�event�occurs�or�circumstances�change�that�would�indicate�the carrying�value�may�not�be�recoverable. ����If�we�determine�the�fair�value�of�the�reporting�units�is�less�than�their�carrying�value�as�a�result�of�the�annual�or�interim�goodwill�tests,�or�the�carrying�value�of�our definite-lived�intangible�asset�exceeds�the�undiscounted�cash�flows�generated�from�the�use�of�the�asset,�an�impairment�loss�may�be�recognized.�Any�such�write- down�would�adversely�affect�our�results�of�operations.�As�a�result�of�our�annual�impairment�analysis�in�2020,�the�Company�recorded�a�$53.4�million�non-cash goodwill�impairment�charge�related�to�the�WEX�Fleet�Europe�reporting�unit. ����While�we�currently�believe�that�the�fair�values�of�our�other�reporting�units�exceed�their�respective�carrying�values�and�that�our�goodwill�will�contribute indefinitely�to�the�cash�flows�of�the�Company,�materially�different�assumptions�regarding�future�performance�of�our�reporting�units�and�the�weighted-average�cost of�capital�used�in�the�annual�valuation�could�result�in�impairment�losses.�In�addition,�while�we�believe�that�the�expected�future�cash�flows�to�the�Company�resulting from�the�use�of�our�definite-lived�intangible�assets�exceeds�the�carrying�value�of�such�assets,�material�changes�in�business�strategy,�customer�attrition�in�excess�of expectations,�and�technological�obsolescence�could�result�in�impairment�losses�and/or�an�acceleration�of�amortization�expense. Legislation�and�regulation�of�greenhouse�gases�("GHG")�and�related�divestment�and�other�efforts�could�adversely�affect�our�business. We�are�aware�of�the�increasing�focus�of�local,�state,�regional,�national�and�international�regulatory�bodies�on�GHG�emissions�and�climate�change�issues. Legislation�to�regulate�GHG�emissions�has�periodically�been�introduced�in�the�U.S.�Congress,�and�there�has�been�a�wide-ranging�policy�debate,�both�in�the�U.S. and�internationally,�regarding�the�impact�of�these�gases�and�possible�means�for�their�regulation.�The�Biden�Administration�has�made�climate�change�and�the limitation�of�GHG�emissions�one�of�its�initial�and�primary�objectives.�For�example,�in�January�2021,�U.S.�President�Biden�signed�a�number�of�executive�orders with�respect�to�GHGs,�including�one�recommitting�the�United�States�to�the�Paris�Agreement,�pursuant�to�which�nearly�200�nations�have�committed�to�reduce�global emissions.�Several�states�and�geographic�regions�in�the�U.S.�have�adopted�legislation�and�regulations�to�reduce�emissions�of�GHGs.�Additional�legislation�or regulation�by�these�states�and�regions,�the�U.S.�Environmental�Protection�Agency,�and/or�any�international�agreements�to�which�the�U.S.�may�become�a�party,�that control�or�limit�GHG�emissions�or�otherwise�seek�to�address�climate�change�could�adversely�affect�our�partners’,�merchants’�and�our�operations.�Finally,�private businesses,�including�vehicle�manufacturers,�are�increasingly�taking�proactive�steps�to�control�or�limit�GHG�emissions.�As�an�example,�in�January�2021,�General Motors�announced�that 28 it�aspired�to�have�all�of�its�global�new�light-duty�vehicles�be�zero�emission�by�2035.�Because�our�business�is�currently�heavily�reliant�on�the�level�of�fossil�fuels purchased�and�sold,�existing�or�future�laws�or�regulations�or�business�actions�related�to�GHGs�and�climate�change,�including�incentives�to�conserve�energy�or�use alternative�energy�sources,�could�have�a�negative�impact�on�our�business�if�any�of�the�same�serve�to�reduce�demand�for�fossil�fuels. In�addition�to�the�regulatory�and�private�sector�efforts�described�above,�there�have�also�been�efforts�in�recent�years�aimed�at�the�investment�community, including�investment�advisors,�sovereign�wealth�funds,�public�pension�funds,�universities�and�other�groups,�promoting�the�divestment�of�equities�issued�by companies�connected�to�fossil�fuels�as�well�as�to�pressure�lenders�and�other�financial�services�companies�to�limit�or�curtail�activities�with�companies�similarly connected.�If�these�efforts�are�successful,�and�if�our�business�is�deemed�to�be�sufficiently�tied�to�the�use�of�fossil�fuels�by�such�communities,�our�ability�to�access capital�markets�may�be�limited�and�our�stock�price�may�be�negatively�impacted. Members�of�the�investment�community�have�recently�increased�their�focus�on�sustainability�practices�with�regard�to�the�oil�and�gas�industry,�including practices�related�to�GHGs�and�climate�change.�An�increasing�percentage�of�the�investment�community�considers�sustainability�factors�in�making�investment decisions,�and�an�increasing�number�of�entities�consider�sustainability�factors�in�awarding�business.�If�we�are�unable�to�appropriately�address�sustainability enhancement,�we�may�lose�customers,�partners,�or�merchants,�our�stock�price�may�be�negatively�impacted,�our�reputation�may�be�negatively�affected,�and�it�may�be more�difficult�for�us�to�effectively�compete. Unpredictable�events,�including�natural�catastrophes�or�public�health�crises,�dangerous�weather�conditions,�technology�failure,�political�unrest,�and�terrorist attacks�in�the�locations�in�which�we�or�our�customers�operate,�or�elsewhere,�may�adversely�affect�our�ability�to�conduct�business�and�could�impact�our�results. ����In�addition�to�public�health�crises,�such�as�the�COVID-19�global�pandemic,�other�unpredictable�events,�such�as�political�unrest,�terrorist�attacks,�power�failures, natural�disasters�(such�as�wildfires�or�hurricanes)�and�severe�weather�conditions�could�interrupt�our�operations�by�causing�disruptions�in�global�markets,�economic conditions,�fuel�supply�or�demand,�travel�and�tourism,�and�the�use�of�health�care�services.�Such�events�could�also�trigger�large-scale�technology�failures,�delays,�or security�lapses.�Such�events,�if�continuing�or�significant,�could�affect�our�revenues�by�reducing�the�demand�for�our�products�and�services�or�by�limiting�our�ability to�provide�our�services�or�resulting�in�security�or�other�issues�to�our�technology�systems�and�the�information�contained�therein�and�could�therefore�cause�a�material adverse�effect�on�our�business,�financial�condition,�and�operating�results. The�healthcare�industry�changes�often�and�technology-enabled�services�used�by�consumers�are�relatively�new�and�unproven. The�market�for�technology-enabled�services�for�healthcare�consumers�changes�rapidly�and�new�products�and�services�are�consistently�being�introduced. Opportunities�to�gain�market�share�are�challenging�due�to�the�significant�resources�of�our�existing�and�potential�competitors.�It�is�uncertain�whether�or�how�fast�this market�will�continue�to�grow.�In�order�to�remain�competitive,�we�are�continually�involved�in�a�number�of�projects�to�develop�new�services�or�compete�with�these new�market�entrants,�including�the�development�of�mobile�versions�of�our�proprietary�technology�platform.�These�projects�carry�risks,�such�as�cost�overruns,�delays in�delivery,�performance�problems�and�lack�of�acceptance�by�our�Health�and�Employee�Benefit�Solutions�segment�customers. Based�on�our�experience,�consumers�are�still�learning�about�HSAs�and�other�similar�tax-advantaged�healthcare�savings�arrangements.�The�willingness�of consumers�to�increase�their�use�of�technology�platforms�to�manage�their�healthcare�saving�and�spending�tax�advantaged�benefits�will�impact�our�operating�results. Our�ability�to�attract�and�retain�qualified�employees�is�critical�to�our�success�and�the�failure�to�do�so�may�materially�adversely�affect�our�performance. ����We�believe�our�employees,�including�our�executive�management�team,�are�our�most�important�resource�and,�in�our�industry�and�geographic�area,�competition�for qualified�personnel�is�intense.�If�we�were�unable�to�retain�and�attract�qualified�employees,�our�performance�could�be�materially�adversely�affected. The�Company�is�and�may�in�the�future�become�involved�in�various�claims,�investigations,�and�legal�proceedings�which�could�have�a�material�adverse�effect�on our�business,�financial�condition�or�results�of�operations. The�Company�is�subject�to�legal�proceedings�and�claims�in�the�ordinary�course�of�business�and�may�become�involved�in�legal�proceedings�that�could�be material.�These�proceedings�may�include,�without�limitation,�commercial�or�contractual�disputes,�intellectual�property�matters,�personal�injury�claims,�stockholder claims,�and�employment�matters.�No�assurances�can�be�given�that�any�such�proceedings�and�claims�will�not�have�a�material�adverse�impact�on�the�Company’s 29 financial�statements.�Legal�proceedings�are�inherently�uncertain�and�there�is�no�guarantee�that�we�will�be�successful�in�defending�ourselves�in�any�such proceedings,�or�that�our�assessment�of�the�materiality�of�these�matters�and�the�likely�outcome�or�potential�losses�and�established�reserves�will�be�consistent�with�the ultimate�outcome�of�such�matters.�The�types�of�claims�made�in�such�proceedings�may�include�claims�for�compensatory�damages,�punitive�and�consequential damages,�specific�performance�and/or�other�injunctive�or�declaratory�relief.�We�may�incur�significant�expenses�in�defending�ourselves�in�any�proceedings�and�may be�required�to�pay�damage�awards�or�settlements�or�become�subject�to�equitable�remedies�that�adversely�affect�our�operations�and�financial�statements.�Moreover, any�insurance�or�indemnification�rights�that�we�may�have�may�be�insufficient�or�unavailable�to�protect�us�against�such�losses.�Responding�to�litigation,�claims, proceedings,�inquiries,�and�investigations,�even�those�that�are�ultimately�non-meritorious,�requires�us�to�incur�significant�expense�and�devote�significant�resources, and�may�generate�adverse�publicity�that�damages�our�reputation,�resulting�in�an�adverse�impact�on�our�business,�financial�condition,�and�operating�results. Risks�related�to�WEX�Bank The�loss�or�suspension�of�WEX�Bank's�industrial�loan�charter�or�changes�in�applicable�regulatory�requirements�could�be�disruptive�to�certain�of�our operations�and�increase�costs. ����WEX�Bank�is�a�Utah�industrial�bank�incorporated�in�1998�that�operates�under�an�industrial�loan�charter�(ILC).�WEX�Bank�is�also�an�FDIC-insured�depository institution.�Deposits�issued�by�WEX�Bank�are�currently�used�to�support�and�fund�substantially�all�of�the�U.S.�and�Canadian�operations�in�our�Fleet�Solutions segment�and�a�substantial�portion�of�the�global�operations�of�our�Travel�and�Corporate�Solutions�segment.�WEX�Bank's�ILC�enables�it�to�issue�certificates�of deposit,�accept�money�market�deposits�and�borrow�on�federal�funds�lines�of�credit�from�other�banks,�which�we�believe�provides�us�access�to�lower�cost�funds�than many�of�our�competitors,�thus�helping�us�to�offer�competitive�products�to�our�customers.�WEX�Bank�operates�under�a�uniform�set�of�state�lending�laws,�and�its operations�are�subject�to�extensive�state�and�federal�regulation.�The�bank’s�primary�regulators�are�the�Utah�DFI�and�the�FDIC.�Continued�licensing�and�federal deposit�insurance�are�subject�to�ongoing�satisfaction�of�compliance�and�safety�and�soundness�requirements.�Adverse�changes�to�its�ILC�could�impact�WEX�Bank's ability�to�operate�and/or�attract�funds�or�limit�our�ability�to�provide�competitive�offerings�to�our�customers.�If�industrial�loan�charters�were�eliminated�or�if�changes to�such�charters�limited�or�effectively�prohibited�us�from�operating�as�we�currently�operate,�without�our�operations�being�"grandfathered",�we�would�either�need�to outsource�our�credit�support�activities�or�perform�these�activities�ourselves,�which�would�subject�us�to�the�credit�laws�of�each�individual�state�in�which�we�conduct business.�Furthermore,�we�could�not�be�a�MasterCard�and/or�Visa�issuer�and�would�have�to�work�with�another�financial�institution�to�issue�the�product�or�otherwise sell�the�portfolio.�Any�such�changes�would�be�disruptive�to�our�operations�and�could�result�in�significant�incremental�costs�and�reduce�or�eliminate�any�perceived�or actual�competitive�advantage,�resulting�in�a�material�adverse�effect�on�our�business,�financial�condition�and�operating�results.�In�addition,�changes�in�the�bank regulatory�environment,�including�the�implementation�of�new�or�varying�measures�or�interpretations�by�the�State�of�Utah�or�the�federal�government,�may significantly�affect�or�restrict�the�manner�in�which�we�conduct�business�in�the�future,�could�subject�us�to�greater�regulatory�oversight�requirements�or�could�create�a default�under�our�2016�Credit�Agreement. WEX�Bank�is�subject�to�extensive�supervision�and�regulation�that�could�restrict�our�activities�and�impose�financial�requirements�or�limitations�on�the�conduct of�our�business�and�limit�our�ability�to�generate�income. ����WEX�Bank�is�subject�to�extensive�federal�and�state�regulation�and�supervision,�including�that�of�the�FDIC,�the�CFPB,�and�the�Utah�DFI.�Banking�regulations�are primarily�intended�to�protect�depositors’�funds,�federal�deposit�insurance�funds�and�the�banking�system�as�a�whole,�not�shareholders�or�noteholders.�These regulations�affect�our�payment�operations,�capital�structure,�investment�practices,�dividend�policy,�and�growth,�among�other�things.�Failure�to�comply�with�laws, regulations�or�policies�could�result�in�sanctions�by�regulatory�agencies,�damages,�civil�money�penalties�or�reputational�damage,�which�could�have�a�material adverse�effect�on�our�business,�financial�condition�and�results�of�operations.�While�we�have�policies�and�procedures�designed�to�prevent�any�such�violations,�there can�be�no�assurance�that�such�violations�will�not�occur.�The�U.S.�Congress�and�federal�regulatory�agencies�frequently�revise�banking�and�securities�laws, regulations�and�policies.�We�cannot�predict�whether,�or�in�what�form,�any�other�proposed�regulations�or�statutes�will�be�adopted�or�the�extent�to�which�our�business may�be�affected�by�any�new�regulation�or�statute.�Such�changes�could�subject�our�business�to�additional�costs,�limit�the�types�of�financial�services�and�products�we may�offer�and�increase�the�ability�of�non-banks�to�offer�competing�services�and�products,�among�other�things. Volatility�or�adverse�conditions�in�the�economy�or�credit�or�other�financial�markets�may�negatively�impact�WEX�Bank’s�ability�to�attract�and�retain�deposits. ����Volatility�or�adverse�conditions�in�the�economy�or�credit�or�other�financial�markets�may�limit�WEX�Bank’s�ability�to�attract�and�retain�deposits�at�a�time�when�it would�like�or�need�to�do�so.�In�addition,�the�FDIC's�final�rule�regarding�Parent 30 Companies�of�Industrial�Banks�and�Industrial�Loan�Companies,�which�becomes�effective�April�1,�2021,�could�make�it�easier�for�some�commercial�companies�to obtain�an�industrial�loan�company�charter,�which�could�increase�competition�and�limit�our�ability�to�attract�deposits.�A�significant�credit�rating�downgrade,�material capital�market�disruptions,�or�significant�withdrawals�by�depositors�at�WEX�Bank,�among�other�things,�could�impact�our�ability�to�maintain�adequate�liquidity�and impact�our�ability�to�provide�competitive�offerings�to�our�customers.�Further,�any�such�limitation�on�the�availability�of�deposits�to�WEX�Bank�could�have�an impact�on�our�ability�to�fund�our�customers'�purchases,�which�could�have�a�material�adverse�effect�on�the�Company's�business,�financial�condition,�and�operating results.�� In�an�environment�of�increasing�interest�rates�and�changes�in�the�brokered�deposit�market,�WEX�Bank's�cost�of�capital�would�increase. ����WEX�Bank�uses�collectively�brokered�deposits,�including�certificates�of�deposit�and�interest-bearing�money-market�deposits�to�finance�its�operations,�which primarily�involves�financing�payments�on�behalf�of�our�customers.�Certificates�of�deposit�carry�fixed�interest�rates�from�issuance�to�maturity,�which�vary�and�are relatively�short�term�in�duration.�The�interest-bearing�money�market�deposits�carry�variable�rates.�Upon�maturity,�the�deposits�will�likely�be�replaced�by�issuing new�deposits�to�the�extent�that�they�are�needed.�In�a�rising�interest�rate�environment,�WEX�Bank�would�not�be�able�to�replace�maturing�deposits�with�deposits�that carry�the�same�or�lower�interest�rates.�Therefore,�rising�interest�rates�would�result�in�reduced�net�income�to�the�extent�that�certificates�of�deposit�and�interest- bearing�money�market�deposits�mature�and�are�replaced�with�deposits�that�carry�higher�interest�rates�and�we�are�otherwise�unable�to�increase�the�fees�we�otherwise receive�under�contracts.�Rising�interest�rates�could�also�therefore�limit�our�ability�to�offer�competitive�product�offerings�to�our�customers.�At�December�31,�2020, WEX�Bank�had�outstanding�$354.8�million�in�certificates�of�deposit�maturing�within�one�year,�$148.6�million�in�certificates�of�deposit�maturing�between�one�and�3 years,�and�$439.9�million�in�interest-bearing�money�market�deposits,�for�an�aggregate�exposure�of�$943.3�million�in�brokered�deposits�at�WEX�Bank. WEX�Bank�is�subject�to�funding�risks�associated�with�its�reliance�on�brokered�deposits. ����As�of�December�31,�2020,�the�most�recent�FDIC�exam�report�categorized�WEX�Bank�as�“well�capitalized”�under�the�regulatory�framework�for�prompt corrective�action.�Under�applicable�regulations,�however,�if�WEX�Bank�were�to�be�no�longer�categorized�as�"well�capitalized"�under�such�framework,�it�would�not be�able�to�finance�its�operations�through�the�acceptance�of�brokered�deposits�without�the�approval�of�the�FDIC.�Moreover,�in�December�2020,�the�FDIC�amended its�brokered�deposits�regulations,�effective�April�1,�2021,�and�may�in�the�future�change�the�definition�of�brokered�deposits�or�extend�the�classification�to�deposits not�currently�classified�as�brokered�deposits.�WEX�Bank’s�inability�to�accept�brokered�deposits,�or�a�loss�of�a�significant�amount�of�its�brokered�deposits,�could adversely�affect�its�liquidity�and�therefore�its�ability�to�support�and�fund�the�Company's�operations�it�currently�supports�and�funds.�Additionally,�such circumstances�could�require�WEX�Bank�to�raise�deposit�rates�in�an�attempt�to�attract�new�deposits,�or�to�obtain�funds�through�other�sources�at�higher�rates,�which would�affect�the�Company's�ability�to�offer�competitive�products�to�our�customers�in�our�segments�served�by�WEX�Bank�and�would�have�a�material�adverse�effect on�our�business,�financial�condition,�and�operating�results. WEX�Bank�is�subject�to�regulatory�capital�requirements�that�may�require�us�to�make�capital�contributions�to�WEX�Bank�and�that�may�restrict�WEX�Bank's ability�to�make�cash�available�to�us. ����WEX�Bank�must�maintain�minimum�amounts�of�regulatory�capital.�If�WEX�Bank�does�not�meet�these�capital�requirements,�its�regulators�have�broad�discretion to�institute�a�number�of�corrective�actions�that�could�have�a�direct�material�effect�on�our�financial�condition.�WEX�Bank,�as�an�institution�insured�by�the�FDIC, must�maintain�certain�capital�ratios,�paid-in�capital�minimums�and�adequate�allowances�for�loan�losses.�Under�the�Dodd-Frank�Act,�we�are�also�required�to�serve�as a�source�of�financial�strength�for�WEX�Bank.�If�WEX�Bank�were�to�fail�to�meet�any�of�the�capital�requirements�to�which�it�is�subject,�or�if�required�under�Dodd- Frank’s�source�of�strength�requirements,�we�may�be�forced�to�provide�WEX�Bank�with�additional�capital,�which�could�impair�our�ability�to�service�our indebtedness�or�may�not�be�permitted�under�the�terms�of�our�2016�Credit�Agreement�or�Notes. In�addition,�substantially�all�of�the�transactions�of,�and�therefore�the�revenues�derived�from,�the�U.S.�and�Canadian�operations�of�our�Fleet�Solutions segment�and�the�global�operations�of�our�Travel�and�Corporate�Solutions�segment�flow�through�WEX�Bank.�Due�to�the�applicable�regulatory�regime,�WEX�Bank�is limited�in�the�ways�it�can�transfer�its�cash�or�other�assets�to�WEX�Inc.�One�of�the�primary�methods�by�which�funds�are�transferred�to�WEX�Inc.�is�through�the payment�of�a�dividend�by�WEX�Bank�to�us.�However,�WEX�Bank�is�subject�to�various�regulatory�requirements�relating�to�the�payment�of�dividends,�including requirements�to�maintain�capital�above�regulatory�minimums.�Accordingly,�WEX�Bank�may�be�unable�to�make�any,�or�may�only�be�able�to�make�limited�amounts, of�its�cash�or�other�assets�available�to�us,�which�could�affect�our�ability�to�service�our�indebtedness,�make�acquisitions,�enhance�product�offerings,�or�fund corporate�needs,�among�other�things,�any�of�which�could�have�a�material�adverse�effect�on�our�business,�operations,�or�financial�condition. 31 If�WEX�Bank�fails�to�meet�certain�criteria,�we�may�become�subject�to�regulation�under�the�Bank�Holding�Company�Act,�which�could�force�us�to�divest�WEX Bank�or�cease�all�of�our�non-banking�activities,�which�could�have�an�adverse�effect�on�our�revenue�and�business�or�could�create�a�default�under�our�2016 Credit�Agreement. ����WEX�Bank�currently�meets�the�criteria�for�exemption�of�an�industrial�bank�from�the�definition�of�“bank”�under�the�Bank�Holding�Company�Act.�Elimination�of this�exemption�or�WEX�Bank’s�failure�to�qualify�for�this�exemption�in�the�future�would�cause�us�to�become�subject�to�regulation�under�the�Bank�Holding�Company Act.�This�would�require�us�to�divest�WEX�Bank�or�become�a�Bank�Holding�Company�and�to�possibly�cease�certain�non-banking�activities�which�may�be impermissible�for�a�Bank�Holding�Company�and�could�create�a�default�under�our�2016�Credit�Agreement.�Failure�to�qualify�for�or�the�elimination�of�this exemption�could�thus�have�an�adverse�effect�on�our�revenue�and�business. We�are�subject�to�limitations�on�transactions�with�WEX�Bank,�which�may�limit�our�ability�to�engage�in�transactions�with�and�obtain�credit�from�it. ����Sections�23A�and�23B�of�the�FRA�and�the�implementing�regulations�limit�the�extent�to�which�we�can�borrow�or�otherwise�obtain�credit�from�or�engage�in�other “covered�transactions”�with�WEX�Bank.�“Covered�transactions”�include�loans�or�extensions�of�credit,�purchases�of�or�investments�in�securities,�purchases�of assets,�including�assets�subject�to�an�agreement�to�repurchase,�acceptance�of�securities�as�collateral�for�a�loan�or�extension�of�credit,�or�the�issuance�of�a�guarantee, acceptance,�or�letter�of�credit.�Although�the�applicable�rules�do�not�serve�as�an�outright�ban�on�engaging�in�“covered�transactions,”�they�do�limit�the�amount�of covered�transactions�WEX�Bank�may�have�with�any�one�affiliate�and�with�all�affiliates�in�the�aggregate.�The�applicable�rules�also�require�that�we�engage�in�such transactions�with�WEX�Bank�only�on�terms�and�under�circumstances�that�are�substantially�the�same,�or�at�least�as�favorable�to�WEX�Bank,�as�those�prevailing�at the�time�for�comparable�transactions�with�nonaffiliated�companies.�Furthermore,�with�certain�exceptions,�each�loan�or�extension�of�credit�by�WEX�Bank�to�the Company�or�its�other�affiliates�must�be�secured�by�collateral�with�a�market�value�ranging�from�100�percent�to�130�percent�of�the�amount�of�the�loan�or�extension�of credit,�depending�on�the�type�of�collateral.�Accordingly,�WEX�Bank�may�be�unable�to�provide�credit�or�engage�in�transactions�with�us,�including�transactions intended�to�help�us�service�our�indebtedness. Risks�Related�to�our�Indebtedness We�currently�have�a�substantial�amount�of�indebtedness�and�may�incur�additional�indebtedness,�which�could�affect�our�flexibility�in�managing�our�business and�could�materially�and�adversely�affect�our�ability�to�meet�our�debt�service�obligations. At�December�31,�2020,�we�had�approximately�$3,026.8�million�of�debt�outstanding,�net�of�unamortized�debt�issuance�costs�and�debt�discount,�including $152.7�million�in�current�liabilities,�under�the�Notes,�the�Convertible�Notes�and�our�2016�Credit�Agreement,�which�consists�of�a�tranche�A�term�loan�facility,�a tranche�B�term�loan�facility,�and�a�secured�revolving�credit�facility.�In�addition�to�our�outstanding�debt,�as�of�December�31,�2020,�we�had�outstanding�letters�of credit�of�$51.6�million�issued�under�the�2016�Credit�Agreement.�We�have�additional�indebtedness�in�the�form�of�deposits�held�by�WEX�Bank�and�other�liabilities outstanding. Our�substantial�indebtedness�currently�outstanding,�or�as�may�become�outstanding�if�we�incur�additional�indebtedness,�and�the�terms�and�conditions�of�such indebtedness,�could,�among�other�things: • • • • • • lead�to�difficulty�in�our�ability�to�generate�enough�cash�flow�to�satisfy�our�indebtedness�obligations�under�our�credit�facilities,�and�if�we�fail�to�satisfy these�indebtedness�obligations,�an�event�of�default�could�result; require�us�to�dedicate�a�substantial�portion�of�our�cash�flow�to�repaying�our�indebtedness,�thus�reducing�the�amount�of�funds�available�to�execute�on�our corporate�strategy,�to�fund�working�capital�or�capital�expenditures�or�for�other�general�corporate�purposes; limit�our�ability�to�borrow�additional�funds�necessary�for�working�capital,�capital�expenditures�or�other�general�corporate�purposes; increase�our�vulnerability�to�adverse�general�economic�or�industry�conditions; place�us�at�a�competitive�disadvantage�relative�to�our�competitors�that�have�less�indebtedness�or�better�access�to�capital,�by,�for�example,�limiting�our ability�to�enter�into�new�markets,�upgrade�our�assets�or�pursue�acquisitions�or�other�business�opportunities;�and limit�our�flexibility�in�planning�for,�or�reacting�to�changes�in,�our�business. We�may�also�incur�substantial�additional�indebtedness�in�the�future.�The�Convertible�Notes�were�issued�in�July�2020,�and�consist�of�$310.0�million�in initial�aggregate�principal�amount�in�notes�to�an�affiliate�of�Warburg�Pincus�in�a�private�placement.�Under�the�terms�of�the�Convertible�Notes,�we�may�elect�to satisfy�our�bi-annual�interest�payment 32 obligations�through�the�payment�of�interest�in�cash�or�by�increasing�the�principal�amount�of�the�Convertible�Notes�by�an�amount�equal�to�any�interest�we�elect�to satisfy�in�kind.�As�a�result,�the�outstanding�principal�amount�of�the�Convertible�Notes�may�increase�over�time.�Finally,�we�had�$818.4�million�of�available borrowing�capacity�remaining�under�the�revolving�credit�facility�of�the�2016�Credit�Agreement�as�of�December�31,�2020.�We�are�also�are�permitted�under�our credit�facilities�to�incur�additional�indebtedness,�subject�to�specified�limitations,�including�compliance�with�covenants�contained�in�our�2016�Credit�Agreement.�If new�debt�is�incurred�under�any�circumstance,�the�associated�risks�faced�by�the�Company,�such�as�those�set�forth�above,�could�intensify. Furthermore,�the�Convertible�Notes�are�convertible�by�their�holders�at�any�time�prior�to�maturity,�or�earlier�redemption�or�repurchase,�based�upon�an initial�conversion�price�of�$200�per�share�of�common�stock.�We�may�settle�conversions�of�Convertible�Notes,�at�our�election,�in�cash,�shares�of�common�stock,�or�a combination�of�cash�and�shares�of�common�stock.�If�we�are�unable,�or�it�is�undesirable,�due�to�market�or�other�conditions,�to�issue�shares�of�common�stock�to satisfy�a�conversion�request,�then�we�will�be�required�to�settle�the�conversion�in�cash,�which�could�reduce�our�cash�position�to�a�point�that�would�materially adversely�affect�our�business,�operations,�and�financial�condition.�Moreover,�if�we�are�unable�to�meet�any�of�our�principal,�interest,�or�other�payment�or�settlement obligations�under�any�of�our�debt�agreements,�we�could�be�forced�to�restructure�or�refinance�our�obligations,�seek�additional�equity�financing�or�sell�assets,�which we�may�not�be�able�to�do�on�satisfactory�terms�or�at�all.�Our�default�on�any�of�our�debt�agreements�could�have�a�material�adverse�effect�on�our�business,�financial condition�and�results�of�operations. In�addition,�the�2016�Credit�Agreement�requires�that�we�meet�certain�financial�covenants,�including�a�consolidated�EBITDA�to�consolidated�interest charge�coverage�ratio�and�a�consolidated�leverage�ratio,�as�described�in�Item�8,�Note�16,�Financing�and�Other�Debt,�2016�Credit�Agreement.�The�2016�Credit Agreement�also�contains�various�affirmative�and�negative�covenants�that,�subject�to�certain�customary�exceptions,�restrict�our�ability�to,�among�other�things,�create liens�over�our�property,�incur�additional�indebtedness,�enter�into�sale�and�lease-back�transactions,�make�loans,�advances�or�other�investments,�make�non-ordinary course�asset�sales,�declare�or�pay�dividends�or�make�other�distributions�with�respect�to�equity�interests,�change�the�nature�of�our�business,�enter�into�certain agreements�which�restrict�our�ability�to�pay�dividends�or�other�distributions�or�create�liens�on�our�property,�transact�business�with�affiliates�and/or�merge�or consolidate�with�any�other�person. Our�ability�to�comply�with�these�provisions�may�be�affected�by�events�beyond�our�control,�including�prevailing�economic,�financial,�and�industry conditions.�Failure�to�comply�with�the�financial�covenants�or�any�other�non-financial�or�restrictive�covenants�in�our�2016�Credit�Agreement,�for�any�reason,�could create�a�default.�Upon�a�default,�our�lenders�could�accelerate�the�indebtedness�under�the�facilities�(except�only�the�requisite�lenders�under�the�revolving�credit facility�and�the�tranche�A�term�loan�facility�may�accelerate�the�revolving�credit�facility�due�to�a�breach�of�the�financial�covenants),�foreclose�against�their�collateral or�seek�other�remedies,�which�could�trigger�a�default�under�the�Notes�and�the�Convertible�Notes�and�would�jeopardize�our�ability�to�continue�our�current operations.�The�Notes�and�the�Convertible�Notes�also�contain�customary�negative�and�affirmative�covenants,�including,�without�limitation,�certain�covenants placing�certain�limitations�on�our�ability�to�incur�additional�debt,�and�events�of�default�that�if�breached�could�allow�the�requisite�noteholders�to�accelerate�the maturity�of�the�Notes�and�the�Convertible�Notes,�as�applicable,�and�to�exercise�their�rights�and�remedies�under�the�Notes�and�the�Convertible�Notes,�and�could�also trigger�a�cross-default�under�the�2016�Credit�Agreement. We�may�want�or�need�to�refinance�a�significant�amount�of�indebtedness�or�otherwise�require�additional�financings,�but�we�cannot�guarantee�that�we�will�be able�to�refinance�or�obtain�additional�financing�on�favorable�terms�or�at�all. We�may�elect�or�need�to�refinance�certain�of�our�indebtedness�to�react�to�changing�economic�and�business�conditions,�or�for�other�reasons,�even�if�not required�to�do�so�by�the�terms�of�such�indebtedness.�Moreover,�we�may�need,�or�want,�to�raise�substantial�additional�financing�to�replace�maturing�debt,�or�to�fund working�capital,�capital�expenditures,�acquisitions�or�other�general�corporate�requirements.�Our�ability�to�arrange�additional�financing�or�refinancing�will�depend on,�among�other�factors,�our�financial�position�and�performance,�as�well�as�prevailing�market�conditions�and�other�factors�beyond�our�control.�In�addition,�our access�to�lenders�in�the�future�is�also�dependent�on,�among�other�things,�market�conditions,�which�are�variable�and�potentially�volatile,�and�which�could�result�in increased�costs�for�obtaining�and�servicing�our�indebtedness.�Accordingly,�there�can�be�no�assurance�that�we�will�be�able�to�obtain�additional�financing�or refinancing�on�terms�acceptable�to�us�or�at�all,�which�could�have�a�material�adverse�effect�on�us. Fluctuations�in�interest�rates�could�materially�affect�the�interest�expense�on�our�2016�Credit�Agreement. ����Because�a�significant�portion�of�our�debt�under�the�2016�Credit�Agreement�bears�interest�at�variable�rates,�increases�in�interest�rates�could�materially�increase�our interest�expense.�Under�our�2016�Credit�Agreement,�we�had�$2.3�billion�of�indebtedness�outstanding�at�December�31,�2020,�of�which�approximately�40%�was�at variable�interest�rates�for�which�we�had�not�entered�into�interest�rate�swap�agreements�to�fix�the�future�interest�payments.�An�increase�in�interest�rates�would increase�the�cost�of�borrowing�under�that�portion�of�our�2016�Credit�Agreement.�As�of�December�31,�2020,�outstanding 33 interest�rate�swap�contracts�are�intended�to�fix�the�future�interest�payments�associated�with�$1.4�billion�of�the�$2.3�billion�of�outstanding�borrowings�under�the�2016 Credit�Agreement.�These�swap�agreements�expire�at�various�points�prior�to�the�maturity�of�the�2016�Credit�Agreement�and�may�not�be�effective�at�mitigating�the risk�of�increasing�interest�rates. ����Further,�our�2016�Credit�Agreement�uses�LIBOR�as�a�reference�rate�for�our�term�loans�and�revolving�credit�facility,�such�that�the�interest�due�pursuant�to�such loans�may�be�calculated�using�LIBOR�(subject�to�a�stated�minimum�value).�On�July�27,�2017,�the�United�Kingdom’s�Financial�Conduct�Authority�(the�"FCA"), which�regulates�LIBOR,�announced�that�it�intends�to�stop�encouraging�or�compelling�banks�to�submit�rates�for�the�calibration�of�LIBOR�by�the�end�of�2021.�On November�30,�2020,�ICE�Benchmark�Administration,�the�administrator�of�LIBOR,�with�the�support�of�the�United�States�Federal�Reserve�and�the�FCA,�announced plans�to�consult�on�ceasing�publication�of�LIBOR�on�December�31,�2021�for�only�the�one�week�and�two�month�LIBOR�tenors,�and�on�June�30,�2023�for�all�other LIBOR�tenors.�While�this�announcement�extends�the�transition�period�to�June�2023,�the�United�States�Federal�Reserve�concurrently�issued�a�statement�advising banks�to�stop�new�LIBOR�issuances�by�the�end�of�2021.�In�light�of�these�recent�announcements,�the�future�of�LIBOR�at�this�time�is�uncertain�and�any�changes�in the�methods�by�which�LIBOR�is�determined�or�regulatory�activity�related�to�LIBOR's�phaseout�could�cause�LIBOR�to�perform�differently�than�in�the�past�or�cease to�exist.�In�June�2017,�the�Alternative�Reference�Rates�Committee�selected�the�Secured�Overnight�Financing�Rate�(“SOFR”),�a�new�index�calculated�by�reference to�short-term�repurchase�agreements�backed�by�Treasury�securities,�as�its�preferred�replacement�for�U.S.�dollar�LIBOR.�Whether�or�not�SOFR�attains�market acceptance�as�a�LIBOR�replacement�tool�remains�in�question.�As�such,�the�future�of�LIBOR�and�the�potential�alternatives�at�this�time�is�uncertain.�If�the�method�for calculation�of�LIBOR�changes,�if�LIBOR�is�no�longer�available�or�if�lenders�have�increased�costs�due�to�changes�in�LIBOR�or�changes�in�law,�we�may�suffer�from potential�increases�in�interest�rate�costs�on�our�floating�debt�rate�and�our�hedging�arrangements�may�not�perform�as�expected.�Further,�we�may�need�to�renegotiate our�2016�Credit�Agreement�and�the�variable�rate�loans�thereunder�to�replace�the�interest�rate�calculated�by�reference�to�LIBOR�with�an�interest�rate�calculated�by reference�to�a�new�standard�that�is�established. Risks�Related�to�Regulation Our�business�is�subject�to�a�wide�variety�of�laws,�rules,�regulations�and�government�policies�under�the�Dodd-Frank�Act,�which�may�have�a�significant�impact on�our�business,�results�of�operations�and�financial�condition. ����On�July�21,�2010,�the�Dodd-Frank�Wall�Street�Reform�and�Consumer�Protection�Act�of�2010,�or�the�Dodd-Frank�Act,�was�enacted�into�law.�Since�enactment,�the Dodd-Frank�Act�has�generally�resulted�in�increased�government�regulation�and�supervision,�and�when�fully�implemented,�will,�among�other�things,�result�in substantial�changes�in�the�regulation�of�derivatives�and�capital�market�activities.�The�ultimate�impact�of�the�Dodd-Frank�Act�continues�to�evolve�as�regulations�that are�intended�to�implement�the�Dodd-Frank�Act�are�adopted,�and�the�text�of�the�Dodd-Frank�Act�is�analyzed�by�stakeholders�and�the�courts.�In�particular,�the�Dodd- Frank�Act�establishes�federal�oversight�and�regulation�of�the�over-the-counter�derivatives�market�and�entities�that�participate�in�that�market.�Derivatives�regulations have�added�costs�to�our�business,�and�any�additional�requirements,�such�as�future�registration�requirements�or�increased�regulation�of�derivative�contracts,�may�add additional�costs�or�may�require�us�to�change�any�fuel�price,�currency�and�interest�rate�hedging�practices�we�may�then�use�to�comply�with�new�regulatory requirements.�Potential�changes�could�also�include�clearing�and�execution�methodology�of�our�derivatives�transactions.�Presently,�we�cannot�assess�the�capital�or margin�requirements�which�might�apply�to�our�over-the-counter�transactions.�Once�implemented,�these�changes�could�result�in�increased�transaction�costs.�In summary,�the�Dodd-Frank�Act�and�any�new�regulations�could�increase�the�cost�of�derivative�contracts�or�modify�the�way�in�which�we�conduct�those�transactions. Additionally,�we�are�required�to�pay�to�the�lenders�under�the�2016�Credit�Agreement,�any�increased�costs�associated�with�the�Dodd-Frank�Act�and�other�changes�in laws,�rules�or�regulations,�subject�to�the�terms�of�the�2016�Credit�Agreement. ����The�Dodd-Frank�Act�also�created�the�Consumer�Financial�Protection�Bureau,�or�the�CFPB,�to�regulate�the�offering�of�consumer�financial�products�or�services under�the�federal�consumer�financial�laws.�The�CFPB�assumed�rulemaking�authority�under�the�existing�federal�consumer�financial�protection�laws,�and�enforces those�laws�against�and�examines�certain�non-depository�institutions�and�insured�depository�institutions�with�total�assets�greater�than�$10�billion�and�their�affiliates. In�addition,�the�CFPB�was�granted�general�authority�to�prevent�covered�persons�or�service�providers�from�committing�or�engaging�in�unfair,�deceptive�or�abusive acts�or�practices�under�federal�law�in�connection�with�any�transaction�with�a�consumer�for�a�consumer�financial�product�or�service,�or�the�offering�of�a�consumer financial�product�or�service.�The�CFPB�is�also�engaged�in�rulemaking�and�regulation�of�the�payments�industry,�in�particular�with�respect�to�prepaid�cards.�The CFPB�amended�several�aspects�of�its�prepaid�accounts�rule,�which�became�effective�on�April�1,�2019.�The�extensive�nature�of�these�types�of�regulations�and�the implementation�dates�for�any�such�additional�rulemaking�may�result�in�additional�compliance�obligations�and�expense�for�our�business�and�our�customers.�The CFPB�also�has�broad�rulemaking�authority�for�a�wide�range�of�consumer�protection�laws,�which�it�has�exercised�as�described�in�Item�1�under�the�heading�“Other Items�–�Regulation�-�United�States�–�The�Dodd�Frank�Act�and�the�Consumer�Financial�Protection�Bureau.”�It�is�unclear�what�future 34 regulatory�changes�may�be�promulgated�by�the�CFPB�and�what�effect,�if�any,�such�changes�would�have�on�our�business�and�operations. ����As�required�under�the�Dodd-Frank�Act,�the�Government�Accountability�Office�issued�its�study�on�the�implications�of�any�elimination�of�the�exemption�to�the definition�of�“bank”�for�industrial�banks�under�the�Bank�Holding�Company�Act.�The�study�did�not�make�a�recommendation�regarding�the�elimination�of�this exemption.�However,�if�this�exemption�were�eliminated�without�any�grandfathering�or�accommodations�for�existing�institutions,�we�could�be�required�to�become�a bank�holding�company�which�could�prompt�us�to�either�cease�certain�activities�or�divest�WEX�Bank. ����The�Dodd-Frank�Act�and�any�related�legislation�or�regulations,�or�any�repeal�or�replacement�of�such�legislation�or�regulations,�may�have�a�material�impact�on our�business,�results�of�operations�and�financial�condition.�The�full�impact�of�the�Dodd-Frank�Act�will�not�be�known�until�all�of�the�regulations�implementing�the statute�are�adopted�and�implemented.�However,�compliance�with�these�laws�and�regulations,�including�any�subsequent�repeals�or�amendments�of�them,�may�require us�to�make�changes�to�our�business,�and,�there�is�a�significant�possibility�that�the�Dodd-Frank�Act�will,�at�a�minimum,�result�in�increased�regulatory�burden�and compliance�costs.�We�have�invested�significant�management�time�and�resources�to�address�the�various�provisions�of�the�Dodd-Frank�Act�and�the�numerous regulations�that�are�required�to�be�issued�under�it,�and�may�have�to�invest�significant�additional�time,�including�to�address�any�changed�business�environment resulting�from�a�repeal�or�replacement�of�all�or�part�of�the�Dodd�Frank�Act�and�any�related�legislation�or�regulation. Existing�and�new�laws�and�regulations�and�enforcement�activities�could�negatively�impact�our�business�and�the�markets�we�presently�operate�in�or�could�limit our�expansion�opportunities. ����Our�operations�are�subject�to�substantial�regulation�both�domestically�and�internationally.�In�addition,�there�are�often�new�regulatory�efforts�which�could�result�in significant�constraints�and�may�impact�our�operations.�These�existing�and�emerging�laws�and�regulations�can�make�the�expansion�or�operations�of�our�business very�difficult�and�negatively�impact�our�revenue�or�increase�our�compliance�costs.�Failure�to�comply�with�applicable�laws�or�regulations�may�result,�among�other things,�in�the�suspension�or�revocation�of�licenses�or�registrations,�the�limitation,�suspension�or�termination�of�services,�and/or�the�imposition�of�civil�and�criminal penalties,�including�fines.�Among�the�regulations�that�impact�us�or�could�impact�us�are�those�governing:�interchange�rates,�interest�rate�and�fee�restrictions,�credit access�and�disclosure�requirements,�collection�and�pricing�requirements,�compliance�obligations,�data�security�and�data�breach�requirements,�identity�theft avoidance�programs,�health�care�mandates,�the�cost�and�scope�of�public�and�private�health�insurance�coverage,�and�anti-money�laundering�compliance�programs. We�also�often�must�obtain�permission�from�government�regulators�to�conduct�business�in�new�locations�or�in�connection�with�the�transfer�of�licenses�for�businesses that�we�acquire.�Changes�to�these�regulations,�including�expansion�of�consumer-oriented�regulation�to�business-to-business�transactions,�could�materially�adversely affect�our�operations,�financial�condition�and�results�of�operations�and�could�further�increase�our�compliance�costs�and�limit�our�ability�to�expand�to�new�markets. ����We�also�conduct�business�with�other�highly�regulated�businesses�such�as�banks,�payment�card�issuers,�and�health�insurance�providers.�These�industries�are subject�to�significant�potential�new�regulations,�laws,�or�reforms�that�could�negatively�affect�these�businesses,�their�ability�to�maintain�or�expand�their�products�and services,�and�the�costs�associated�with�doing�so.�These�developments�could�also�negatively�impact�our�business. Laws�or�regulations�developed�in�one�jurisdiction�or�for�one�product�could�result�in�new�laws�or�regulations�in�other�jurisdictions�or�for�other�products. ����Regulators�often�monitor�other�approaches�to�the�governance�of�the�payment�industry.�As�a�result,�a�law�or�regulation�enacted�in�one�jurisdiction�could�result�in similar�developments�in�another.�In�addition,�law�and�regulation�involving�one�product�could�influence�the�extension�of�regulations�to�other�product�offerings. ����The�expansion�of�certain�regulations�could�negatively�impact�our�business�in�other�geographies�or�for�other�products.�Rules�and�regulations�concerning interchange�and�business�operations�regulations,�for�example,�may�differ�from�country�to�country�which�adds�complexity�and�expense�to�our�operations. ����These�varying�and�increasingly�complex�regulations�could�limit�our�ability�to�globalize�our�products�and�could�significantly�and�adversely�affect�our�business, financial�condition�and�operating�results. Regulations�and�industry�standards�intended�to�protect�or�limit�access�to�personal�information�could�adversely�affect�our�ability�to�effectively�provide�our services. ����Governmental�bodies�in�the�United�States�and�abroad�have�adopted,�or�are�considering�the�adoption�of,�laws�and�regulations�restricting�the�transfer�of,�and requiring�safeguarding�of,�non-public�personal�information.�For�example,�in�the 35 United�States,�all�financial�institutions�must�undertake�certain�steps�to�ensure�the�privacy�and�security�of�consumer�financial�information,�and�the�California Consumer�Privacy�Act,�or�CCPA,�which�became�effective�on�January�1,�2020,�imposes�additional�restrictions�on�the�collection,�processing�and�disclosure�of personally-identifiable�data,�including�imposing�breach�reporting�requirements�and�increased�penalties�on�data�privacy�incidents.�In�Europe,�the�adoption�of General�Data�Protection�Regulation�(commonly�referred�to�as�GDPR)�also�requires�additional�privacy�protections�and�extends�the�scope�of�the�EU�data�protection laws�to�all�companies�processing�data�of�EU�residents,�regardless�of�the�company’s�location.�In�connection�with�providing�services�to�our�clients,�we�are�required by�regulations�and�arrangements�with�payment�networks�and�certain�clients�to�provide�assurances�regarding�the�confidentiality�and�security�of�non-public consumer�information.�These�arrangements�require�periodic�audits�by�independent�companies�regarding�our�compliance�with�industry�standards�such�as�payment card�industry�standards�and�also�allow�for�similar�audits�regarding�best�practices�established�by�regulatory�guidelines.�The�compliance�standards�relate�to�our infrastructure�and�operational�procedures�designed�to�safeguard�the�confidentiality�and�security�of�non-public�consumer�personal�information�received�from�our customers.�Our�ability�to�maintain�compliance�with�these�standards�and�satisfy�these�audits�will�affect�our�ability�to�attract�and�maintain�business�in�the�future.�If we�fail�to�comply�with�these�regulations,�we�could�be�exposed�to�suits�for�breach�of�contract�or�to�governmental�proceedings.�In�addition,�our�client�relationships and�reputation�could�be�harmed,�and�we�could�be�inhibited�in�our�ability�to�obtain�new�clients.�If�more�restrictive�privacy�laws�or�rules�are�adopted�by�authorities�in the�future�on�the�federal�or�state�level,�our�compliance�costs�may�increase,�our�opportunities�for�growth�may�be�curtailed�by�our�compliance�capabilities�or reputational�harm�and�our�potential�liability�for�security�and�data�privacy�breaches�may�increase,�all�of�which�could�have�a�material�adverse�effect�on�our�business, financial�condition�and�operating�results. Changes�in�our�tax�rates,�the�adoption�of�new�U.S.�or�international�tax�legislation�or�exposure�to�additional�tax�liabilities�could�affect�our�future�results. ����We�are�subject�to�taxes�in�the�U.S.�and�numerous�foreign�jurisdictions.�Significant�judgment�is�required�in�determining�our�global�provision�for�income�taxes, deferred�tax�assets�or�liabilities�and�in�evaluating�our�tax�positions�on�a�worldwide�basis.�Our�future�effective�tax�rates�could�be�affected�by�changes�in�the�mix�of earnings�in�countries�with�differing�statutory�tax�rates,�changes�in�the�valuation�of�deferred�tax�assets�and�liabilities,�or�changes�in�tax�laws�or�their�interpretation. Any�of�these�changes�could�have�a�material�adverse�effect�on�our�profitability.�For�example,�the�2017�Tax�Act�enacted�in�December�2017�had�a�significant�impact on�our�tax�obligation�and�effective�tax�rate�for�the�fourth�quarter�of�2017.�We�are�also�subject�to�the�examination�of�our�income�tax�returns�by�the�Internal�Revenue Service�and�other�tax�authorities.�We�regularly�assess�the�likelihood�of�adverse�outcomes�resulting�from�these�examinations�to�determine�the�adequacy�of�our provision�for�taxes.�There�can�be�no�assurance�that�the�outcomes�from�these�examinations�will�not�materially�adversely�affect�our�financial�condition�and�operating results. ����We�urge�our�stockholders�to�consult�with�their�legal�and�tax�advisors�with�respect�to�this�legislation�and�the�potential�tax�consequences�of�investing�in�or�holding our�common�stock. Compliance�with�anti-money�laundering�laws�and�regulations�creates�additional�compliance�costs�and�reputational�risk. ����The�applicable�laws�and�regulations�in�the�various�jurisdictions�in�which�WEX�operates�impose�significant�anti-money�laundering�compliance�and�due�diligence obligations�on�the�local�entities,�including�WEX�Bank,�WEX�Europe�UK�Limited,�and�WEX�Europe�(Netherlands)�B.V.,�as�well�as�our�other�regulated subsidiaries.�We�must�verify�the�identity�of�customers,�monitor�and�report�unusual�or�suspicious�account�activity,�as�well�as�transactions�involving�amounts�in excess�of�prescribed�limits,�and�refrain�from�transacting�with�designated�persons�or�in�designated�regions,�in�each�case�as�required�by�the�applicable�laws�and regulations�(such�as�the�Bank�Secrecy�Act�and�regulations�of�the�United�States�Treasury�Department�and�the�Internal�Revenue�Service�regulations�in�the�United States,�the�Money�Laundering�and�Terrorist�Financing�Regulations�2019�in�the�U.K.�and�the�Act�on�Financial�Supervision�in�the�Netherlands).�Financial�regulators have�issued�various�implementing�regulations�and�have�made�enforcement�a�high�priority.�Failure�to�maintain�and�implement�adequate�programs�to�combat�money laundering�and�terrorist�financing,�or�to�comply�with�all�of�the�relevant�laws�or�regulations,�could�result�in�the�imposition�of�fines�or�penalties�and�other�serious legal�and�reputational�consequences�which�may�impact�our�business,�financial�condition,�and�operating�results. Evolution�and�expansion�of�our�business�may�subject�us�to�additional�regulatory�requirements�and�other�risks,�for�which�failure�to�comply�or�adapt�could harm�our�operating�results. ����The�evolution�and�expansion�of�our�business�may�subject�us�to�additional�risks�and�regulatory�requirements,�including�laws�governing�money�transmission�and payment�processing�services.�These�requirements�vary�throughout�the�markets�in�which�we�operate,�and�have�increased�over�time�as�the�geographic�scope�and complexity�of�our�payments�product�services�have�expanded.�While�we�maintain�a�compliance�program�focused�on�applicable�laws�and�regulations�throughout�the payments�industry,�there�is�no�guarantee�that�we�will�not�be�subject�to�fines,�criminal�and�civil�lawsuits�or�other 36 regulatory�enforcement�actions�in�one�or�more�jurisdictions,�or�be�required�to�adjust�business�practices�to�accommodate�future�regulatory�requirements. ����In�order�to�maintain�flexibility�in�the�growth�and�expansion�of�our�payments�operations,�we�have�registered�as�a�money�service�business�with�FinCEN�and�have obtained�money�transmitter�licenses�(or�their�equivalents)�in�most�states�and�expect�to�continue�the�license�application�process�in�additional�jurisdictions throughout�the�United�States�as�needed�to�accommodate�new�product�development.�Our�efforts�to�acquire�and�maintain�these�licenses�could�result�in�significant management�time,�effort,�and�cost,�and�may�still�not�guarantee�compliance�given�the�constant�state�of�change�in�these�regulatory�frameworks.�Accordingly,�costs associated�with�changes�in�compliance�requirements,�regulatory�audits,�enforcement�actions,�reputational�harm,�or�other�regulatory�limits�on�our�ability�to�grow�our payment�processing�business�could�adversely�affect�our�financial�results. Our�increased�presence�in�foreign�jurisdictions�increases�the�possibility�of�foreign�law�violations�or�violation�of�the�FCPA�and�the�United�Kingdom�Bribery�Act of�2010�(“UKBA”) . ����We�are�subject�to�the�FCPA�and�the�UKBA,�as�we�own�subsidiaries�organized�under�UK�law,�which�serve�as�holding�companies�for�other�subsidiaries.�The FCPA�generally�prohibits�U.S.�companies�and�their�intermediaries�from�making�improper�payments�to�foreign�officials�for�the�purpose�of�obtaining�or�retaining business.�The�UKBA�is�broader �in�its �reach�and �prohibits�bribery �in�purely �commercial�contexts �in�addition�to�bribery �of�government �officials, �and�it �does�not allow�certain�exceptions�that�are�permitted�by�the�FCPA.�Other�countries�in�which�we�operate�or�have�operated,�including�Brazil,�and�other�countries�where�we intend�to�operate,�also�have�anti-corruption�laws,�which�we�are,�have�been�or�will�be�subject�to. Our �employees �and �agents �interact �with �government �officials �on �our �behalf, �including �as �necessary �to �obtain �licenses �and �other �regulatory �approvals necessary�to�operate�our�business.�We�also�have�a�number�of�contracts�with�third-parties�that�are�owned�or�controlled�by�foreign�governments.�These�interactions and�contracts�create�a�risk�of�unauthorized�payments�or�offers�of�payments�by�one�of�our�employees�or�agents�that�could�be�in�violation�of�the�FCPA,�UKBA�or other�similar�laws,�we�could�be�held�liable�for�such�unauthorized�actions�taken�by�our�employees�or�agents. In�recent�years,�there�have�been�significant�regulatory�reviews�and�actions�taken�by�the�United�States�and�other�regulators�related�to�anti-bribery�laws,�and the�trend�appears�to�be�greater�scrutiny�on�payments�to,�and�relationships�with,�foreign�entities�and�individuals. � �� �Although �we �have �policies �and �procedures �designed �to �ensure �that �we, �our �employees, �agents �and �intermediaries �comply �with �the �FCPA �and �UKBA, �such policies�or�procedures�may�not�work�effectively�all�of�the�time�or�protect�us�against�liability�for�actions�taken�by�our�employees,�agents�and�intermediaries�with respect�to�our�business�or�any�businesses�that�we�may�acquire.�In�the�event�that�we�believe,�or�have�reason�to�believe,�that�our�employees,�agents�or�intermediaries have�or�may�have�violated�applicable�anti-corruption�laws,�we�may�be�required�to�investigate�or�have�a�third�party�investigate�the�relevant�facts�and�circumstances, which�can�be�expensive�and�require�significant�time�and�attention�from�senior�management.�Our�continued�operation�and�expansion�outside�the�United�States�could increase�the�risk�of�such�violations�in�the�future.�Any�violation�of�the�FCPA,�the�UKBA�or�similar�laws�and�regulations,�could�result�in�significant�expenses,�divert management�attention,�and�otherwise�have�a�negative�impact�on�us.�Any�determination�that�we�have�violated�the�FCPA,�UKBA�or�laws�of�any�other�jurisdiction could�subject�us�to,�among�other�things,�penalties�and�legal�expenses�that�could�harm�our�reputation�and�have�a�material�adverse�effect�on�our�financial�condition and �results �of �operations. �The �possibility �of �violations �of �the �FCPA, �UKBA�or �other �similar �laws �or �regulations �may �increase �as �we �expand �globally �and �into countries�with�recognized�corruption�problems. Risks�Related�to�our�Dependence�on�Technology If�the�technologies�we�use�in�operating�our�business�and�interacting�with�our�customers�fail,�are�unavailable,�or�do�not�operate�to�expectations,�or�we�fail�to successfully�implement�technology�strategies�and�capabilities�in�connection�with�our�outsourcing�arrangements,�our�business�and�results�of�operations�could be�adversely�impacted. ����We�utilize�a�combination�of�proprietary�and�third-party�technologies,�including�third-party�owned�and�operated�“cloud”�technologies�or�third-party�managed technology�platforms,�data-centers,�and�processing�systems,�to�conduct�our�business�and�interact�with�our�customers,�partners�and�suppliers,�among�others.�This includes�technology�that�we�have�developed,�have�contracted�with�others�to�develop,�have�outsourced�to�a�single�provider�to�operate�or�have�obtained�through third-parties�by�way�of�service�agreements.�To�the�extent�that�our�proprietary�technology�or�a�third-party�providers’�technology�does�not�work�as�agreed�to�or�as expected,�or�if�we�experience�outages�or�unavailability�resulting�from�their�operations�and�the�services�they�provide�to�us,�our�ability�to�efficiently�and�effectively deliver�services�could�be�adversely�impacted�and�our�business�and�results�of�operations�could�be�adversely�affected.�Similarly,�any�failure�by�our�customers�or 37 partners�to�access�the�technology�that�we�develop�internally�could�have�an�adverse�effect�on�our�business,�results�of�operations�and�financial�condition.�Although we�make�substantial�investments�in�technology,�there�is�no�guarantee�that�it�will�function�as�intended�once�it�is�placed�into�operation.�Lastly,�given�our�reliance�on technology,�we�regularly�assess�our�technology�plans,�including�both�platforms�and�technology�infrastructure.�To�the�extent�that�we�conclude�that�certain technologies�should�be�retired,�that�existing�platforms�should�be�consolidated,�or�that�we�should�change�our�technology�strategies,�we�may�be�required�to�impair�or accelerate�depreciation�on�certain�assets.�Any�of�these�potential�changes�or�failures�in�our�technology�strategies�may�also�divert�management’s�attention�and�have�a material�adverse�effect�on�our�business�and�results�of�operations. Our�business�is�regularly�subject�to�cyberattacks�and�attempted�security�and�privacy�breaches�and�we�may�not�be�able�to�adequately�protect�our�information systems,�including�the�data�we�collect�about�our�customers,�which�could�subject�us�to�liability�and�damage�our�reputation. ����We�collect�and�store�data�about�our�customers�and�their�fleets,�including�bank�account�information�and�spending�data.�Our�customers�expect�us�to�keep�this information�in�our�confidence.�In�certain�instances,�the�information�we�collect�includes�social�security�numbers�and�tax�identification�numbers.�As�a�result�of applicable�laws,�we�are�required�to�take�commercially�reasonable�measures�to�prevent�and�mitigate�the�impact�of�cyberattacks,�as�well�as�the�unauthorized�access, acquisition,�release�and�use�of�“personally�identifiable�information,”�such�as�social�security�numbers.�While�social�security�numbers�and�tax�identification�numbers constitute�only�a�part�of�the�data�we�keep,�in�the�event�of�a�security�breach�we�would�be�required�to�determine�the�types�of�information�compromised�and�determine corrective�actions�and�next�steps�under�applicable�laws,�which�would�require�us�to�expend�capital�and�other�resources�to�address�the�security�breach�and�protect against�future�breaches.�In�addition,�as�outsourcing,�specialization�of�functions,�third-party�digital�services�and�technology�innovation�within�the�payments�industry increase�(including�with�respect�to�mobile�technologies,�tokenization,�big�data�and�cloud�storage�solutions),�more�third�parties�are�involved�in�processing�card transactions�and�there�is�a�risk�the�confidentiality,�integrity,�privacy�and/or�security�of�data�held�by,�or�accessible�to,�third�parties,�including�merchants�that�accept our�cards,�payment�processors�and�our�business�partners,�may�be�materially�compromised,�which�could�lead�to�unauthorized�transactions�on�our�cards�and�costs associated�with�responding�to�such�an�incident.�In�addition,�high�profile�data�breaches�could�change�consumer�behaviors,�impact�our�ability�to�access�data�to�make product�offers�and�credit�decisions,�result�in�legislation�and�additional�regulatory�requirements,�and�increases�in�our�compliance�and�monitoring�costs.�An increasing�number�of�organizations,�including�large�on-line�and�off-line�merchants�and�businesses,�large�Internet�companies,�financial�institutions,�and�government institutions,�have�disclosed�breaches�of�their�information�security�systems,�some�of�which�have�involved�sophisticated�and�highly�targeted�attacks,�including�on portions�of�their�websites�or�infrastructure.�Like�those�companies,�we�too,�are�subject�to�regular�and�repeated�attempts�to�breach�our�information�security protections. �������� ����The�techniques�used�in�attempts�to�obtain�unauthorized,�improper�or�illegal�access�to�our�systems,�our�data�or�our�customers’�data,�to�degrade�service,�or�to sabotage�our�systems�are�constantly�evolving,�are�difficult�to�detect�quickly,�and�may�not�be�recognized�until�after�a�successful�penetration�of�our�information security�systems.�Unauthorized�parties�attempt�to�gain�access�to�our�systems�or�facilities�through�various�means,�including,�among�others,�targeting�our�systems�or facilities�or�our�third-party�vendors�or�customers,�or�attempting�to�fraudulently�induce�our�employees,�partners,�customers�or�others�into�disclosing�user�names, passwords,�payment�card�information,�or�other�sensitive�information,�which�may�in�turn�be�used�to�access�our�information�technology�systems.�Certain�efforts�may be�state-sponsored�and�supported�by�significant�financial�and�technological�resources,�making�them�even�more�difficult�to�detect.�Like�many�companies,�we�are�a target�for�such�breaches�and�attacks.�Although�we�have�developed�systems�and�processes�that�are�designed�to�protect�our�data�and�customer�data�and�to�prevent data�loss�and�other�security�breaches,�and�will�continue�to�expend�significant�additional�resources�to�bolster�these�protections,�these�security�measures�cannot provide�absolute�security.�Our�information�technology�and�infrastructure�may�be�vulnerable�to�successful�cyberattacks�or�security�breaches,�and�third�parties�may be�able�to�access�our�customers’�personal�or�proprietary�information�and�data�that�are�stored�on�or�accessible�through�those�systems. ����Our�security�measures�may�also�be�breached�due�to�employee�error,�malfeasance,�system�errors�or�vulnerabilities,�or�other�irregularities.�Any�actual�or�perceived breach�of�our�security�could�interrupt�our�operations;�result�in�our�systems�or�services�being�unavailable;�result�in�improper�disclosure�of�data;�materially�harm�our reputation�and�brand;�result�in�significant�legal�and�financial�exposure;�lead�to�loss�of�customer�confidence�in,�or�decreased�use�of,�our�products�and�services;�and, adversely�affect�our�business�and�results�of�operations.�Any�breaches�of�network�or�data�security�at�our�partners,�some�of�whom�maintain�information�about�our customers,�or�breaches�of�our�customers’�systems�could�have�similar�effects.�In�addition,�our�customers�could�have�vulnerabilities�on�their�own�computer�systems that�are�entirely�unrelated�to�our�systems,�but�could�mistakenly�attribute�their�own�vulnerabilities�to�us.�While�we�take�commercially�appropriate�steps�to�safeguard data�used�by�and�contained�on�the�systems�of�our�partners,�customers�and�vendors,�we�cannot�control�all�access�to�those�systems�and�they�are�therefore�subject�to potential�cyberattacks�and�fraud. 38 ����Furthermore,�as�we�have�increased�the�number�of�platforms�as�well�as�the�size�of�our�networks�and�information�systems,�our�reliance�on�these�technologies�have become�increasingly�important�to�our�operating�activities.�The�potential�negative�impact�that�a�platform,�network�or�information�system�shutdown�may�have�on�our operating�activities�has�increased.�Shutdowns�may�be�caused�by�cyberattacks�and�unexpected�catastrophic�events�such�as�natural�disasters�or�other�unforeseen events,�such�as�software�or�hardware�defects�or�cyber-attacks�by�groups�or�individuals. ����Under�the�Financial�Services�Modernization�Act�of�1999,�also�referred�to�as�the�Gramm-Leach-Bliley�Act�or�GLBA,�and�some�state�laws,�we�and�WEX�Bank are�required�to�maintain�a�comprehensive�written�information�security�program�that�includes�administrative,�technical�and�physical�safeguards�relating�to�consumer information.�This�requirement�generally�does�not�extend�to�information�about�companies�or�about�individuals�who�obtain�financial�products�or�services�for business,�commercial,�or�agricultural�purposes. ����The�GLBA�also�requires�us�and�WEX�Bank�to�provide�initial�and�annual�privacy�notices�to�customers�that�describe�in�general�terms�our�information�sharing practices.�If�we�or�WEX�Bank�intend�to�share�nonpublic�personal�information�about�consumers�with�affiliates�and/or�nonaffiliated�third�parties,�we�and�WEX�Bank must�provide�customers�with�a�notice�and�a�reasonable�period�of�time�for�each�customer�to�“opt�out”�of�any�such�disclosure.�In�addition�to�U.S.�federal�privacy laws�with�which�we�must�comply,�states�also�have�adopted�statutes,�regulations�and�other�measures,�such�as�the�CCPA,�governing�the�collection�and�distribution�of nonpublic�personal�information�about�customers.�In�some�cases,�these�state�measures�are�preempted�by�federal�law,�but�if�not,�we�and�WEX�Bank�must�monitor and�seek�to�comply�with�individual�state�privacy�laws�in�the�conduct�of�our�businesses. ����When�we�handle�individually�identifiable�health�information,�regulations�issued�under�Health�Insurance�Portability�and�Accountability�Act�of�1996,�or�HIPAA, and�the�Health�Information�Technology�for�Economic�and�Clinical�Health�Act,�or�HITECH�Act,�our�contracts�with�our�customers,�and�supplemental�state�laws require�us�to�implement�privacy�and�data�security�measures�and�to�comply�with�breach�notification�requirements.�We�may�be�subject�to�contractual�damages�and civil�or�criminal�penalties�if�we�are�found�to�violate�these�privacy,�security�and�breach�notification�requirements.�An�amendment�to�the�HITECH�Act�enacted�in January�2021�will�require�consideration�of�a�company's�implementation�of�recognized�security�standards�in�assessing�administrative�fines�and�penalties�under�the HIPAA�security�standards.�This�action�will�potentially�heighten�enforcement�risks�if�we�fail�to�adequately�implement�the�recognized�security�standards,�while mitigating�such�risks�if�the�recognized�measures�are�successfully�implemented. ����Our�efforts�to�comply�with�existing�and�future�health�and�financial�data�laws�and�regulations,�both�in�the�U.S.�and�abroad,�is�costly�and�time-consuming. Incidents�involving�our�handling�of�this�protected�and�sensitive�information�may�consume�significant�financial�and�managerial�resources�and�may�damage�our reputation,�which�may�discourage�customers�from�using,�renewing,�or�expanding�their�use�of�our�services. ����Any�security�breach,�inadvertent�transmission�of�information�about�our�customers,�failure�to�comply�with�applicable�breach�notification�and�reporting requirements,�or�any�violation�of�international,�federal�or�state�privacy�laws�could�expose�us�to�liability�in�excess�of�any�applicable�insurance�policies,�litigation, regulatory�scrutiny,�and/or�cause�damage�to�our�reputation.�We�may�also�be�required�to�expend�significant�resources�to�implement�additional�data�protection measures�or�to�modify�the�features�and�functionality�of�our�system�offerings�in�a�way�that�is�less�attractive�to�customers. Our�Fleet�business�is�dependent�on�technology�systems�and�electronic�communications�networks�managed�by�third�parties,�which�could�result�in�our�inability to�prevent�service�disruptions. ����Our�ability�to�process�and�authorize�transactions�electronically�depends�on�our�ability�to�electronically�communicate�with�our�fuel�and�vehicle�maintenance providers�through�point-of-sale�devices�and�electronic�networks�that�are�owned�and�operated�by�third�parties.�The�electronic�communications�networks�upon�which we�depend�are�often�subject�to�disruptions�of�various�magnitudes�and�durations.�Any�severe�disruption�of�one�or�more�of�these�networks�could�impair�our�ability�to authorize�transactions�or�collect�information�about�such�transactions,�which,�in�turn,�could�harm�our�reputation�for�dependable�service�and�adversely�affect�our results�of�operations.�In�addition,�our�ability�to�collect�enhanced�data�relating�to�our�customers’�purchases�may�be�limited�by�the�use�of�older�point-of-sale�devices by�fuel�and�vehicle�maintenance�providers.�To�the�extent�that�fuel�and�vehicle�maintenance�providers�within�our�network�are�slow�to�adopt�advanced�point-of-sale devices,�we�may�not�be�able�to�offer�the�latest�services�and�capabilities�that�our�customers�demand. The�failure�to�maintain�effective�systems�of�internal�control�over�financial�reporting�and�disclosure�controls�and�procedures�could�result�in�the�inability�to accurately�report�our�financial�results�or�prevent�material�misstatement�due�to�fraud,�which�could�cause�current�and�potential�shareholders�to�lose�confidence in�our�financial�reporting,�adversely Risks�Relating�to�Ownership�of�Our�Common�Stock 39 affect�the�trading�price�of�our�securities,�harm�our�operating�results,�trigger�a�default�under�the�2016�Credit�Agreement�or�result�in�regulatory�proceedings against�us. ����Effective�internal�control�over�financial�reporting�and�disclosure�controls�and�procedures�are�necessary�for�us�to�provide�reliable�financial�reports�and�effectively prevent�fraud�and�operate�successfully�as�a�public�company.�The�failure�to�develop�or�maintain�effective�internal�control�over�financial�reporting�and�disclosure controls�and�procedures�could�harm�our�reputation�or�operating�results,�or�cause�us�to�fail�to�meet�our�reporting�obligations,�or�trigger�a�default�under�the�2016 Credit�Agreement. ����Our�financial�reporting�and�disclosure�controls�and�procedures�are�reliant,�in�part,�on�information�we�receive�from�disparate�internal�financial�reporting�systems and�third�parties�that�supply�information�to�us�regarding�transactions�that�we�process.�In�addition,�because�our�strategy�includes�pursuing�growth�through acquisitions�of�other�businesses,�which�are�at�different�levels�of�maturity�and�which�may�have�underdeveloped�financial�reporting�systems�and�processes,�we depend�on�dispersed�financial�systems�to�process,�summarize�and�report�financial�transactions�for�our�distributed�operations.�To�the�extent�these�systems�do�not properly�transmit�information�to�our�financial�ledgers,�we�could�fail�to�properly�summarize�and�report�financial�results. ����As�we�expand�our�business�operations�domestically�and�internationally,�and�as�we�implement�new�accounting�standards�promulgated�by�the�FASB,�we�will�need to�maintain�effective�internal�control�over�financial�reporting�and�disclosure�controls�and�procedures.�If�we�are�unable�to�do�so,�our�external�auditors�could�issue�a qualified�opinion�on�the�effectiveness�of�our�internal�control�over�financial�reporting. ����Ineffective�internal�control�over�financial�reporting�and�disclosure�controls�and�procedures�could�cause�investors�to�lose�confidence�in�our�reported�financial information,�which�could�have�a�negative�effect�on�the�trading�price�of�our�securities�or�affect�our�ability�to�access�the�capital�markets�and�could�result�in regulatory�proceedings�against�us�by,�among�others,�the�SEC. Currently,�we�are�cooperating�with�an�SEC�investigation�arising�from�the�revision�of�our�financial�statements�in�2019�due�to�issues�involving�our�former Brazil�subsidiary,�including�our�financial�and�disclosure�controls�and�procedures.�At�this�time,�it�is�not�possible�to�predict�the�outcome�of�the�SEC’s�inquiry, including�whether�or�not�any�proceeding�will�be�initiated�or,�if�so,�when�or�how�the�matter�will�be�resolved. Material�weaknesses�in�internal�control�over�financial�reporting�have�in�the�past�and�could�in�the�future�lead�to�deficiencies�in�the�preparation�of�financial statements.�Deficiencies�in�the�preparation�of�financial�statements,�could�lead�to�litigation�claims�against�us.�The�defense�of�any�such�claims�may�cause�the diversion�of�management’s�attention�and�resources,�and�we�may�be�required�to�pay�damages�if�any�such�claims�or�proceedings�are�not�resolved�in�our�favor.�Any litigation,�even�if�resolved�in�our�favor,�could�cause�us�to�incur�significant�legal�and�other�expenses.�Such�events�could�also�affect�our�ability�to�raise�capital�to�fund future�business�initiatives. Provisions�in�our�charter�documents,�Delaware�law,�applicable�banking�law�and�the�Convertible�Notes�may�delay�or�prevent�our�acquisition�by�a�third�party. Our�certificate�of�incorporation�and�by-laws�contain�several�provisions�that�may�make�it�more�difficult�for�a�third�party�to�acquire�control�of�us�without the�approval�of�our�board�of�directors.�These�provisions�include,�among�other�things,�a�classified�board�of�directors,�the�elimination�of�stockholder�action�by written�consent,�advance�notice�for�raising�business�or�making�nominations�at�meetings�of�stockholders�and�“blank�check”�preferred�stock.�Blank�check�preferred stock�enables�our�board�of�directors,�without�stockholder�approval,�to�designate�and�issue�additional�series�of�preferred�stock�with�such�special�dividend, liquidation,�conversion,�voting�or�other�rights,�including�the�right�to�issue�convertible�securities�with�no�limitations�on�conversion,�and�rights�to�dividends�and proceeds�in�a�liquidation�that�are�senior�to�the�common�stock,�as�our�board�of�directors�may�determine.�In�addition,�under�the�indenture�for�the�Convertible�Notes, upon�the�occurrence�of�a�“fundamental�change”�(as�defined�in�the�indenture,�and�which�includes,�among�other�things,�certain�change�of�control�transactions�with respect�to�the�Company),�holders�may�require�the�Company�to�repurchase�all�or�a�portion�of�their�Convertible�Notes�at�a�repurchase�price�equal�to�the�sum�of�(i) 105%�of�then�accreted�principal�amount�of�the�Convertible�Notes�to�be�repurchased,�plus�accrued�interest�and�(ii)�the�sum�of�the�present�values�of�the�scheduled remaining�payments�of�interest�had�such�Convertible�Notes�remained�outstanding�through�maturity.�These�provisions�may�make�it�more�difficult�or�expensive�for�a third�party�to�acquire�a�majority�of�our�outstanding�voting�common�stock.�We�also�are�subject�to�certain�provisions�of�Delaware�law,�which�could�delay,�deter�or prevent�us�from�entering�into�an�acquisition,�including�Section�203�of�the�Delaware�General�Corporation�Law,�which�prohibits�a�Delaware�corporation�from engaging�in�a�business�combination�with�an�interested�stockholder�unless�specific�conditions�are�met.�These�provisions�also�may�delay,�prevent�or�deter�a�merger, acquisition,�tender�offer,�proxy�contest�or�other�transaction�that�might�otherwise�result�in�our�stockholders�receiving�a�premium�over�the�market�price�for�their common�stock. 40 In�addition,�as�owners�of�a�Utah�industrial�bank,�we�are�subject�to�Utah�banking�regulations�that�require�any�entity�that�controls�10�percent�or�more�of�our common�stock�to�obtain�the�approval�of�Utah�banking�authorities�prior�to�consummating�any�acquisition�of�shares.�Federal�law�also�prohibits�a�person�or�group�of persons�from�acquiring�“control”�of�us�unless�the�FDIC�has�been�notified�and�has�not�objected�to�the�transaction.�Under�the�FDIC’s�regulations,�the�acquisition�of 10�percent�or�more�of�a�class�of�our�voting�stock�would�generally�create�a�rebuttable�presumption�of�control.�In�addition,�our�certificate�of�incorporation�requires that�if�any�stockholder�fails�to�provide�us�with�satisfactory�evidence�that�any�required�approvals�have�been�obtained,�we�may,�or�will�if�required�by�state�or�federal regulators,�restrict�such�stockholder’s�ability�to�vote�such�shares�with�respect�to�any�matter�subject�to�a�vote�of�our�stockholders.�These�regulatory�requirements may�preclude�or�delay�the�purchase�of�a�relatively�large�ownership�stake�by�potential�investors.�Further,�as�a�result�of�these�regulatory�requirements,�certain existing�and�potential�stockholders�may�choose�not�to�invest�or�invest�further�in�our�stock.�This�could�limit�the�number�of�potential�investors�and�impact�our�ability to�attract�further�funds. The�issuance�by�us�of�additional�shares�of�common�stock�or�equity-linked�securities,�including�in�connection�with�conversions�of�our�outstanding�Convertible Notes,�may�cause�dilution�to�our�stockholders. To�the�extent�that�we�issue�additional�shares�of�common�stock�or�equity-linked�securities,�the�ownership�interests�of�our�stockholders�may�be�diluted.�In July�2020,�we�issued�$310.0�million�in�initial�aggregate�principal�amount�of�the�Convertible�Notes�and�$90.0�million�of�our�common�stock�to�an�affiliate�of Warburg�Pincus�in�a�private�placement.�The�Convertible�Notes�are�convertible�by�the�holders�at�any�time�prior�to�maturity,�or�earlier�redemption�or�repurchase, based�upon�an�initial�conversion�price�of�$200�per�share�of�common�stock.�We�may�settle�conversions�of�Convertible�Notes,�at�our�election,�in�cash,�shares�of common�stock,�or�a�combination�of�cash�and�shares�of�common�stock.�The�number�of�shares�issuable�upon�conversion�of�the�Convertible�Notes�is�subject�to increase,�including�as�a�result�of�our�ability�to�elect�to�satisfy�interest�obligations�under�the�Convertible�Notes�by�increasing�the�principal�amount�of�the�Convertible Notes�rather�than�paying�cash�interest�and�as�a�result�of�adjustments�to�the�conversion�price�under�the�Convertible�Notes�in�connection�with�certain�events.�The conversion�price�is�subject�to�adjustments�customary�for�convertible�debt�securities�and�is�also�subject�to�a�weighted�average�adjustment�in�the�event�of�issuances of�equity�and�equity�linked�securities�by�the�Company�at�prices�below�the�then�applicable�conversion�price�for�the�Convertible�Notes�or�the�then�market�price�of�the Company’s�common�stock,�subject�to�certain�exceptions,�including�exceptions�for�underwritten�offerings,�Rule�144A�offerings,�private�placements�at�discounts�not exceeding�a�specified�amount,�issuances�as�acquisition�consideration�and�equity�compensation�related�issuances.�To�the�extent�we�issue�shares�of�our�common stock�in�satisfaction�of�our�conversion�obligations�under�the�Convertible�Notes,�our�stockholders�will�experience�dilution.�Our�ability�to�settle�conversions�of Convertible�Notes�in�cash�may�be�limited,�including�as�a�result�of�our�available�cash�resources�at�the�time�of�any�conversions�and�as�a�result�of�restrictions�in�our then�existing�debt�agreements�on�our�ability�to�satisfy�conversions�in�cash�(for�example,�pursuant�to�restricted�payment�covenants�similar�to�those�contained�in�our existing�debt�agreements). In�addition�to�potential�dilution�that�may�result�from�the�issuance�of�shares�of�common�stock�pursuant�to�the�terms�of�the�Convertible�Notes,�our stockholders�may�also�experience�additional�dilution�as�a�result�of�other�future�issuances�by�us�of�common�stock�or�equity-linked�securities,�whether�issued�in financing�transactions,�in�connection�with�acquisitions,�pursuant�to�equity�compensation�plans�or�otherwise.�Pursuant�to�the�purchase�agreement�entered�into�with Warburg�Pincus�in�connection�with�the�issuance�of�the�Convertible�Notes,�we�provided�Warburg�Pincus�with�certain�contractual�preemptive�rights�allowing�it�to maintain�its�proportionate�equity�interest�on�an�as-converted�basis,�subject�to�certain�exceptions,�in�connection�with�certain�future�issuances�by�us�of�common�stock or�other�equity-linked�securities. The�sale�or�other�dispositions�of�significant�amounts�of�our�outstanding�common�stock�into�the�public�market�in�the�future,�or�the�perception�that�sales�or other�dispositions�could�occur,�could�adversely�impact�the�market�price�of�our�common�stock. In�connection�with�our�July�2020�private�placement�with�Warburg�Pincus,�we�filed�a�registration�statement�registering�under�the�Securities�Act�of�1933,�as amended,�the�Convertible�Notes�and�the�shares�of�common�stock�issued�in�the�private�placement�and�issuable�pursuant�to�conversions�of�the�Convertible�Notes. The�purchase�agreement�for�the�Convertible�Notes�provides�that�Warburg�Pincus�is�restricted�from�transferring�the�Convertible�Notes�or�shares�of�common�stock issued�in�the�private�placement�or�upon�conversion�of�the�Convertible�Notes�until�July�1,�2021,�subject�to�certain�exceptions�(including,�among�other�exceptions, transfers�pursuant�to�pledge�arrangements�that�may�be�entered�into�by�Warburg�Pincus�in�connection�with�certain�financing�arrangements).�After�July�1,�2021, transfers�by�Warburg�Pincus�generally�will�not�be�restricted,�subject�to�certain�limitations�on�transfers�to�certain�categories�of�transferees.�The�Company�also�has the�ability�to�waive�the�transfer�restrictions�under�the�purchase�agreement�prior�to�their�expiration�and�may�elect�to�do�so�in�the�future�and,�as�noted�above,�certain transfers�may�be�made�by�Warburg�Pincus�prior�to�July�1,�2021.�The�sale�or�other�dispositions�of�a�substantial�number�of�our�shares�by�Warburg�Pincus�or�other holders�of�our�common�stock�or�the�Convertible�Notes,�or�the�market�perception�that�such�sales�or�other�dispositions�may�occur,�could�have�an�adverse�impact�on the�price�of�our�common�stock. 41 ITEM�1B.�UNRESOLVED�STAFF�COMMENTS None. ITEM�2.��PROPERTIES All�of�our�facilities�are�leased.�Our�corporate�headquarters,�located�in�Portland,�Maine,�consists�of�90,000�square�feet,�pursuant�to�a�lease�that�expires�in 2034.�We�lease�an�additional�39,595�square�feet�of�office�space�in�Portland,�Maine.�We�lease�49,418�square�feet�and�179,144�square�feet�of�space�in�Minnesota�and North�Dakota,�respectively,�primarily�for�WEX�Health�operations.�These�leases�expire�at�various�dates�between�2021�and�2035.�We�also�lease�facilities�in�various other�locations�in�the�United�States�and�around�the�world. ITEM�3.�LEGAL�PROCEEDINGS As�of�the�date�of�this�filing,�we�are�not�involved�in�any�material�legal�proceedings.�On�May�11,�2020,�the�shareholders�of�eNett�and�Optal�each�initiated separate�legal�proceedings�against�the�Company�by�filing�claims�in�the�High�Court�of�Justice�of�England�and�Wales�in�the�United�Kingdom.�The�legal�proceedings denied�that�there�had�been�a�Material�Adverse�Effect�(as�defined�in�the�original�purchase�agreement�between�WEX,�eNett�and�Optal,�among�others)�and�alleged that�the�Company�has�threatened�to�breach�its�obligations�under�the�terms�of�the�purchase�agreement.�The�claimants�sought�a�declaration�that�no�Material�Adverse Effect �had�occurred �within�the �meaning �of �the �purchase �agreement �and �ordered�for �specific �performance�of �WEX’s �obligations �under �the �purchase �agreement. From�September�21,�2020�through�September�29,�2020,�a�London�court�held�a�trial�of�certain�preliminary�issues,�including,�among�other�things,�the�determination of�the�industry�in�which�eNett�and�Optal�operate�and�of�the�other�participants�in�such�industry,�in�each�case�for�purposes�of�interpreting�the�definition�of�Material Adverse�Effect�in�the�purchase�agreement.�On�October�12,�2020,�the�Court�handed�down�its�judgment,�which�concluded,�among�other�things,�that�Optal�and�eNett operate �in �the�payments �industry �and�the �B2B�payments �industry �and�that, �for�the �purpose�of �the �definition�of �the�Material�Adverse �Effect�clause, �the �relevant industry�is�the�B2B�payments�industry.�The�Court�found�that�there�was�no�travel�payments�industry,�as�argued�for�by�eNett�and�Optal.�This�finding�meant�that�when determining�whether�eNett�or�Optal�have�been�disproportionately�impacted�by�COVID-19,�a�comparison�would�be�made�against�other�B2B�payments�companies. The�Company�and�the�claimants�each�sought�permission�to�appeal�certain�portions�of�the�Court’s�judgment. On�December�15,�2020,�the�Company�entered�into�a�Deed�of�Settlement�(the�“Settlement�Deed”)�with�eNett,�Optal�and�the�other�parties�thereto,�providing for, �among �other �things, �(i) �the �dismissal �with �prejudice �of �the �legal �proceedings �and �appeals �described �above, �(ii) �the �amendment �of �the �original �purchase agreement �and�(iii) �the�release �of�all �claims�capable �of�arising �out�of,�or �in�any �way�connected�with �or�relating �to�the �COVID-19�pandemic,�but �excluding�any claims�arising�under�the�amended�purchase�agreement.�The�amended�purchase�agreement�provided�for,�among�other�things,�a�reduction�of�the�aggregate�purchase price�for�the�acquisition�to�$577.5�million�(subject�to�certain�adjustments)�consisting�entirely�of�cash,�which�the�Company�paid�with�cash�on�hand,�and�the�closing of�the�acquisition�occurring�concurrent�with�the�execution�of�the�Settlement�Deed,�which�occurred�on�December�15,�2020. We�were�not�involved�in�any�other�material�legal�proceedings�that�were�terminated�during�the�fourth�quarter�of�2020.�However,�from�time�to�time,�we�are subject �to �legal �proceedings �and �claims �in �the �ordinary �course �of �business, �including �but �not �limited �to: �commercial �disputes; �contract �disputes; �employment litigation;�disputes�regarding�our�intellectual�property�rights;�alleged�infringement�or�misappropriation�by�us�of�intellectual�property�rights�of�others;�and,�matters relating �to �our �compliance �with �applicable �laws �and �regulations. �In �addition, �we �are �cooperating �with �an �SEC �investigation �arising �from �the �revision �of �our financial�statements�as�noted�in�our�Annual�Report�on�Form�10–K/A�for�the�year�ended�December�31,�2018�due�to�issues�involving�our�former�Brazil�subsidiary, which�was�sold�in�September�2020,�including�financial�and�disclosure�controls�and�procedures.�As�of�the�date�of�this�filing,�the�current�estimate�of�a�reasonably possible�loss�contingency�from�these�matters�is�not�material�to�the�Company’s�consolidated�financial�position,�results�of�operations,�cash�flows�or�liquidity. ITEM�4.�MINE�SAFETY�DISCLOSURES Not�applicable. 42 PART�II ITEM�5.�MARKET�FOR�REGISTRANT’S�COMMON�EQUITY,�RELATED�STOCKHOLDER�MATTERS�AND�ISSUER�PURCHASES�OF�EQUITY SECURITIES Market�Information The �principal�market�for �the�Company’s�common�stock�is�the�NYSE�and�our�ticker �symbol�is�WEX.�As�of �February�22,�2021,�the�closing �price�of�our common�stock�was�$226.82�per�share,�there�were�44,190,995�shares�of�our�common�stock�outstanding�and�there�were�7�holders�of�record�of�our�common�stock. The�actual�number�of�stockholders�is�greater�than�this�number�of�record�holders�and�includes�stockholders�who�are�beneficial�owners�but�whose�shares�are�held�in street�name�by�brokers�or�nominees. Dividends The �Company �has �not �declared �any �dividends �on �its �common�stock �since �it �commenced �trading �on �the �NYSE �on �February �16, �2005. �The �timing�and amount �of �future �dividends, �if �any, �will �be �(i) �dependent �upon �the �Company’s �results �of �operations, �financial �condition, �cash �requirements �and �other �relevant factors; �(ii) �subject �to �the �discretion �of �the �Board �of �Directors �of �the �Company; �and �(iii) �payable �only �out �of �the �Company’s �surplus �or �current �net �profits �in accordance�with�the�General�Corporation�Law�of�the�State�of�Delaware. The �Company �has �certain �restrictions �on �the �dividends �it �may �pay �under �its �revolving �credit �agreement, �including �pro �forma �compliance �with �a consolidated �leverage �ratio, �testing �consolidated �funded �indebtedness �(excluding �(i) �up �to �$400 �million �of �consolidated �funded �indebtedness �due �to �permitted securitization�transactions�and�(ii)�the�amount�of�consolidated�funded�indebtedness�constituting�the�non-recourse�portion�of�permitted�factoring�transactions,�and netting�up�to�(x)�with�respect�to�calculating�the�consolidated�leverage�ratio�for�purposes�of�the�periods�ending�prior�to�June�15,�2021,�an�unlimited�amount,�and�(y) with�respect�to�calculating�the�consolidated�leverage�ratio�for�purposes�of�the�periods�ending�thereafter,�$400.0�million,�of�unrestricted�cash�and�cash�equivalents denominated�in�U.S.�dollars�or�other�lawful�currencies�(provided�that�such�other�currencies�are�readily�convertible�to,�and�deliverable�in,�U.S.�dollars)�held�by�the Company�and�its�subsidiaries)�to�consolidated�EBITDA�of�less�than�2.50:1.00�for�the�most�recent�period�of�four�fiscal�quarters. Share�Repurchases On�September�20,�2017,�our�board�of�directors�approved�a�share�repurchase�program�authorizing�the�purchase�of�up�to�$150�million�of�our�common�stock, expiring�in�September�2021.�Share�repurchases�are�to�be�made�on�the�open�market�and�can�be�commenced�or�suspended�at�any�time. We �did�not �purchase �any �shares �of �our �common�stock �during �the �year �ended �December �31, �2020.�The �dollar �value �of �shares �that �were �available �to �be purchased�under�our�share�repurchase�program�was�$150�million�as�of�December�31,�2020. ITEM�6.�RESERVED 43 ITEM�7.�MANAGEMENT’S�DISCUSSION�AND�ANALYSIS�OF�FINANCIAL�CONDITION�AND�RESULTS�OF�OPERATIONS ����The �discussion�below�focuses �on�the�factors �affecting�our�consolidated �results�of �operations�for�the �years�ended�December �31,�2020�and�2019 �and�financial condition�at�December�31,�2020�and�2019�and,�where�appropriate,�factors�that�may�affect�our�future�financial�performance,�unless�stated�otherwise.�This�discussion should�be�read�in�conjunction�with�the�consolidated�financial�statements,�notes�to�the�consolidated�financial�statements�and�selected�consolidated�financial�data. Our�Management’s�Discussion�and�Analysis�of�Financial�Condition�and�Results�of�Operations,�or�MD&A,�is�presented�in�the�following�sections: • • • • • • • • 2020�Highlights�and�Year�in�Review Subsequent�Events Recent�Events Segments Results�of�Operations Application�of�Critical�Accounting�Policies�and�Estimates Recently�Adopted�and�New�Accounting�Standards Liquidity,�Capital�Resources�and�Cash�Flows 2020�Highlights�and�Year�in�Review ����Our�Company’s�management�regularly�monitors�key�performance�indicators�to�measure�our�current�performance�and�project�future�performance.�A�recurring, comprehensive �list �is �included �by �segment �within �the �Results �of �Operations �section �of �this �Management's �Discussion �and �Analysis. �Management �believes �the following�key�performance�indicators�by�segment�were�important�to�our�overall�performance�in�2020�as�they�provide�enhanced�information�and�data�underlying our�financial�results.�See�“COVID-19�Pandemic�Response�and�Impact”�included�in�“Recent�Events”�below�for�further�information�regarding�how�COVID-19�has impacted�the�Company’s�segments. Key�Performance�Indicators Fleet�Solutions • • • • Average �number �of �vehicles �serviced �increased �9 �percent �from �2019 �to �15.3 �million �for �2020, �primarily �related �to �growth �in �our �worldwide customer�base.�As�of�December�31,�2020,�vehicles�serviced�totaled�15.8�million. The�average�U.S.�price�per�gallon�of�fuel�was�$2.29�during�2020,�an�18�percent�decrease�as�compared�to�2019. Fuel�transactions�processed�decreased�6�percent�from�2019�to�576.0�million�in�2020.�We�have�seen�strong�over-the-road�trucking�volumes,�with offsetting�significant�volume�declines�in�small�to�mid-size�North�American�and�international�fleets�as�a�result�of�the�impacts�of�COVID-19. Payment �processing �transactions, �which �represents �the �total �number �of �purchases �made �by �fleets �that�have �a �payment �processing �relationship with�WEX,�decreased�8�percent�from�2019�to�463.9�million�in�2020. Travel�and�Corporate�Solutions • Payment �solutions �purchase �volume, �which �represents �the �total �dollar �value �of �all �WEX �issued �transactions �that �use �WEX �corporate �card products �and�virtual�card�products,�was�$20.9�billion�in�2020,�a�47�percent�decrease �from�2019,�driven�primarily�by�the�decline�in�worldwide travel �and �tourism �as �a �result �of �the �COVID-19 �pandemic. �This �decrease �was �partly �offset �by �improved �volumes �in �our �corporate �payments portion�of�the�segment. Health�and�Employee�Benefit�Solutions • Average�number�of�SaaS�accounts,�which�represents�the�number�of�active�Consumer-Directed�Health,�COBRA,�and�billing�accounts�on�our�U.S. SaaS�platforms,�grew�12%�to�14.5�million�in�2020�from�12.9�million�in�2019. 44 • Purchase�volume,�which�represents�the�total�US�dollar�value�of�all�transactions�where�interchange�is�earned�by�WEX,�decreased�$400.9�million in�2020,�as�compared�to�2019,�driven�primarily�by�the�impact�of�COVID-19�on�the�segment. Other�Performance�Metrics • Credit�loss�expense�in�the�Fleet�Solutions�segment�decreased�5�percent�to�$56.6�million�during�2020,�as�compared�to�$59.8�million�during�2019. Our�credit�losses�were�16.7�basis�points�of�fuel�expenditures�for�2020,�as�compared�to�15.1�basis�points�of�fuel�expenditures�for�2019,�an�increase of�11�percent�primarily�due�to�higher�losses�in�the�small�fleet�over-the-road�business�as�compared�to�2019. • We�recorded�an�income�tax�benefit�of�$20.6�million�for�2020�as�compared�to�an�income�tax�provision�of�$61.2�million�for�2019.�Our�effective tax�rate�was�a�6.8�percent�benefit�for�2020�as�compared�to�a�28.3�percent�provision�for�2019.�The�Company's�effective�tax�rate�for�the�year�ended December�31,�2020�was�impacted�by�no�income�tax�benefit�being�recorded�for�i)�operating�losses�generated�from�WEX�Latin�America�during the�current�year�through�the�date�of�sale,�ii)�the�loss�on�sale�of�WEX�Latin�America,�and�iii)�the�legal�settlement.�These�losses�were�included�as part�of�the�current�year�loss�and�determined�to�be�either�non-deductible�for�income�tax�purposes�or�required�a�valuation�allowance. Subsequent�Events HSA�Purchase�Agreement On�February�11,�2021,�the�Company�entered�into�an�asset�purchase�agreement�with�Bell�Bank�to�acquire�certain�HSA�assets,�including�the�custodial�rights for�certain�HSAs�from�Bell�Bank's�HealthcareBank�division,�the�custodian�bank�for�customers�of�the�U.S.�Health�business.�We�believe�the�acquisition�will�allow the�Company�to�better�capture�the�economics�from�those�HSAs,�leverage�our�investments�to�provide�customers�with�market-leading�HSA�solutions,�and�align�with our�growth�strategy.�The�transaction�is�expected�to�close�in�the�second�quarter�of�2021,�subject�to�regulatory�approvals�and�other�customary�closing�conditions. Pursuant �to �the �purchase �agreement, �the �Company �will �pay �Bell �Bank �initial �cash �consideration �of �approximately �$200 �million, �and �two �additional deferred�cash�payments�of�$25�million�in�July�2023�and�January�2024,�contingent�upon�closing�of�the�transaction.�The�agreement�also�includes�potential�additional consideration�payable,�over�the�ten�years�subsequent�to�the�closing�date,�that�is�contingent�on,�and�calculated�based�on,�any�future�increases�in�the�Federal�Funds rate. �Potential �additional �consideration �may �not �exceed �$225 �million �in �the �aggregate �over �the �ten �year �period �and �will �not �adversely �impact �the �Company’s adjusted�net�income�or�financial�position�as�net�revenues�earned�on�the�acquired�HSA�assets�will�increase�in�the�event�the�Federal�Funds�rate�increases�in�the�future. Notes�Redemption�Notice On�February�11,�2021,�the�Company�provided�irrevocable�notice�to�The�Bank�of�New�York�Mellon�Trust�Company,�N.A.,�the�trustee�for�the�Notes,�of�its intent�to�redeem�its�outstanding�$400�million�4.75%�Senior�Secured�Notes�due�February�1,�2023�on�March�15,�2021.�The�redemption�price�of�the�Notes�is�$400 million�plus�accrued�and�unpaid�interest�through�the�proposed�redemption�date.�The�redemption�is�expected�to�be�funded�from�cash. Recent�Events 2020�Acquisition/Legal�Settlement On �January �24, �2020, �the �Company �entered �into �a �purchase �agreement �to �purchase �eNett, �a �leading �provider �of �B2B �payment �solutions �to �the �travel industry,�and�Optal,�a�company�that�specializes�in�optimizing�B2B�payments�transactions,�subject�to�certain�working�capital�and�other�adjustments�as�described�in the�purchase�agreement.�The�parties’�obligations�to�consummate�the�acquisition�were�subject�to�customary�closing�conditions,�including�the�absence�of�a�Material Adverse�Effect�(as�defined�in�the�purchase�agreement�between�WEX,�eNett�and�Optal,�among�others).�The�Company�subsequently�concluded�that�the�COVID-19 pandemic�and�conditions�arising�in�connection�with�it�had�a�Material�Adverse�Effect�on�the�businesses,�which�was�disproportionate�to�the�effect�on�others�in�the relevant�industry.�Because�of�this�Material�Adverse�Effect,�WEX�formally�advised�eNett�and�Optal�on�May�4,�2020�that�it�was�not�required�to�close�the�transaction pursuant�to�the�terms�of�the�original�purchase�agreement.�On�May�11,�2020,�the�shareholders�of�eNett�and�Optal�each�initiated�separate�legal�proceedings�in�the High�Court�of�Justice�of�England�and�Wales�in�the�United�Kingdom�against�the�Company�seeking�a�declaration�that�no 45 Material �Adverse �Effect �had �occurred �and �an �order �for �specific �performance �of �WEX's �obligations �under �the �purchase �agreement. �From �September �21, �2020 through�September�29,�2020,�a�London�court�held�a�trial�of�certain�preliminary�issues,�and�handed�down�its�judgment�on�October�12,�2020.�The�Company�and�the claimants�each�sought�permission�to�appeal�certain�portions�of�the�Court’s�judgment. On�December�15,�2020,�the�Company�entered�into�a�Deed�of�Settlement�(the�“Settlement�Deed”)�with�eNett,�Optal�and�the�other�parties�thereto,�providing for�among�other�things,�(i)�the�dismissal�with�prejudice�of�the�legal�proceedings�and�appeals�described�above,�(ii)�amendment�of�the�original�purchase�agreement and�(iii)�the�release�of�all�claims�capable�of�arising�out�of,�or�in�any�way�connected�with�or�relating�to�the�COVID-19�pandemic,�but�excluding�any�claims�arising under�the�amended�purchase�agreement.�The�closing�of�the�acquisition�occurred�concurrent�with�the�execution�of�the�Settlement�Deed�on�December�15,�2020.�The Amended �Purchase �Agreement �provided �for, �among �other �things, �a �reduction �of �the �aggregate �purchase �price �for �the �acquisition �to �$577.5 �million �(subject �to certain�working�capital�and�other�adjustments�as�described�in�the�Amended�Purchase�Agreement,�which�resulted�in�a�total�cash�payment�of�$615.4�million),�which the�Company�paid�entirely�with�cash�on�hand.�The�Company�determined�the�aggregate�purchase�price�represents�consideration�paid�for�the�businesses�acquired�and for�the�legal�settlement�described�above.�The�preliminary�fair�value�of�the�businesses�acquired�was�estimated�to�be�$415.0�million�using�a�discounted�cash�flow analysis�and�guideline�transaction�method.�Since�the�Company�was�not�able�to�reliably�estimate�the�fair�value�of�the�legal�settlement,�the�residual�value�of�$162.5 million�has �been�allocated �to�the �legal�settlement, �which �has�been �included�in �legal�settlement �expense �in�the �consolidated�statement �of�operations �for �the�year ended�December�31,�2020. Private�Placement On �July�1, �2020, �the �Company �closed �on �a �private �placement �with �an �affiliate �of �Warburg �Pincus �LLC, �pursuant �to �which �the �Company �issued �$310 million �in �aggregate �principal �amount �of �its �senior �Convertible �Notes �due �2027 �and �577,254 �shares �of �the �Company’s �common �stock, �with �gross �proceeds �in respect�of�the�common�stock�of�$90�million,�reflecting�a�purchase�price�of�$155.91�per�share.�The�issuance�of�the�Convertible�Notes�provided�the�Company�with net�proceeds�of�approximately�$299�million�after�original�issue�discount. The�Convertible�Notes,�which�are�unsecured,�have�a�seven-year�term�and�mature�on�July�15,�2027,�unless�either�converted,�repurchased�or�redeemed.�The Convertible�Notes�bear �interest�at �a�rate�of �6.5%�per�annum, �payable�semi-annually �in�arrears,�with �the�first �interest�payment �due�January�15, �2021.�At�WEX's option,�interest�is�either�payable�in�cash,�through�accretion�to�the�principal�amount�of�the�Convertible�Notes,�or�a�combination�of�cash�and�accretion. The�Convertible�Notes�may�be�converted�at�any�time�at�the�option�of�holders�of�the�Convertible�Notes,�based�on�an�initial�conversion�price�of�$200�per share,�subject�to�certain�adjustments.�Conversions�of�Convertible�Notes�may�be�settled�in�shares�of�WEX�common�stock,�cash,�or�a�combination�thereof�at�WEX's election.�WEX�will�have�the�right,�at�any�time�following�the�third�anniversary�of�closing,�to�redeem�the�Convertible�Notes�in�whole�or�in�part�if�the�closing�price�of WEX's�common�stock�is�at�least�200%�of�the�conversion�price�of�the�Convertible�Notes�for�20�out�of�30�days�prior�to�the�time�WEX�delivers�a�redemption�notice (including�at�least�one�of�the�five�trading�days�immediately�preceding�the�last�day�of�such�30�day�period),�subject�to�the�right�of�holders�of�the�Convertible�Notes�to convert �their �Convertible �Notes �prior �to �the �redemption �date. �In �the �event �of �certain �fundamental �change �transactions, �including �certain �change �of �control transactions�and�delisting�events,�holders�of�Convertible�Notes�will�have�the�right�to�require�WEX�to�repurchase�its�Convertible�Notes�in�accordance�with�the�terms of�the �Convertible�Notes�at�a�repurchase�price�equal�to�the�sum�of�(i)�105%�of�then�accreted�principal�amount�of�the�Convertible�Notes�to�be�repurchased,�plus accrued�interest,�and�(ii)�the�sum�of�the�present�values�of�the�scheduled�remaining�payments�of�interest�had�such�notes�remained�outstanding�through�the�maturity date�of�the�Convertible�Notes. The �indenture �includes �a �debt �incurrence �covenant �that �restricts �the �Company �from �incurring �certain �indebtedness, �including �disqualified �stock �and preferred �stock �issued�by �the�Company �or�its �subsidiaries, �subject�to �customary�exceptions, �including �if,�after �giving�effect �to �any �such�proposed �incurrence �or issuance,�and�the�receipt�and�application�of�the�proceeds�therefrom,�the�ratio�of�(x)�the�Company’s�consolidated�EBITDA�for�the�most�recent�four�fiscal�quarters for�which�financial�statements�are�available,�to�(y)�the�Company’s�consolidated�fixed�charges�for�such�period�would�be�greater�than�1.5:1.0.�The�indenture�contains other�customary�terms�and�covenants,�including�customary�events�of�default.�The�Convertible�Notes�are�the�Company’s�general�senior�unsecured�obligations�and rank�equally�with�all�of�the�Company’s�existing�and�future�senior�indebtedness.�The�Convertible�Notes�are�effectively�subordinated�to�all�of�the�Company’s�secured indebtedness,�including�borrowings�under�the�2016�Credit�Agreement,�as�amended,�to�the�extent�of�the�value�of�the�collateral�securing�such�indebtedness,�and�are structurally�subordinated�to�all�existing�and�future�indebtedness�and�other�liabilities�of�the�Company’s�subsidiaries. Sale�of�Subsidiary On�September�30,�2020,�the�Company�sold�its�wholly-owned�subsidiary�UNIK�S.A.�Under�the�conditions�of�the�sale 46 agreement,�the�Company�was�required�to�make�a�payment�to�the�buyer.�The�Company�wrote-off�the�associated�assets�and�liabilities�of�this�entity�as�of�the�date�of sale�and�recorded�a�pre-tax�loss�on�sale�of�subsidiary�of�$46.4�million�during�the�year�ended�December�31,�2020.�The�loss�on�sale�of�subsidiary�is�not�deductible�for tax�purposes. COVID-19�Pandemic�Response�and�Impact A�novel�strain�of�coronavirus�(COVID-19)�was �first�identified�in�Wuhan, �China�in�January�2020,�and�subsequently �declared�a�global�pandemic �by�the World�Health�Organization�on�March�11,�2020.�During�the�first�quarter�of�2020,�the�Company�took�a�number�of�precautionary�steps�to�safeguard�its�business�and employees �from �the �effects �of �COVID-19 �including �restricting �business �travel, �temporarily �closing �offices �and �canceling �participation �in �various �industry events.�Additionally,�in�an�effort�to�rescale�the�business�and�safeguard�shareholder�value�in�this�unprecedented�operating�environment,�we�took�certain�measures�to both �permanently �reduce �headcount �and �furlough �employees �across �our �worldwide �offices �where �necessary. �Aside �from�the �employee �furloughs, �which �ended during�the�third�quarter�of�2020,�the�precautionary�steps�described�above�largely�remain�in�force�as�the�Company�continues�to�closely�track�and�assess�the�evolving effect�of�the�pandemic.�The�Company�is�actively�managing�its�responses�in�collaboration�with�its�employees,�customers�and�suppliers. The�spread�of�COVID-19,�and�conditions�arising�in�connection�with�it,�including�restrictions�on�businesses�and�individuals�and�wider�changes�in�business and �customer �behavior, �had �a �negative �impact �on�the �Company’s �businesses �during �the �year�ended �December �31, �2020.�While �we�have�seen �varying �levels �of improvement�since�the�lowest�volume�levels,�we�expect�a�slow�and�steady�volume�recovery�will�continue�across�our�business.�Specific�to�our�Travel�and�Corporate Solutions�segment,�which�has�been�the �most�severely�impacted,�while�volumes �are�slowly�improving�as�leisure �travel�begins�to�slowly�improve �from�its�lowest levels,�we�believe�that�COVID-19�has�structurally�changed�the�travel�market�and�we�expect�these�disruptions�to�have�a�continuing�impact�on�the�Company’s�Travel and�Corporate�Solutions�segment�operating�results.�However,�the�pace�and�breadth�of�the�vaccine�rollout�as�well�as�the�potential�for�government�stimulus�will�be critical�factors�in�determining�how�quickly�our�existing�customer�activity�across�all�three�segments�will�rebound.�Given�the�current�pace�of�vaccine�distribution�as well�as�our�own�customer�mix,�we�believe�customer�activity�will�increase�in�the�second�half�of�the�year,�but�likely�more�fully�in�the�fourth�quarter.�The�following describes�these�impacts�by�reportable�segment: Fleet�Solutions�—�The�Fleet�Solutions�segment�has�seen�both�positive�and�negative�impacts�as�a�result�of�the�world's�response�to�COVID-19,�with�the negative �impacts �significantly �outweighing �the �positive. �Firstly, �2020 �revenue �has �significantly �decreased �as �a �result �of �lower �transaction �prices �driven �by �a decrease�in�the�average�U.S.�price�per�gallon�of�fuel�as�compared�to�2019.�Volumes�have�also�negatively�impacted�the�segment's�results�during�2020�as�compared to �2019 �due �to �lower �volumes �in �the �North �American �fleet �and �international �portions �of �the �business. �Partly �offsetting �these �negatively �impacted �areas �of �the business�were�volume�trends�in�our�over-the-road�trucking�business,�which�have�increased�relative�to�prior�year�due�to�increased�shipping�to�individuals�during�the U.S.�lockdown,�but�represent�a�smaller�portion�of�the�overall�segment. Travel�and�Corporate�Solutions�—�Of�the�Company's�segments,�Travel�and�Corporate�Solutions�has�been�the�most�severely�impacted�by�the�pandemic and�the�corresponding�decline�in�worldwide�travel�and�tourism.�Purchase�volume�in�the�travel�portion�of�the�segment�was�significantly�lower�in�2020�as�compared to�2019. �In�contrast, �the �corporate �payments�portion�of �the�segment �has �seen �an�increase �in �purchase�volumes �during�2020,�which �is �largely �attributable �to�the ongoing�migration�of�businesses�to�virtual�payments�and �increasing�usage�of�our�accounts�payable�products.�These�improvements, �however,�represent�a�smaller percentage�of�the�total�segment. Health�and�Employee�Benefit�Solutions�—�The�Health�and�Employee�Benefit�Solutions'�volume�was�most�challenged�by�the�pandemic�during�the�second quarter�of�2020�as�a�result�of�cardholders�deferring�non-essential�medical�treatments�when�U.S.�lockdown�restrictions�were�most�severe.�However,�by�the�fourth quarter�of�2020,�the�U.S.�Health�business�saw�a�slight�increase�in�purchase�volumes�relative�to�the�same�period�in�the�prior�year. We�are�closely�tracking�and�assessing�the�evolving�effect�of�the�pandemic�and�are�actively�managing�our�responses�in�collaboration�with�our�employees, customers�and�suppliers. 47 Segments ����WEX�operates�in�three�reportable�segments:�Fleet�Solutions,�Travel�and�Corporate�Solutions,�and�Health�and�Employee�Benefit�Solutions.�Our�Fleet�Solutions segment�provides�payment,�transaction�processing�and�information�management�services�specifically�designed�for�the�needs�of�commercial�and�government�fleets. Our�Travel�and�Corporate�Solutions�segment�focuses�on�the�complex�payment�environment�of�business-to-business�payments,�providing�customers�with�payment processing �solutions �for �their �payment �and �transaction �monitoring �needs. �Our �Health �and �Employee �Benefit �Solutions �segment �provides �a �SaaS �platform �for consumer �directed �healthcare �payments, �and �provided �payroll �related �benefits �to �customers �in �Brazil �until �September �30, �2020, �the �date �of �sale �of �our �former subsidiary�UNIK�S.A. Results�of�Operations ����The�Company�does�not�allocate�foreign�currency�gains�and�losses,�financing�interest�expense,�unrealized�and�realized�gains�and�losses�on�financial�instruments, income�taxes,�adjustments�attributable�to�non-controlling�interests�and�non-cash�adjustments�related�to�our�tax�receivable�agreement�to�our�operating�segments�as management�believes�these�items�are�unpredictable�and�can�obscure�a�segment's�operating�trends�and�results.�In�addition,�the�Company�does�not�allocate�certain corporate�expenses�to�our�operating�segments,�as�these�items�are�centrally�controlled�and�are�not�directly�attributable�to�any�reportable�segment. Sources�of�Operating�Expenses The�Company's�operating�expenses�consist�of�the�following: Cost�of�Services • • • • • Processing�costs�-�The�Company’s�processing�costs�consist�of�expenses�related�to�processing�transactions,�servicing�customers�and�merchants�and�cost�of goods�sold�related�to�hardware�and�other�product�sales. Service�fees�-�The�Company�incurs�costs�from�third-party�networks�utilized�to�deliver�payment�solutions.�Additionally,�other�third-parties�are�utilized�in performing�services�directly�related�to�generating�revenue. Provision�for�credit �losses�-�Changes �in�the �reserve �for�credit �loss�are �the�result �of�changes �in�management’s �estimate �of�the �losses�in �the�Company’s outstanding�portfolio�of�receivables,�including�losses�from�fraud. Operating�interest�-�The�Company�incurs�interest�expense�on�the�operating�debt�obtained�to�provide�liquidity�for�its�short-term�receivables. Depreciation �and �amortization �-� The �Company �has �identified �those �tangible �and �intangible �assets �directly �associated �with �providing �a �service �that generates �revenue �and �records �the �depreciation �and �amortization �associated �with �those �assets �under �this �category. �Such �assets �include �processing platforms�and�related�infrastructure,�acquired�developed�technology�intangible�assets�and�other�similar�asset�types. Other�Operating�Expenses • • • • • • General �and �administrative �-� General �and �administrative �includes �compensation �and �related �expenses �for �executive, �finance �and �accounting, �other information �technology, �human �resources, �legal, �and �other �corporate �functions. �Also �included �are �corporate �facilities �expenses, �certain �third-party professional�service�fees,�and�other�corporate�expenses. Sales�and�marketing�-�The�Company’s�sales�and�marketing�expenses�relate�primarily�to�compensation,�benefits,�sales�commissions,�and�related�expenses for�sales,�marketing,�and�other�related�activities. Depreciation�and�amortization�-�The�depreciation �and�amortization�associated�with�tangible�and�intangible�assets�that�are�not�considered�to�be�directly associated �with �providing �a �service �that �generates �revenue �are �recorded �as �other �operating �expenses. �Such �assets �include �corporate �facilities �and information�technology�assets,�and�acquired�intangible�assets�other�than�those�included�in�cost�of�services. Legal �settlement �-� Represents �the �consideration �paid �to �the �sellers �of �eNett �and �Optal �in �excess �of �the �businesses' �fair �values. �See �Item �8 �– �Note �4, Acquisitions,�of�our�consolidated�financial�statements�for�more�information. Impairment�charges�- �During �our �annual �goodwill �assessment �completed �in �the �fourth �quarter �of �2020, �we �recorded �a �non-cash �goodwill �impairment charge �of �$53.4 �million �for �our �WEX �Fleet �Europe �reporting �unit. �See �Item �8 �– �Note �9, �Goodwill �and �Other �Intangible �Assets, �of �our �consolidated financial�statements�for�more�information. Loss�on�sale�of�subsidiary�-�The�loss�on�sale�of�subsidiary�relates�to�the�divestiture�of�the�Company's�former�Brazilian�subsidiary�as�of�the�date�of�sale, September�30,�2020,�and�the�associated�write-off�of�its�assets�and�liabilities. 48 Year�Ended�December�31,�2020,�Compared�to�the�Year�Ended�December�31,�2019 Fleet�Solutions Revenues ����The�following�table�reflects�comparative�revenue�and�key�operating�statistics�within�Fleet�Solutions:� (In�thousands,�except�per�transaction�and�per�gallon�data) Revenues 1 Payment�processing�revenue Account�servicing�revenue Finance�fee�revenue Other�revenue Total�revenues Key�performance�indicators Payment�processing�revenue: 2 Payment�processing�transactions 3 Payment�processing�fuel�spend Average�price�per�gallon�of�fuel�–�Domestic�–�($USD/gal) 4 Net�payment�processing�rate Twelve�Months�Ended�December�31, Increase�(Decrease) 2020 2019 Amount Percent $ $ $ $ 404,843� 153,823� 197,307� 162,337� 918,310� 463,864� 29,924,535� 2.29� 1.35�% $ $ $ $ 457,244� 164,735� 245,082� 171,334� 1,038,395� 505,292� 37,372,684� 2.80� 1.22�% $ $ $ $ (52,401) (10,912) (47,775) (8,997) (120,085) (41,428) (7,448,149) (0.51) 0.13�% (11) % (7) % (19) % (5) % (12) % (8) % (20) % (18) % 11� % 1 �Foreign�currency�exchange�rate�fluctuations�had�an�insignificant�impact�on�Fleet�Solutions'�revenue�in�2020,�compared�to�the�prior�year. 2� Payment�processing�transactions�represents�the�total�number�of�purchases�made�by�fleets�that�have�a�payment�processing�relationship�with�WEX. 3� Payment�processing�fuel�spend�represents�the�total�dollar�value�of�the�fuel�purchased�by�fleets�that�have�a�payment�processing�relationship�with�WEX. 4� Net�payment�processing�rate�represents�the�percentage�of�the�dollar�value�of�each�payment�processing�transaction�that�WEX�records�as�revenue�from�merchants�less�certain�discounts�given�to customers�and�network�fees. ����Fleet�Solutions�revenue�decreased�$120.1�million�for�2020,�as�compared�to�2019.�As�discussed�in�the�preceding�“COVID-19�Pandemic�Response�and�Impact” section, �the �business�has�been �adversely�impacted �by�lower �average�domestic �fuel�prices �during�2020 �as�compared �to�the�prior �year,�and, �to�a �lesser�extent, �by lower�volumes.�The�decrease�was�partly�offset�by�improvements�in�our�over-the-road�business,�as�long�haul�trucking�has�not�seen�the�same�impacts�to�volume�as other�parts�of�our�Fleet�Solutions�segment. ����Finance�fee�revenue�is�comprised�of�the�following�components: (In�thousands) Finance�income Factoring�fee�revenue Finance�fee�revenue Twelve�Months�Ended�December 31, Increase�(Decrease) 2020 2019 Amount Percent $ $ 159,944� 37,363� 197,307� $ $ 208,911� 36,171� 245,082� $ $ (48,967) 1,192� (47,775) (23) % 3� % (19) % ����Finance�income�primarily�consists�of�late�fees�charged�for�receivables�not�paid�within�the�terms�of�the�customer�agreement�based�upon�the�outstanding�customer receivable�balance.�This�revenue�is�earned�when�a�customer’s�receivable�balance�becomes�delinquent�and�is�calculated�using�the�greater�of�a�minimum�charge�or�a stated�late�fee�rate�multiplied�by�the�outstanding�balance�that�is�subject�to�a�late�fee�charge.�Changes�in�the�absolute�amount�of�such�outstanding�balances�can�be attributed�to�(i)�changes�in�fuel�prices;�(ii)�customer�specific�transaction�volume;�and�(iii)�customer�specific�delinquencies.�Late�fee�revenue�can�also�be�impacted by�(i) �changes �in �late �fee �rates �and �(ii) �increases �or �decreases �in �customer �overdue �balances. �Late �fee �rates �are �determined �and �set �based �primarily �on �the �risk associated�with�our�customers,�coupled�with�a�strategic�view�of�standard�rates�within�our�industry.�Periodically,�we�assess�the�market�rates�associated�within�our industry�to�determine�appropriate�late�fee�rates.�We�consider�factors�such�as�the�Company’s�overall�financial�model�and�strategic�plan,�the�cost�to�our�business�from customers�failing�to�pay�timely�and�the�impact�such�late�payments�have�on�our�financial�results.�These�assessments�are�typically�conducted�at�least�annually�but may�occur�more�often�depending�on�macro-economic�factors. 49 ����Finance�income�decreased�$49.0�million�in�2020,�as�compared�to�2019,�primarily�due�to�a�reduction�of�outstanding�balances�as�a�result�of�declining�fuel�prices and�reduced�volumes�due�to�COVID-19,�as�well�as�lower�delinquencies.�This�decrease�was�partly�offset�by�an�$8.7�million�benefit�during�2020�arising�from�higher weighted�average�late�fee�rates.�For�both�2020�and�2019,�monthly�late�fee�rates�and�minimum�finance�charges�ranged�up�to�9.99�percent�and�$75,�respectively.�The weighted�average�late�fee�rate,�net�of�related�charge-offs�was�5.7�percent�and�5.4�percent�for�2020�and�2019,�respectively,�resulting�from�higher�minimum�finance charge�instances�relative�to�prior�year.�Concessions�to�certain�customers�experiencing�financial�difficulties�may�be�granted�and�are�limited�to�extending�the�time�to pay, �placing �a �customer �on �a �payment �plan �or �granting �waivers �of �late �fees. �There �were �no �material �concessions �granted �to �customers �experiencing �financial difficulties�during�2020�or�2019.�Going�forward,�we�may�see�an�increase�in�concessions�granted�to�customers�as�a�result�of�COVID-19. ��� �The�primary �source�of �factoring �fee�revenue �is�calculated �as�a �negotiated�percentage �fee �of�the �receivable�balance �that�we �purchase.�A �secondary�source �of factoring�fee�revenue�is�a�flat�rate�service�fee�to�our�customers�that�request�a�non-contractual�same�day�funding�of�the�receivable�balance.�Factoring�fee�revenue�for 2020�was�generally�consistent�with�factoring�fee�revenue�in�2019. ��� �Other�revenue�decreased�$9.0�million�in�2020,�as�compared�to�2019,�due�primarily�to�a�decline�in�servicing�revenue�at�our�international�fleet�business�due�to lower�levels�of�spend�as�a�result�of�travel�bans�and�restrictions�as�of�result�of�the�government's�response�to�the�COVID-19�pandemic. Operating�Expenses ����The�following�table�compares�line�items�within�operating�income�for�Fleet�Solutions:�� (In�thousands) Cost�of�services Processing�costs Service�fees ���Provision�for�credit�losses Operating�interest Depreciation�and�amortization Other�operating�expenses General�and�administrative Sales�and�marketing Depreciation�and�amortization Impairment�charges Operating�income NM�-�Not�meaningful Cost�of�services Twelve�Months�Ended�December 31, Increase�(Decrease) 2020 2019 Amount Percent $ $ $ $ $ $ $ $ $ $ 200,734� 7,216� 56,620� 18,360� 48,958� 92,268� 148,478� 89,642� 53,378� 202,656� $ $ $ $ $ $ $ $ $ $ 205,034� 7,208� 59,816� 22,141� 43,570� 79,717� 168,155� 86,865� —� 365,889� $ $ $ $ $ $ $ $ $ $ (4,300) 8� (3,196) (3,781) 5,388� 12,551� (19,677) 2,777� 53,378� (163,233) (2) % —� % (5) % (17) % 12� % 16� % (12) % 3� % NM (45) % ����Processing�costs�decreased�$4.3�million�for�2020,�as�compared�to�2019,�due�to�a�reduction�in�transactions�relative�to�the�prior�year,�primarily�as�a�result�of�the corresponding�reduction�in�payment�processing�revenue�and�charges�incurred�during�the�three�months�ended�March�31,�2019�to�on-board�significant�customers. ����Service�fees�for�2020�were�generally�consistent�with�service�fees�in�2019. ����Provision�for�credit�losses�decreased�$3.2�million�for�2020,�as�compared�to�2019.�The�reduction�is�primarily�due�to�a�reduction�in�fraud�losses�during�2020�as compared�to�the�prior�year.�The�adoption�of�the�new�credit�loss�accounting�standard,�Topic�326,�coupled�with�an�increase�in�expected�credit�losses�as�a�result�of COVID-19, �increased �the �provision �for �credit �losses �through �the �first �half �of �2020. �However, �reductions �in �credit �losses �resulting �from �changes �in �customer payment �behavior �and �increased �collection�efforts �substantially �offset �those �increases �during�the �latter �half �of�2020. �The �provision �reflects�the �Company’s �best estimate�for�losses�that�it�expects�to�incur�based�on�the�current�level�of�accounts�receivable�and�the�anticipated�payment�difficulty�for�some�fleet�customers�due�to changes �in �transportation �activity �as �a �result �of �the �COVID-19 �pandemic. �We �generally �measure �our �credit �loss �performance �by �calculating �fuel-related �credit losses�as�a�percentage�of�total�fuel 50 expenditures�on�payment�processing�transactions.�This�metric�for�credit�losses�was�16.7�basis�points�of�fuel�expenditures�for�2020,�as�compared�to�15.1�basis�points of�fuel�expenditures�for�2019. ����Operating�interest�expense�decreased�$3.8�million�in�2020,�as�compared�to�2019.�The�decrease�is�due�to�lower�interest�rates�and�a�decrease�in�deposits. ����Depreciation�and�amortization�increased�$5.4�million�in�2020,�as�compared�to�2019,�due�primarily�to�the�amortization�of�merchant�network�access�agreements obtained�in�the�Go�Fuel�Card�acquisition�in�July�2019. Other�operating�expenses � � � � General �and �administrative �expenses �increased �$12.6 �million �in �2020, �as �compared �to �2019, �due �primarily �to �compensation �and �professional �services �cost increases�in�2020�as�a�result�of�the�July�2019�acquisition�of�Go�Fuel�Card. ����Sales�and �marketing�expenses�decreased �$19.7�million�in �2020,�as�compared �to�2019,�due�primarily �to�a�decline �in�our�discretionary�spending�as�a�result �of COVID-19�as�well�as�lower�relative�commission�payments�to�partners. � � � �Depreciation �and �amortization �increased �$2.8 �million �in �2020, �as �compared �to �2019, �due �primarily �to �the �amortization �of �the �Chevron �customer �portfolio intangible�asset�and�customer�relationships�obtained�in�the�Go�Fuel�Card�acquisition�in�July�2019. Impairment�charges�consists�of�a�non-cash�goodwill�impairment�charge�of�$53.4�million�for�our�WEX�Fleet�Europe�reporting�unit,�which�was�identified during�the�annual�goodwill�assessment�completed�in�the�fourth�quarter�of�2020.�See�Item�8�–�Note�9,�Goodwill�and�Other�Intangible�Assets,�of�our�consolidated financial�statements�for�more�information. Travel�and�Corporate�Solutions Revenues���� ����The�following�table�reflects�comparative�revenue�and�key�operating�statistics�within�Travel�and�Corporate�Solutions:� (In�thousands) Revenues 1 Payment�processing�revenue Account�servicing�revenue Finance�fee�revenue Other�revenue Total�revenues Key�performance�indicators Payment�processing�revenue: Payment�solutions�purchase�volume 2 Twelve�Months�Ended�December�31, Increase�(Decrease) 2020 2019 Amount Percent $ $ 229,144� 41,927� 1,079� 5,690� 277,840� $ $ 303,385� 43,293� 2,086� 19,062� 367,826� $ $ (74,241) (1,366) (1,007) (13,372) (89,986) (24) % (3) % (48) % (70) % (24) % $ 20,877,234� $ 39,632,411� $ (18,755,177) (47) % 1� Foreign�currency�exchange�rate�fluctuations�had�an�insignificant�impact�on�Travel�and�Corporate�Solutions�revenues�in�2020,�compared�to�the�prior�year. 2� Payment �solutions �purchase �volume �represents �the �total �dollar �value �of �all �WEX-issued �transactions �that �use �WEX �corporate �card �products �and �virtual �card �products. �As �discussed �in �the preceding�“COVID-19�Pandemic�Response�and�Impact”�section,�our�current�travel-related�transaction�volumes�have�been�impacted�by�the�decline�in�worldwide�travel�and�tourism�as�a�result�of COVID-19�and�we�expect�them�to�continue�to�be�impacted. ����Travel�and�Corporate�Solutions�total �revenue�decreased�$90.0�million�for�2020,�as�compared�to�2019,�primarily�due�to�the�impact�of�the�pandemic�on�travel volumes, �with �revenue �down �53 �percent �in �that �portion �of �the �business. �This �unfavorable �factor �was �partly �offset �by �benefits �realized �as �part �of �a �contract amendment�executed�during�the�second�quarter�of�2020�and�13�percent�revenue�growth�in�the�corporate�payments�portion�of�the�business�as�a�result�of�ongoing migration�to�virtual�payments�and�increasing�usage�of�our�accounts�payable�products. ����Finance�fee�revenue�was�not�material�to�Travel�and�Corporate�Solutions’�operations�in�2020�or�2019.�Concessions�to�certain�customers�experiencing�financial difficulties�may�be�granted�and�are�limited�to�extending�the�time�to�pay,�placing�a�customer�on�a�payment�plan�or�granting�waivers�of�late�fees.�During�the�second quarter �of�2020,�WEX �Latin�America�placed �certain�delinquent �customers,�with�accounts �receivable�balances �of�$11.0�million, �on�payment�plans�ranging �up�to three �years �in�length. �As�part �of�the �sale �of�WEX �Latin�America, �the�Company �retained �one�of �these�delinquent, �fully�reserved �customer �balances.�No �late�fee income�has�been�recognized�associated�with�these�payment�plans�during�2020.�There�were�no�material 51 concessions �to �customers �experiencing �financial �difficulties �during �either �2020 �or �2019. �Going �forward, �we �may �see �an �increase �in �concessions �granted �to customers�as�a�result�of�the�continuing�impact�that�COVID-19�has�on�their�businesses. Operating�Expenses ����The�following�table�compares�line�items�within�operating�income�for�Travel�and�Corporate�Solutions:� (In�thousands) Cost�of�services Processing�costs Service�fees Provision�for�credit�losses Operating�interest Depreciation�and�amortization Other�operating�expenses General�and�administrative Sales�and�marketing Depreciation�and�amortization Legal�settlement Operating�(loss)�income � NM�-�Not�meaningful Cost�of�services���� Twelve�Months�Ended�December 31, Increase�(Decrease) 2020 2019 Amount Percent $ $ $ $ $ $ $ $ $ $ 57,735� 17,442� 21,610� 5,331� 20,271� 31,534� 81,958� 23,341� 162,500� $ $ $ $ $ $ $ $ $ 62,179� 27,654� 5,914� 17,496� 17,044� 36,164� 58,927� 18,144� —� (143,882) $ 124,304� $ $ $ $ $ $ $ $ $ $ (4,444) (10,212) 15,696� (12,165) 3,227� (4,630) 23,031� 5,197� 162,500� (7)% (37)% 265�% (70)% 19�% (13)% 39�% 29�% NM (268,186) (216)% ����Processing�costs�decreased�$4.4�million�in�2020,�as�compared�to�2019,�due�primarily�to�volume�related�decreases. ����Service�fees�decreased�$10.2�million�in�2020,�as�compared�to�2019,�due�to�lower�processing�volumes�and�the�conversion�to�an�internal�transaction�processing platform. ����Provision�for�credit�losses�increased�$15.7�million�in�2020,�as�compared�to�2019,�resulting�primarily�from�an�increase�in�expected�credit�losses�as�a�result�of COVID-19�and�a�specific�reserve�taken�on�a�customer�in�Brazil�prior�to�the�sale�of�WEX�Latin�America.�The�impact�reflects�our�best�estimate�for�losses�that�we expect�to�incur�based�on�the�current�level�of�accounts�receivable�and�the�anticipated�payment�difficulty�for�some�online�travel�agency�customers�due�to�reduced travel�as�a�result�of�the�COVID-19�pandemic.�We�will�continue�to�actively�monitor�the�impact�of�the�COVID-19�pandemic�on�expected�credit�losses. ����Operating�interest�decreased�$12.2�million�in�2020,�as�compared�to�2019,�as�a�result�of�lower�interest�rates�and�lower�overall�deposit�balances. ��� �Depreciation �and�amortization �expenses �increased�$3.2 �million�in �2020,�as �compared �to�2019, �due�primarily �to�the �amortization �of�software �obtained �in�the Noventis�acquisition. Other�operating�expenses ����General�and�administrative�expenses�decreased�$4.6�million�in�2020,�as�compared�to�2019,�primarily�due�to�the�expense�incurred�to�accelerate�vesting�of�option awards�as�part�of�the�Noventis�acquisition�during�2019. ����Sales�and�marketing�expenses�increased�$23.0�million�in�2020,�as�compared�to�2019,�primarily�due�to�higher�relative�commission�payments�to�partners�in�the corporate�payments�business,�partly�offset�by�a�decrease�in�our�discretionary�spending�as�a�result�of�COVID-19. ����Depreciation�and�amortization�increased�$5.2�million�in�2020,�as�compared�to�2019,�due�primarily�to�higher�amortization�on�customer�relationships�acquired�as part�of�the�Noventis�acquisition. 52 Legal�settlement�expenses�were�$162.5�million�in�2020�due�to�the�settlement�of�legal�proceedings,�and�represents�the�consideration�paid�to�the�sellers�of eNett�and�Optal�in�excess�of�the�businesses'�fair�values,�as�further�described�in�Recent�Developments. Health�and�Employee�Benefit�Solutions Revenues ����The�following�table�reflects�comparative�revenue�and�key�operating�statistics�within�Health�and�Employee�Benefit�Solutions: (In�thousands) Revenues 1 Payment�processing�revenue Account�servicing�revenue Finance�fee�revenue Other�revenue Total�revenues Key�performance�indicators Payment�processing�revenue: Purchase�volume 2 Account�servicing�revenue: Average�number�of�SaaS�accounts 3 Twelve�Months�Ended�December�31, Increase�(Decrease) 2020 2019 Amount Percent $ $ $ 64,904� 253,706� 137� 44,972� 363,719� $ $ 64,963� 205,524� 150� 46,833� 317,470� $ $ (59) 48,182� (13) (1,861) 46,249� 4,805,395� $ 5,206,275� $ (400,879) 14,512� 12,926� 1,586� —� % 23� % (9) % (4) % 15� % (8) % 12� % 1� Foreign�currency�exchange�rate�fluctuations�decreased�Health�and�Employee�Benefit�Solutions'�revenue�by�$1.6�million�in�2020,�as�compared�to�the�prior�year. 2� Purchase�volume�represents�the�total�U.S.�dollar�value�of�all�transactions�where�interchange�is�earned�by�WEX. 3� Average�number�of�SaaS�accounts�represents�the�number�of�active�Consumer-Directed�Health,�COBRA,�and�billing�accounts�on�our�SaaS�platforms�in�the�U.S. � � � �Payment �processing �revenues �in �2020 �were �generally �consistent �with �2019 �as �a �result �of �a �decline �in �the �U.S. �Health �business �customer �spend �on �elective healthcare�procedures�in�connection�with�COVID-19�restrictions,�offset�by�the�acquisition�of�Discovery�Benefits. ����Account�servicing�revenue�increased�$48.2�million�for�2020,�as�compared�to�2019,�primarily�due�to�the�acquisition�of�Discovery�Benefits�and�existing�WEX Health�customer�growth,�which�resulted�in�a�higher�number�of�participants�using�our�SaaS�healthcare�technology�platform. � � � �Finance �fee �revenue �was �not �material �to �Health �and �Employee �Benefit �Solutions’ �operations �in �either �2020 �or �2019. �Concessions �to �certain �customers experiencing�financial�difficulties�may�be�granted�and�are�limited�to�extending�the�time�to�pay,�placing�a�customer�on�a�payment�plan�or�granting�waivers�of�late fees. ����Other�revenue�decreased�$1.9�million�in�2020�as�compared�to�2019,�which�was�primarily�attributable�to�lower�revenues�from�the�Company's�former�WEX�Latin America �business, �partly �offset �by �professional �services �revenue �and �growth �in �ancillary �services �to �cardholders �associated �with �the �increased �number �of �SaaS platform�participants�of�our�U.S.�Health�Business. 53 Operating�Expenses ����The�following�table�compares�line�items�within�operating�income�for�Health�and�Employee�Benefit�Solutions: (In�thousands) Cost�of�services Processing�costs Service�fees Provision�for�credit�losses Operating�interest Depreciation�and�amortization Other�operating�expenses General�and�administrative Sales�and�marketing Depreciation�and�amortization Operating�income � NM�-�Not�meaningful Cost�of�services���� Twelve�Months�Ended�December 31, Increase�(Decrease) 2020 2019 Amount Percent $ $ $ $ $ $ $ $ $ 160,572� 22,631� 213� 119� 35,363� 34,599� 36,248� 42,008� 31,966� $ $ $ $ $ $ $ $ $ 133,226� 22,165� (66) 2,278� 34,111� 35,739� 32,788� 34,975� 22,254� $ $ $ $ $ $ $ $ $ 27,346� 466� 279� (2,159) 1,252� (1,140) 3,460� 7,033� 9,712� 21� % 2� % NM (95) % 4� % (3) % 11� % 20� % 44� % ����Processing�costs �increased �$27.3�million�in �2020,�as�compared�to�2019. �The�increase�was�partly �driven �by�higher�personnel-related �costs�to�support�account servicing�revenue�growth.�The�acquisition�of�Discovery�Benefits�contributed�to�the�majority�of�the�increase.�This�increase�was�partly�offset�by�the�sale�of�WEX Latin�America. ����Service�fees�in�2020�were�generally�consistent�with�service�fees�in�2019. ����Provision�for�credit�losses�was�not�material�to�Health�and�Employee�Benefit�Solutions’�operations�in�either�2020�or�2019. ����Operating�interest�decreased�$2.2�million�in�2020,�as�compared�to�2019,�due�primarily�to�a�decrease�in�operating�debt�balances�at�WEX�Latin�America�prior�to completing�the�sale�of�WEX�Latin�America�during�the�third�quarter�of�2020. ����Depreciation�and�amortization�expenses�increased�$1.3�million�in�2020,�as�compared�to�2019,�resulting�primarily�from�higher�depreciation�expense�on�internally developed�software�as�we�continued�to�invest�in�WEX�Health�technology,�partly�offset�by�lower�depreciation�and�amortization�expenses�as�compared�to�2019�as�a result�of�the�sale�of�WEX�Latin�America�during�the�third�quarter�of�2020. Other�operating�expenses ����General�and�administrative�expenses�decreased�$1.1�million�in�2020,�as�compared�to�2019,�due�to�a�decrease�in�professional�services�expenses�incurred�in�2019 as�a�result�of�the�Discovery�Benefit�acquisition. ����Sales�and�marketing�expenses�increased�$3.5�million�in�2020,�as�compared�to�2019,�due�primarily�to�expenses�in�connection�with�the�acquisition�of�Discovery Benefits,�partly�offset�by�the�COVID-related�cancellation�of�our�annual�healthcare�payments�technology�conference�and�COVID-related�travel�and�entertainment decreases. ����Depreciation�and�amortization �increased�$7.0�million�in�2020,�as �compared�to�2019,�due�primarily �to�amortization�of�customer�relationship �intangible�assets obtained�in�the�Discovery�Benefits�acquisition. Unallocated�corporate�expenses ����Unallocated�corporate�expenses�represent�the�portion�of�expenses�relating�to�general�corporate�functions�including�acquisition�and�divestiture�expenses,�certain finance, �legal, �information �technology, �human �resources, �administrative �and �executive �expenses �and �other �expenses �not �directly �attributable �to �a �reportable segment. 54 ����The�following�table�compares�line�items�within�operating�income�for�unallocated�corporate�expenses: (In�thousands) Other�operating�expenses General�and�administrative Depreciation�and�amortization Loss�on�sale�of�subsidiary Twelve�Months�Ended�December 31, Increase�(Decrease) 2020 2019 Amount Percent $ $ $ 133,708� 2,343� 46,362� $ $ $ 124,187� 2,420� —� $ $ $ 9,521� (77) 46,362� 8� % (3) % NM ����General�and�administrative�expenses�increased�$9.5�million�for�2020�as�compared�to�2019,�primarily�due�to�costs�incurred�in�connection�with�the�acquisition�of eNett�and�Optal�and�personnel-related�cost�increases�including�stock-based�compensation.�The�increase�was�partly�offset�by�a�decline�in�debt�restructuring�costs incurred �in�conjunction �with�our�2019�credit �agreement�amendments �and�costs�incurred �to�remediate �material �weaknesses�from �2018�during�the �prior�year,�and decreases�in�employee�travel�as�a�result�of�the�Company's�current�response�to�the�COVID-19�pandemic. Loss�on�sale�of�subsidiary�relates�to�the�write-off�of�the�associated�assets�and�liabilities�of�the�Company's�former�WEX�Latin�America�subsidiary�as�of�the September�30,�2020�sale�date. ����Other�unallocated�corporate�expenses�were�not�material�to�the�Company’s�operations�in�either�2020�or�2019. Non-operating�income�and�expense ����The�following�table�reflects�comparative�results�for�certain�amounts�excluded�from�operating�income: (In�thousands) Financing�interest�expense Net�foreign�currency�loss Net�unrealized�loss�on�financial�instruments Non-cash�adjustments�related�to�tax�receivable�agreement Income�tax�(benefit)�provision Net�income�(loss)�from�non-controlling�interests Change�in�value�of�redeemable�non-controlling�interest NM�-�Not�meaningful Twelve�Months�Ended�December�31, Increase�(Decrease) 2020 2019 Amount Percent $ $ $ $ $ $ $ (157,080) $ (25,783) $ (27,036) $ $ 491� (20,597) $ $ 3,466� $ 40,312� (134,677) $ (926) $ (34,654) $ $ 932� 61,223� $ (1,030) $ (57,317) $ 22,403� 24,857� (7,618) (441) (81,820) (4,496) 97,629� 17� % NM 22� % (47) % NM NM NM Financing�interest�expense�increased�$22.4�million�in�2020,�as�compared�to�2019,�due�primarily�to�financing�fees�incurred�in�connection�with�the�eNett and�Optal�acquisition�and�interest�incurred�on�our�Convertible�Notes�issued�during�July�2020,�partly�offset�by�lower�average�interest�rates. ����Our�foreign�currency�exchange�exposure�is�primarily�related�to�the�remeasurement�of�our�cash,�accounts�receivable�and�accounts�payable�balances,�including intercompany�transactions�that�are�denominated�in�foreign�currencies.�In�2020,�net�foreign�currency�loss�was�$25.8�million,�as�compared�to�$0.9�million�in�2019. The�loss�in�2020�is�the�result�of�the�remeasurement�of�assets�and�liabilities�and�losses�on�intercompany�transactions,�resulting�from�the�U.S.�dollar�strengthening relative�to�numerous�major�foreign�currencies�in�which�we�transact,�including�the�Australian�dollar�and�British�pound.�The�majority�of�these�losses�were�recorded during�the�three�months�ended�March�31,�2020,�as�a�result�of�the�weakening�of�foreign�currencies�relative�to�the�U.S.�dollar�arising�from�the�COVID-19�pandemic. ����Net�unrealized�loss�on�financial�instruments�decreased�$7.6�million�in�2020,�as�compared�to�2019,�due�primarily�to�a�decrease�in�the�LIBOR�forward�yield�curve. ����Non-cash�adjustments�related�to�tax�receivable�agreement�were�not�material�to�operations�in�2020�or�2019. We�recorded�an�income�tax�benefit�of�$20.6�million�for�2020�as�compared�to�an�income�tax�provision�of�$61.2�million�for�2019.�Our�effective�tax�rate�was a �6.8 �percent�benefit �for �2020�as �compared �to�a �28.3�percent �provision �for�2019. �The�Company's�effective �tax �rate �for�the �year�ended �December �31,�2020 �was impacted�by�no�income�tax�benefit�being�recorded�for�i)�operating�losses�generated�by�WEX�Latin�America�during�the�current�year�through�the�date�of�sale,�ii)�loss on�sale�of�WEX 55 Latin �America, �and �iii) �legal �settlement. �These �losses �were �included �as �part �of �the �current �year �loss �and �have �been �determined �to �be �either �non-deductible �for income�tax�purposes�or�required�a�valuation�allowance. ����Net�income�(loss)�from�non-controlling�interests�relates�to�our�non-controlling�interests�in�WEX�Europe�Services�and�the�U.S.�Health�business.�Such�amounts were�not�material�to�Company�operations�for�2020�or�2019. ����The�Company's�redeemable�non-controlling�interest�in�the�U.S.�Health�business�decreased�by�$40.3�million�during�2020.�The�decrease�was�due�substantially�to�a second�quarter�change�in�the�redemption�value�resulting�from�a�decline�in�revenue�multiples�of�peer�companies�due�to�the�COVID-19�pandemic. Year�Ended�December�31,�2019,�Compared�to�the�Year�Ended�December�31,�2018 � � � �Discussion �and �analysis �of �the �year �ended �December �31, �2019 �compared �to �the �year �ended �December �31, �2018 �is �included �under �the �heading �“Item �7. Management’s�Discussion�and�Analysis�of�Financial�Condition�and�Results�of�Operations”�in�our�Annual�Report�on�Form�10–K�for�the�year�ended�December�31, 2019,�as�filed�with�the�SEC�on�February�28,�2020. Non-GAAP�Financial�Measures�That�Supplement�GAAP�Measures ����The�Company’s�non-GAAP�adjusted�net�income�excludes�unrealized�gains�and�losses�on�financial�instruments,�net�foreign�currency�remeasurement�gains�and losses, �acquisition-related �intangible �amortization, �other �acquisition �and �divestiture �related �items, �loss �on �sale �of �subsidiary, �stock-based �compensation, restructuring �and �other �costs, �legal �settlement, �impairment �charges, �debt �restructuring �and �debt �issuance �cost �amortization, �non-cash �adjustments �related �to �tax receivable�agreement,�similar�adjustments�attributable�to�our�non-controlling�interests�and�certain�tax�related�items. Although�adjusted�net�income�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�segment�adjusted�operating�income�to�allocate�resources�among�our�operating�segments. The �Company �considers �this �measure �integral �because �it �excludes �the �above-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: • • • • • Exclusion�of�the�non-cash,�mark-to-market�adjustments�on�financial�instruments,�including�interest�rate�swap�agreements�and�investment�securities,�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�these�financial�instruments.�Additionally,�the�non-cash,�mark-to-market�adjustments�on�financial�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,�accounts�receivable�and�accounts�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. The�Company�considers�certain�acquisition-related�costs,�including�certain�financing�costs,�investment�banking�fees,�warranty�and�indemnity�insurance, certain�integration�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�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. Legal �settlement�represents�the�consideration�paid�to�the�sellers �of�eNett�and�Optal�in�excess�of�the�businesses' �fair�values.�Management�has�elected�to exclude�this�item�as�the�charge�is�nonrecurring�and�does�not�reflect�future�operating�expenses�resulting�from�this�acquisition. The�loss�on�sale�of�subsidiary�relates�to�the�divestiture�of�our�former�Brazilian�subsidiary�as�of�the�date�of�sale,�September�30,�2020,�and�the�associated write-off�of�its�assets�and�liabilities.�As�previously�discussed,�gains�and�losses�from�divestitures�are�considered�by�us�to�be�unpredictable�and�dependent on�factors�that�may�be�outside�of�our�control.�The�exclusion�of�these�gains�and�losses�are�consistent�with�our�practice�of�excluding�other�non-recurring items�associated�with�strategic�transactions. 56 • 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. • We�exclude�restructuring�and�other�costs�when�evaluating�our�continuing�business�performance�as�such�items�are�not�consistently�occurring�and�do�not reflect �expected �future �operating �expense, �nor �do �they �provide �insight �into �the �fundamentals �of �current �or �past �operations �of �our �business. �This �also includes �costs �related �to �certain �identified �initiatives, �including �technology �initiatives, �to �further �streamline �the �business, �improve �the �Company’s efficiency,�create�synergies�and�globalize�the�Company’s�operations�and�remediate�the�prior�year�material�weaknesses,�all�with�an�objective�to�improve scale�and�efficiency�and�increase�profitability�going�forward.�For�the�year�ended�December�31,�2020,�restructuring�and�other�costs�include�certain�costs incurred �in �association�with �COVID-19,�including �the�cost �of�providing �additional�health, �welfare �and�technological �support�to �our�employees �as�they work�remotely. • • • • Impairment �charges �represent �non-cash �asset �write-offs, �which �do �not �reflect �recurring �costs �that �would �be �relevant �to �the �Company’s �continuing operations. �The �Company �believes �that �excluding �these �nonrecurring �expenses �facilitates �the �comparison �of �our �financial �results �to �the �Company’s historical�operating�results�and�to�other�companies�in�its�industry. Debt �restructuring �and �debt �issuance �cost �amortization �are �unrelated �to �the �continuing �operations �of �the �Company. �Debt �restructuring �costs �are �not consistently�occurring�and�do�not�reflect�expected�future�operating�expense,�nor�do�they�provide�insight�into�the�fundamentals�of�current�or�past�operations of�our�business.�In�addition,�since�debt�issuance�cost�amortization�is�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. The �adjustments �attributable �to �non-controlling �interests, �including �adjustments �to �the �redemption �value �of �a �non-controlling �interest, �and �non-cash adjustments�related�to�the�tax�receivable�agreement�have�no�significant�impact�on�the�ongoing�operations�of�the�business. The�tax�related�items�are�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 �as �well �as �the �impact �from �certain �discrete �tax �items. �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. ����For�the�same�reasons,�WEX�believes�that�adjusted�net�income�may�also�be�useful�to�investors�as�one�means�of�evaluating�our�performance.�However,�because adjusted �net �income �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�net�income�as�used�by�WEX�may�not�be�comparable�to�similarly�titled�measures employed�by�other�companies. 57 The�following�table�reconciles�net�(loss)�income�attributable�to�shareholders�to�adjusted�net�income�attributable�to�shareholders: � �(In�thousands) Net�(loss)�income�attributable�to�shareholders Unrealized�loss�(gain)�on�financial�instruments Net�foreign�currency�remeasurement�loss�(gain) Acquisition-related�intangible�amortization Other�acquisition�and�divestiture�related�items Legal�settlement Loss�on�sale�of�subsidiary Stock-based�compensation Other�costs Impairment�charges Debt�restructuring�and�debt�issuance�cost�amortization Non-cash�adjustments�related�to�tax�receivable�agreement ANI�adjustments�attributable�to�non-controlling�interests Tax�related�items Adjusted�net�income�attributable�to�shareholders 2020 Year�ended�December�31, 2019 2018 $ $ (243,638) 27,036� 25,783� 171,144� 57,787� 162,500� 46,362� 65,841� 13,555� 53,378� 40,063� (491) (42,910) (108,086) 268,324� $ $ 99,006� 34,654� 926� 159,431� 37,675� —� —� 47,511� 25,106� —� 21,004� (932) 53,035� (74,743) 402,673� $ $ 168,295� (2,579) 38,800� 138,186� 4,143� —� —� 35,103� 13,717� 5,649� 14,101� 775� (1,370) (53,918) 360,902� 58 Application�of�Critical�Accounting�Policies�and�Estimates ����Our�discussion�and�analysis�of�our�financial�condition�and�results�of�operations�are�based�upon�our�consolidated�financial�statements,�which�have�been�prepared in �accordance �with �GAAP. �Preparation �of �these �financial �statements �requires �us �to �make �estimates �and �judgments �that �affect �reported �amounts �of �assets �and liabilities, �revenue �and �expenses �and �related �disclosure �of �contingent �assets �and �liabilities �at �the �date �of �our �financial �statements. �We �continually �evaluate �our judgments�and�estimates �in�determination �of �our�financial �condition�and �operating �results.�We �base�our �estimates�on �historical�experience �and�on �various�other assumptions�that�we�believe�to�be�reasonable�under�the�circumstances,�the�results�of�which�form�the�basis�for�making�judgments�about�the�carrying�values�of�assets and �liabilities �that �are �not �readily �apparent �from �other �sources. �Estimates �are �based �on �information �available �as �of �the �date �of �the �financial �statements �and, accordingly, �actual�results �could�differ �from�these�estimates, �sometimes�materially. �Critical�accounting �policies�and �estimates�are �defined�as�those �that�are�both most�important�to�the�portrayal�of�our�financial�condition�and�operating�results�and�require�management’s�most�subjective�judgments.�Our�consolidated�financial statements�are�based�on�the�selection�and�application�of�critical�accounting�policies�and�estimates,�the�most�significant�of�which�are�included�in�the�tables�below. Revenue�Recognition Description����������������������������������������������������� The�majority�of�the�Company’s�revenues�are�comprised�of transaction-based�fees,�which�are�generally�calculated�based�on measures�such�as:�(i)�percentage�of�dollar�value�of�volume processed;�(ii)�number�of�transactions�processed;�or�(iii)�some combination�thereof.� �� Interchange�income,�a�fee�paid�by�a�merchant�bank�to�the�card- issuing�bank�(the�Company)�through�the�interchange�network,�is earned�from�the�Company’s�suite�of�card�products.�Interchange fees�are�set�by�the�credit�card�providers.� The�Company�has�entered�into�agreements�with�major�oil companies,�fuel�retailers�and�vehicle�maintenance�providers, online�travel�agencies�and�health�partners,�which�provide products�and/or�services�to�the�Company’s�customers.�These agreements�specify�that�a�transaction�is�deemed�to�be�captured when�the�Company�has�validated�that�the�transaction�has�no errors�and�has�accepted�and�posted�the�data�to�the�Company’s records.� Account�servicing�revenue�is�primarily�comprised�of�monthly fees�charged�to�cardholders.�The�Company�also�recognizes�SaaS based�service�fees�in�the�healthcare�market�and�licensing�fees�for use�of�our�accounts�receivable�and�accounts�payable�SaaS platforms.� The�Company�earns�revenue�on�overdue�accounts,�calculated using�the�greater�of�a�minimum�charge�or�a�stated�late�fee�rate multiplied�by�the�outstanding�balance�that�is�subject�to�a�late�fee charge.� The�Company�assesses�fees�for�providing�ancillary�services, such�as�information�products�and�services,�software development�projects�and�other�services�sold�subsequent�to�the core�offerings.�Other�revenues�also�include�international settlement�fees,�fees�for�overnight�shipping,�certain�customized electronic�reporting�and�customer�contact�services�provided�on behalf�of�certain�of�the�Company’s�customers.� Effect�if�Actual�Results�Differ�from� Assumptions In�preparing�the�financial�statements,�management must�make�estimates�related�to�contractual�terms, customer�performance�and�sales�volumes�to determine�the�total�amounts�recorded�as�deductions, such�as�rebates�and�incentives,�from�revenue. Rebates�and�incentives�are�calculated�based�on estimated�performance�and�the�terms�of�the�related business�agreements.�Management�also�considers historical�results�in�making�such�estimates.�The actual�amounts�ultimately�paid�to�the�customer�may be�different�from�our�estimates.�Such�differences�are recorded�once�they�have�been�determined�and�have historically�not�been�significant.� Assumptions/Approach�Used The�Company’s�primary�performance�obligation�to�merchants is�a�stand-ready�commitment�to�provide�payment�and transaction�processing�services�as�the�merchant�requires, which�is�satisfied�over�time�in�daily�increments.� �� Within�our�Travel�and�Corporate�Solutions�and�Health�and Employee�Benefit�Solutions�segments,�we�provide�SaaS services�and�support,�which�is�satisfied�over�time�in�a�series�of daily�increments.�Revenue�is�recognized�based�on�an�output method�using�days�elapsed�to�measure�progress�as�the Company�transfers�control�evenly�over�each�monthly subscription�period.� The�Company�enters�into�contracts�with�certain�large customers�or�strategic�cardholders�that�provide�for�fee�rebates tied�to�performance�milestones.�When�such�rebates�constitute consideration�payable�to�a�customer�or�other�parties�that purchase�services�from�the�customer,�they�are�considered variable�consideration�and�are�recorded�as�a�reduction�in payment�processing�revenue�in�the�same�period�that�related interchange�income�is�recognized.�Fee�rebates�made�to�certain other�partners�were�determined�to�be�costs�to�obtain�a�contract and�are�recorded�as�sales�and�marketing�expenses.� The�Company�earns�revenue�on�overdue�accounts,�which�is recognized�as�revenue�at�the�time�the�fees�are�assessed.� The�Company�generally�records�revenue�net,�equal�to consideration�retained,�based�upon�its�conclusion�that�the Company�is�the�agent�in�its�principal�versus�agent relationships.� �� �� 59 Reserve�for�Credit�Losses Description����������������������������������������������������� The�allowance�for�expected�credit�losses�reflects�management’s estimate�of�uncollectible�balances�as�of�the�reporting�date resulting�from�credit�risk�and�including�fraud�losses.�The�reserve for�credit�losses�reduces�the�Company’s�accounts�receivable balances,�as�reported�in�the�consolidated�financial�statements,�to the�net�realizable�value. �� Effect�if�Actual�Results�Differ�from� Assumptions To�the�extent�calculated�expected�credit�losses�are�not indicative�of�future�performance,�actual�loss experience�could�differ�significantly�from management’s�judgments�and�expectations,�resulting in�either�higher�or�lower�future�provisions�for�credit losses,�as�applicable.�As�of�December�31,�2020,�we have�an�estimated�reserve�for�credit�losses,�including fraud�losses,�that�is�2.9�percent�of�the�total�gross accounts�receivable�balance. � An�increase�or�decrease�to�this�reserve�by�0.5�percent of�the�total�gross�accounts�receivable�balance�would increase�or�decrease�the�provision�for�credit�losses�for the�year�by�$10.3�million. �� Assumptions/Approach�Used The�allowance�for�expected�credit�losses�is�primarily calculated�by�analytical�models�using�actual�loss-rate experience,�and�adjustments,�where�necessary,�for�current conditions�and�forecasts�of�leading�economic�indicators correlated�to�loss-rate�trends.�Management�monitors�the�credit quality�of�accounts�receivable�in�making�judgments�necessary to�estimate�expected�credit�losses�by�analyzing�delinquency reports,�loss-rate�trends,�changes�in�customer�payment patterns,�economic�indicators,�recent�trends�and�forecasts,�and competitive,�legal,�and�regulatory�environments.�When�such indicators�are�forecasted�to�deviate�from�the�current�or historical�median,�the�Company�qualitatively�assesses�what impact,�if�any,�the�trends�are�expected�to�have�on�the�reserve for�credit�losses.�Assumptions�regarding�expected�credit�losses are�reviewed�each�reporting�period�and�may�be�impacted�by actual�performance�of�accounts�receivable�and�changes�in�any of�the�factors�discussed�above. Receivables�exhibiting�elevated�credit�risk�characteristics�from homogeneous�pools�are�assessed�on�an�individual�basis�for expected�credit�losses.�These�receivables�are�assessed individual�expected�credit�loss�estimates�based�on�the occurrence�of�bankruptcies,�disputes,�conversations�with customers,�or�other�significant�credit�loss�events. Additionally,�the�allowance�for�expected�credit�losses�includes fraud�losses.�Management�monitors�known�and�suspected fraudulent�activity�identified�by�the�Company,�as�well�as fraudulent�claims�reported�by�customers,�in�estimating�the reserve�for�expected�fraud�losses. Lastly,�the�allowance�includes�reserves�for�waived�late�fees. The�Company�earns�revenue�by�assessing�monthly�finance fees�on�accounts�with�overdue�balances.�These�fees�are recognized�as�revenue�at�the�time�the�fees�are�assessed.�The finance�fee�is�calculated�using�the�greater�of�a�minimum charge�or�a�stated�late�fee�rate�multiplied�by�the�outstanding balance�that�is�subject�to�a�late�fee�charge.�On�occasion,�these fees�are�waived�to�maintain�relationship�goodwill.�Charges�to other�accounts�represents�the�offset�against�the�late�fee revenue�recognized�when�the�Company�establishes�a�reserve for�such�waived�amounts. 60 Business�Combinations,�Acquired�Intangible�Assets�and�Goodwill � Description����������������������������������������������������� Business�combinations�are�accounted�for�at�fair value.�The�accounting�for�business�combinations requires�estimates�and�judgment�as�to�expectations for�future�cash�flows�of�the�acquired�business,�and the�allocation�of�those�cash�flows�to�identifiable intangible�assets,�in�determining�the�estimated�fair value�for�assets�and�liabilities�acquired.� ��An�acquisition�not�meeting�the�criteria�to�be accounted�for�as�a�business�combination�is accounted�for�as�an�asset�acquisition.�Asset acquisitions�are�recorded�at�purchase�price,�allocated based�on�the�relative�fair�value�of�identifiable�assets and�liabilities.�No�goodwill�is�recorded�in�an�asset acquisition.� ��Goodwill�is�comprised�of�the�cost�of�business acquisitions�in�excess�of�the�fair�value�assigned�to the�net�tangible�and�identifiable�intangible�assets acquired.�Acquired�intangible�assets�result�from�the allocation�of�the�cost�of�an�acquisition.� Goodwill�is�not�amortized�but�is�reviewed�for impairment�annually,�or�when�events�or�changes�in the�business�environment�indicate�that�the�carrying value�of�the�reporting�units�may�exceed�their�fair value.�The�annual�review�of�goodwill�is�performed as�of�October�1�of�each�year.� The�Company�tests�definite-lived�intangible�assets for�impairment�if�conditions�exist�that�indicate�the carrying�value�may�not�be�recoverable.� Such�circumstances�would�include,�but�are�not limited�to,�a�significant�decrease�in�the�perceived market�price�of�the�intangible,�a�significant�adverse change�in�the�way�the�asset�is�being�used,�or�a history�of�operating�or�cash�flow�losses�associated with�the�use�of�the�intangible. Assumptions/Approach�Used The�fair�values�assigned�to�tangible�and�intangible�assets�acquired�and liabilities�assumed�are�based�on�management’s�estimates�and�assumptions, as�well�as�other�information�compiled�by�management,�including�projected financial�information,�effective�income�tax�rates,�present�value�discount factors,�and�long-term�growth�expectations.�The�Company�utilizes�third- party�specialists�to�assist�management�with�the�identification�and�valuation of�intangible�assets�using�customary�valuation�procedures�and�techniques. � During�2020,�the�Company�used�a�discounted�cash�flow�analysis�and guideline�transaction�method�to�determine�the�fair�value�of�the�eNett�and Optal�businesses�acquired�on�December�15,�2020. The�Company’s�annual�goodwill�impairment�test�is�quantitative.�For�the reporting�units�that�carry�goodwill�balances,�our�impairment�test�consists�of a�comparison�of�each�reporting�unit’s�carrying�value�to�its�estimated�fair value.�A�reporting�unit,�for�the�purpose�of�the�impairment�test,�is�one�level below�the�operating�segment�level.�We�have�three�reporting�segments�that are�further�broken�into�several�reporting�units�for�the�impairment�review. The�estimated�fair�value�for�the�majority�of�our�reporting�units�is�estimated using�a�combination�of�discounted�estimated�future�cash�flows�and�prices for�comparable�businesses.�An�appropriate�discount�rate�is�used,�as�well�as risk�premium�for�specific�business�units,�based�on�the�Company’s�cost�of capital�or�reporting�unit-specific�economic�factors.�We�generally�validate the�model�through�a�reconciliation�of�the�fair�value�of�all�our�reporting�units to�our�overall�market�capitalization.�The�assumptions�used�to�estimate�the discounted�cash�flows�are�based�on�our�best�estimates�about�payment processing�fees/interchange�rates,�sales�volumes,�costs�(including�fuel prices),�future�growth�rates,�working�capital�needs,�capital�expenditures�and market�conditions�over�an�estimate�of�the�remaining�operating�period�at�the reporting�unit�level.�The�discount�rate�at�each�reporting�unit�is�based�on�the weighted�average�cost�of�capital�that�is�determined�by�evaluating�the�risk free�rate�of�return,�cost�of�debt,�and�expected�equity�premiums. � The�Company�evaluates�its�definite-lived�intangible�assets�for�impairment under�certain�circumstances.�Such�assessment�includes�considering�any negative�financial�performance,�legal,�regulatory,�contractual�or�other factors�that�could�affect�significant�inputs�used�to�determine�the�fair�value of�the�asset�and�other�relevant�entity-specific�events�such�as�changes�in strategy�or�customers�that�could�affect�significant�inputs�used�in determining�fair�value.�If�the�Company�determines�that�it�is�not�more�likely than�not�that�the�asset�is�impaired,�then�the�Company�does�not�perform�a quantitative�impairment�test.�If�the�Company�determines�that�the�asset�is more�likely�than�not�impaired,�then�a�quantitative�test�is�performed comparing�the�fair�value�of�the�asset�with�its�carrying�amount�and impairment�is�measured�as�the�amount�by�which�the�carrying�amount�of�the asset�group�exceeds�its�fair�value.�Fair�value�measurements�under�FASB Accounting�Standards�Codification�(“ASC”)�820�–�Fair�Value Measurements�and�Disclosures,�are�based�on�the�assumptions�of�market participants.�When�determining�the�fair�value�of�the�asset�group,�entities must�consider�the�highest�and�best�use�of�the�assets�from�a�market- participant�perspective. Effect�if�Actual�Results�Differ�from� Assumptions � Our�goodwill�resides�in�multiple�reporting�units.�The profitability�of�individual�reporting�units�may�suffer periodically�from�downturns�in�customer�demand�or other�economic�factors.�Individual�reporting�units may�be�more�impacted�than�the�Company�as�a whole.�Specifically,�during�times�of�economic slowdown,�our�customers�may�reduce�their expenditures.�As�a�result,�demand�for�the�services�of one�or�more�of�the�reporting�units�could�decline, which�could�adversely�affect�our�operations,�cash flow,�and�liquidity�and�could�result�in�an�impairment of�goodwill�or�intangible�assets.� During�our�annual�goodwill�impairment�test performed�as�of�October�1,�2020,�we�determined�that the�reduced�volumes�attributable�in�part�to�COVID- 19,�had�a�significant�impact�on�the�fair�value�of�the WEX�Fleet�Europe�reporting�unit�(the�2019�Go�Fuel Card�acquisition).�Based�on�the�carrying�value�of this�reporting�unit�exceeding�its�fair�value,�the Company�recorded�a�$53.4�million�goodwill impairment�charge�during�the�year�ended�December 31,�2020.�There�is�$65.8�million�remaining�goodwill associated�with�this�reporting�unit.� For�our�other�reporting�units�with�goodwill,�our 2020�goodwill�impairment�test�indicated�excesses�of estimated�fair�value�over�the�respective�carrying amounts�by�amounts�ranging�from�approximately $10�million�to�$2.3�billion.� Although�no�reporting�units�are�deemed�at�risk�of impairment�as�of�December�31,�2020,�subsequent�to the�impairment�loss�taken�by�WEX�Fleet�Europe�as of�October�1,�2020,�there�exists�the�potential�for future�impairment�should�actual�results�deteriorate versus�our�current�expectations.�As�of�December�31, 2020,�the�Company�had�approximately�$4.2�billion on�its�consolidated�balance�sheet�related�to�goodwill and�intangible�assets�of�acquired�entities.� The�Company�did�not�record�any�goodwill impairments�during�the�year�ended�December�31, 2019.� The�Company�did�not�record�any�intangible�asset impairments�during�the�years�ended�December�31, 2020�and�2019.� If�the�Company�incorrectly�estimates�the�useful�lives�of�its�intangible�assets, it�would�result�in�inaccurate�amortization�expense,�which�may�lead�to�future impairment. � � 61 Income�Taxes � Description����������������������������������������������������� In�preparing�the�consolidated�financial�statements,�we�calculate income�tax�expense�(benefit)�based�on�our�interpretation�of�the�tax laws�in�the�various�jurisdictions�where�we�conduct�business.�This requires�us�to�estimate�current�tax�obligations�and�to�assess temporary�differences�between�the�financial�statement�carrying amounts�and�the�tax�bases�of�assets�and�liabilities.�These differences�result�in�long-term�deferred�tax�assets�and�liabilities, the�net�amount�of�which�we�show�as�a�line�item�on�the consolidated�balance�sheet.�All�or�a�portion�of�the�benefit�of income�tax�positions�is�recognized�only�when�we�have�made�a determination�that�it�is�more�likely�than�not�that�the�tax�position will�be�sustained�upon�examination,�based�upon�the�technical merits�of�the�position�and�other�factors.�For�tax�positions�that�are determined�to�be�more�likely�than�not�sustained�upon�examination, the�tax�benefit�recognized�is�the�largest�amount�of�benefit�that�is greater�than�50%�likely�of�being�realized�upon�ultimate�settlement. We�must�also�assess�the�likelihood�that�the�deferred�tax�assets�will be�realized.� To�the�extent�we�believe�that�realization�is�not�more�likely�than not,�we�establish�a�valuation�allowance.�When�we�establish�a valuation�allowance�or�increase�this�allowance,�we�generally record�a�corresponding�income�tax�expense�in�the�consolidated statement�of�operations�in�the�period�of�the�change.�Conversely,�to the�extent�circumstances�indicate�that�realization�is�more�likely than�not,�the�valuation�allowance�is�decreased�to�the�amount realizable,�which�generates�an�income�tax�benefit.� � � Assumptions/Approach�Used Management�must�make�judgments�to�determine�income�tax expense�(benefit),�deferred�tax�assets�and�liabilities�and�any valuation�allowance�to�be�recorded�against�deferred�tax�assets. During�the�ordinary�course�of�business,�there�are�many transactions�and�calculations�for�which�the�ultimate�tax determination�is�uncertain.�Changes�in�our�estimates�occur periodically�due�to�changes�in�tax�rates,�changes�in�business operations,�implementation�of�tax�planning�strategies,�the expiration�of�relevant�statutes�of�limitations,�resolution�with taxing�authorities�of�uncertain�tax�positions�and�newly enacted�statutory,�judicial�and�regulatory�guidance.�We�record a�valuation�allowance�to�reduce�deferred�tax�assets�to�the amount�that�is�more�likely�than�not�to�be�realized.� Significant�judgment�is�required�in�determining�valuation allowances.�In�evaluating�the�ability�to�recover�deferred�tax assets,�we�consider�all�available�positive�and�negative evidence�including�past�operating�results,�the�existence�of cumulative�losses�in�the�most�recent�years,�forecasted earnings,�future�taxable�income,�and�prudent�and�feasible�tax planning�strategies.�In�establishing�a�liability�for�unrecognized tax�benefits,�assumptions�are�made�in�determining�whether, and�to�what�extent,�a�tax�position�may�be�sustained.�It�requires significant�management�judgment�regarding�applicable statutes�and�their�related�interpretation�as�they�apply�to�our particular�facts�and�circumstances.� � Recently�Adopted�and�New�Accounting�Standards Effect�if�Actual�Results�Differ�from� Assumptions Although�we�believe�that�our�income�tax�related judgments�and�estimates�are�reasonable,�it�is possible�that�our�actual�results�could�be�different than�what�we�expected,�and�we�may�be�exposed�to�a material�change�in�our�total�income�tax�expense,�tax- related�balances,�or�valuation�allowances.�Upon income�tax�audit,�any�unfavorable�tax�settlement may�require�use�of�our�cash�and�result�in�an�increase in�our�effective�tax�rate�in�the�period�of�settlement. A�favorable�tax�settlement�could�be�recognized�as�a reduction�in�our�effective�tax�rate�in�the�period�of settlement.� We�adopted �Topic �326 �on �January �1, �2020, �utilizing �the �modified-retrospective �approach. �Under �the �modified-retrospective �approach, �prior �period �comparable financial �information �is�not �adjusted.�See �Item�8 �–�Note �1,�Basis�of �Presentation �and�Summary �of�Significant �Accounting�Policies, �and�Item �8-�Note �2,�Recent Accounting�Pronouncements,�in�this�report�for�further�discussion�of�the�impact�from�the�adoption�of�this�new�accounting�standard.�We�use�a�loss-rate�methodology to�calculate�our�general�allowance�for�accounts�receivable.�This�methodology�considers�historical�loss�experience�to�calculate�actual�loss-rates�and�analyzes�trends in �the �calculated �loss-rates �against �trends �in �economic �indicators. �Analyzing �trends �in �loss-rates �against �trends �in �economic �indicators �allows �us �to �identify correlations �between �economic �environments �and �loss �experience. �Strong �correlations �identified �from �that �analysis �are �factored �into �the �current �and �expected conditions�of�the�overall�credit�loss�reserve�methodology.�The�expense�we�recognized�in�the�quarter�is�the�amount�necessary�to�bring�the�reserve�to�its�required level �based �on �this �methodology. �When �individual �accounts �receivable �exhibit �elevated �credit �risk �characteristics �as �a �result �of �bankruptcies, �disputes, conversations �with �customers, �or �other �significant �credit �loss �events, �they �are �assessed �individual �credit �loss �estimates. �Assumptions �regarding �expected �credit losses�are�reviewed�each�reporting�period�and�may�be�impacted�by�actual�performance�of�accounts�receivable�and�changes�in�any�of�the�factors�discussed�above.���� See�Item�8�–�Note�2,�Recent�Accounting�Pronouncements,�for�recently�issued�accounting�standards�that�have�not�yet�been�adopted. 62 Liquidity,�Capital�Resources�and�Cash�Flows ����We�believe�that�our�cash�generating�capability,�financial�condition�and�operations,�together�with�the�sources�of�cash�listed�below,�will�be�adequate�to�fund�our cash�needs�for�at�least�the�next�12�months.�The�table�below�summarizes�our�primary�short-term�sources�and�uses�of�cash: Sources�of�cash • • • • • • Borrowings�on�our�2016�Credit�Agreement Convertible�Notes Deposits Borrowed�federal�funds Participation�debt Accounts�receivable�factoring�and�securitization�arrangements 1 Use�of�cash • • Payments�on�our�2016�Credit�Agreement Payments�on�maturities�and�withdrawals�of�certificates�of�deposit�and�brokered�money market�deposits • Payments�on�borrowed�federal�funds • Working�capital�needs�of�the�business • Capital�expenditures 1 �Our�long-term�cash�requirements�consist�primarily�of�amounts�owed�on�our�2016�Credit�Agreement�and�Notes�and�various�facilities�lease�agreements. Cash�Flows ����The�table�below�summarizes�our�cash�activities:� � (In�thousands) Net�cash�provided�by�operating�activities Net�cash�used�for�investing�activities Net�cash�(used�for)�provided�by�financing�activities � Operating�Activities Year�ended�December�31, 2019 2020 $ $ $ 857,019� (329,086) (179,256) $ $ $ 663,171� (990,614) 749,773� $ $ $ 2018 400,229� (254,175) (102,728) • • Cash�provided�by�operating�activities�for�2020�increased�$193.8�million�as�compared�to�the�prior�year,�resulting�from�increased�collections�on�accounts receivable�offset�in�part�by�a�reduction�in�payables. Cash�provided�by�operating�activities�for�2019�increased�$262.9�million�as�compared�to�the�prior�year,�resulting�from�an�increase�in�accounts�payable�and decrease �in �accounts �receivable �primarily �due �to �a �factoring �arrangement �in �which �the �Company �retains �the �merchant �payable �and �sells �the �related accounts�receivable.�This�arrangement�was�in�place�during�the�twelve�months�ended�December�31,�2019,�but�not�in�place�until�August�of�2018. Investing�Activities • • Cash�used�for�investing�activities�for�2020�decreased�$661.5�million�as�compared�to�the�prior�year.�The�Company�completed�one�acquisition�during�2020 with�associated�payments�of�$220.7�million,�net�of�cash�acquired,�as�compared�to�four�acquisitions�completed�during�2019. Cash �used �for �investing �activities �for �2019 �increased �$736.4 �million �as �compared �to �the �prior �year, �resulting �from �$882.4 �million �of �payments �made associated�with�the�four�acquisitions�completed�during�2019. Financing�Activities • • Cash�used�for�financing�activities�during�2020�was�$179.3�million�as�compared�to�cash�provided�by�financing�activities�during�2019�of�$749.8�million. The�decrease�of�$929.0�million�is�substantially�due�to�a�reduction�in�overall�borrowing�needs�year�over�year�for�the�funding�of�acquisitions. Cash �used �for �financing �activities �for �2019 �increased �$852.5 �million �as �compared �to �the �prior �year, �primarily �due �to �higher �overall �borrowings �in connection�with�funding�the�acquisitions�and�raising�deposits�in�order�to�fund�asset�growth. Liquidity ����In�general,�the�Company’s�trade�receivables�provide�for�payment�terms�of�30�days�or�less.�Receivables�not�paid�within�the�terms�of�the�agreement�are�generally subject�to�late�fees�based�upon�the�outstanding�receivable�balance.�The�Company�extends�revolving�credit�to�certain�small�fleets.�These�accounts�are�also�subject�to late�fees,�and�balances�that�are�not�paid�in�full�are�subject�to�interest�charges�based�on�a�revolving�balance.�The�Company�had�approximately�$60.2�million�and $62.4�million�of�receivables�with�revolving�credit�balances�as�of�December�31,�2020�and�2019,�respectively. 63 ����At�December�31,�2020,�approximately�97�percent�of�the�outstanding�balance�of�$2.0�billion�of�total�trade�accounts�receivable�was�29�days�or�less�past�due�and approximately�98�percent�of�the�outstanding�balance�of�total�trade�accounts�receivable�was�59�days�or�less�past�due.�The�receivables�portfolio�consists�of�a�large group�of�homogeneous�smaller�balances�across�a�wide�range�of�industries.�No�one�customer�receivable�balance�represented�10�percent�or�more�of�the�outstanding receivables�balance�at�December�31,�2020�or�December�31,�2019. ����Our�short-term�cash�requirements�consist�primarily�of�funding�the�working�capital�needs�of�our�business,�payments�on�maturities�and�withdrawals�of�certificates of�deposit �and �brokered �money �market �deposits, �payments �on �borrowed �federal �funds, �required �capital �expenditures, �repayments �on �our �credit �facility, �interest payments�on�our�credit�facility�and�other�operating�expenses.�WEX�Bank�can�fund�our�short-term�domestic�cash�requirements�through�the�issuance�of�brokered deposits�and�borrowed�federal�funds.�Any�remaining�cash�needs�are�primarily�funded�through�operations,�our�borrowings�under�our�2016�Credit�Agreement,�our participation�debt�and�our�accounts�receivable�factoring�and�securitization�arrangements.�Our�long-term�cash�requirements�consist�primarily�of�amounts�owed�on our�2016�Credit�Agreement�and�Notes�and�various�facilities�lease�agreements. � � � �Undistributed �earnings �of �certain �foreign �subsidiaries �of �the �Company �amounted �to �$58.5 �million �and �$77.4 �million �at �December �31, �2020 �and �2019, respectively. �The �Company �had �historically �asserted �that �the �undistributed �earnings �of �foreign �subsidiaries �were �considered �indefinitely �reinvested �outside �the United�States.�The�Company�reevaluated�its�historic�indefinite�reinvestment�assertion�and�determined�that�any�historical�undistributed�earnings�as�well�as�the�future earnings�for�WEX�Australia�are�no�longer�considered�to�be�indefinitely�reinvested.�The�Company�continues�to�maintain�its�indefinite�reinvestment�assertion�for�its remaining�foreign�subsidiaries.�The�deferred�tax�liability�related�to�the�foreign�and�state�tax�costs�associated�with�this�change�in�assertion�was�immaterial.�Upon distribution�of�the�foreign�subsidiaries�earnings�in�which�the�Company�continues�to�assert�indefinite�reinvestment,�the�Company�would�be�subject�to�withholding taxes�payable�to�foreign�countries,�where�applicable,�but�would�generally�have�no�further�federal�income�tax�liability. � � � �Earnings �outside �of �the �United �States �are �accompanied �by �certain �financial �risks, �such �as �changes �in �foreign �currency �exchange �rates. �Changes �in �foreign currency�exchange�rates�may�reduce�the�reported�value�of�our�foreign�currency�revenues,�net�of�expenses�and�cash�flows.�We�cannot�predict�changes�in�currency exchange�rates,�the�impact�of�currency�exchange�rate�changes�nor�the�degree�to�which�we�will�be�able�to�manage�the�impact�of�currency�exchange�rate�changes. Deposits�and�Borrowed�Federal�Funds ����WEX�Bank�has�issued�certificates�of�deposit�in �various�maturities�ranging�between�1�year �and �5�years,�with�interest�rates�ranging�from�1.35�percent �to�3.52 percent�as�of�December�31,�2020,�as�compared�to�maturities�ranging�between�4�months�and�5�years�and�interest�rates�ranging�from�1.80�percent�to�3.52�percent�as of�December�31,�2019.�As�of�December�31,�2020,�we�had�approximately�$503.4�million�of�certificates�of�deposit�outstanding�at�a�weighted�average�interest�rate�of 1.81�percent,�compared�to�$979.4�million�of�certificates�of�deposit�outstanding�at�a�weighted�average�interest�rate�of�2.57�percent�as�of�December�31,�2019. � � � �WEX �Bank �also �issues �interest-bearing �brokered �money �market �deposits �with �variable �interest �rates �ranging �from �0.12 �percent �to �0.30 �percent �as �of December�31,�2020,�as�compared�to�variable�interest�rates�ranging�from�1.63�percent�to�1.90�percent�as�of�December�31,�2019.�As�of�December�31,�2020,�we�had approximately �$439.9 �million �of �interest-bearing �brokered �money �market �deposits �at �a �weighted �average �interest �rate �of �0.27 �percent, �as �compared �to �$362.2 million�of�interest-bearing�brokered�money�market�deposits�at�a�weighted�average�interest�rate�of�1.88�percent�as�of�December�31,�2019. ����WEX�Bank�may�issue�additional�brokered�deposits�without�limitation,�subject�to�FDIC�rules�governing�minimum�financial�ratios,�which�include�risk-based�asset and �capital �requirements. �As �of �December �31, �2020, �all �brokered �deposits �were �in �denominations �of �$250 �thousand �or �less, �corresponding �to �FDIC �deposit insurance�limits.�Interest-bearing�money�market�funds�may�be�withdrawn�at�any�time.�We�believe�that�our�brokered�deposits�are�paying�competitive�yields�and�that there�continues�to�be�consumer�demand�for�these�instruments. ����We�also�carry �non-interest�bearing�deposits�that �are�required�for�certain �customers�as�collateral �for�their�credit�accounts. �We�had�$116.7�million �and�$112.6 million�of�these�deposits�at�December�31,�2020�and�2019,�respectively. ���� � �� �In �accordance �with�regulatory �requirements, �WEX �Bank �maintains �reserves �against �a �percentage �of �certain�customer �deposits �by �keeping �balances �with�the Federal�Reserve�Bank.�There�was�no�required�reserve�at�December�31,�2020�due�to�temporarily�relaxed�Federal�Reserve�requirements�enacted�in�response�to�the COVID-19�pandemic.�The�required�reserve�based�on�the�outstanding�customer�deposits�was�$24.9�million�at�December�31,�2019. 64 ����WEX�Bank�also�borrows�from�uncommitted�federal�funds�lines�of�credit�to�supplement�the�financing�of�our�accounts�receivable.�Our�federal�funds�lines�of�credit were�$376.0�million�and�$355.0�million�as�of�December�31,�2020�and�2019,�respectively,�with�$20.0�million�and�$35.0�million�of�borrowings�as�of�December�31, 2020�and�2019,�respectively. ����WEX�Bank�participates�in�the�ICS�service�offered�by�Promontory�Interfinancial�Network,�which�allows�WEX�Bank�to�purchase�brokered�money�market�demand accounts�and�demand�deposit�accounts�in�an�amount�not�to�exceed�$125.0�million�as�part�of�a�one-way�buy�program.�At�December�31,�2020�and�2019�there�was�no outstanding�balance�for�ICS�purchases. 2016�Credit�Agreement ��� �On�July�1,�2016,�we�entered�into�the�2016�Credit�Agreement�in�order�to�permit�the�additional�financing�necessary�to�facilitate�the�EFS�acquisition.�The�2016 Credit�Agreement�initially�provided�for�secured�tranche�A�and�tranche�B�term�loan�facilities�in�original�principal�amounts�equal�to�$455.0�million�and�$1,200.0 million,�respectively,�and�a�$470.0�million�secured�revolving�credit�facility.�As�of�December�31,�2020,�after�giving�effect�to�amendments�prior�to�such�date,�we�had an�outstanding�principal�amount�of�$873.8�million�on�our�secured�tranche�A�term�loan,�an�outstanding�principal�amount�of�$1,442.4�million�on�our�secured�tranche B�term�loan�and�outstanding�letters�of�credit�of�$51.6�million�drawn�against�our�$870.0�million�secured�revolving�credit�facility,�with�a�$250.0�million�sublimit�for letters�of�credit�and�$20.0�million�sublimit�for�swingline�loans.�The�tranche�B�term�loans�mature�during�May�2026�while�the�revolving�credit�facility�and�tranche�A term�loans�mature�during�July�2023,�subject�to�earlier�maturity�in�August�2022�in�certain�circumstances.�The�revolving�credit�loans�and�tranche�A�term�loans�bear interest�at�variable�rates,�at�the�Company’s�option,�plus�an�applicable�margin�determined�based�on�the�Company’s�consolidated�leverage�ratio,�which�is�calculated using�consolidated�funded�indebtedness�(excluding�(i)�up�to�$350.0�million�of�consolidated�funded�indebtedness�due�to�permitted�securitization�transactions�and�(ii) the �amount �of �consolidated �funded �indebtedness �constituting �the �non-recourse �portion �of �permitted �factoring �transactions, �and �netting �up �to �(x) �with �respect �to calculating�the�consolidated�leverage�ratio�for�purposes�of�the�periods�ending�prior�to�June�15,�2021,�an�unlimited�amount�and�(y)�with�respect�to�calculating�the consolidated�leverage�ratio�for�purposes�of�the�periods�ending�thereafter,�$400.0�million,�of�unrestricted�cash�and�cash�equivalents�denominated�in�U.S.�dollars�or other�lawful�currencies�(provided�that�such�other�currencies�are�readily�convertible�to,�and�deliverable�in,�U.S.�dollars)�held�by�the�Company�and�its�subsidiaries)�to consolidated�EBITDA. ����Incremental�loans�of�up�to�(i)�the�greater�of�(x)�$375.0�million�and�(y)�50%�of�consolidated�EBITDA�of�the�Company,�plus�(ii)�the�amount�of�certain�voluntary prepayments�of�the�loans,�plus�(iii)�an�unlimited�amount�subject�to�satisfaction�of�the�Company’s�consolidated�secured�leverage�ratio,�testing�consolidated�funded indebtedness �that �is �secured �by �a �lien �on �the �assets �of �the �Company �or �any �of �its �subsidiaries �(excluding �(a) �up �to �$400.0 �million �of �consolidated �funded indebtedness�due�to�permitted�securitization�transactions�and�(b)�the�amount�of�consolidated�funded�indebtedness�constituting�the�non-recourse�portion�of�permitted factoring�transactions,�and�netting�up�to�(x)�with�respect�to�calculating�the�consolidated�secured�leverage�ratio�for�purposes�of�the�periods�ending�prior�to�June�15, 2021,�an�unlimited�amount,�and�(y)�with�respect�to�calculating�the�consolidated�secured�leverage�ratio�for�purposes�of�the�periods�ending�thereafter,�$400.0�million, of�unrestricted�cash�and�cash�equivalents�denominated�in�U.S.�dollars�or�other�lawful�currencies�(provided�that�such�other�currencies�are�readily�convertible�to,�and deliverable �in, �U.S. �dollars) �held�by �the �Company�and �its �subsidiaries), �minus �(iv)�the �aggregate �amount �of�incremental �loans �incurred �in �reliance�of �clause �(i) above �since �August �24, �2018, �could �be �made �available �under �the �2016 �Credit �Agreement �upon �the �request �of �the �Company �subject �to �specified �terms �and conditions,�including�receipt�of�lender�commitments. Debt�Covenants � � � �The �2016 �Credit �Agreement �and �the �indenture �governing �the �Notes �contain �various �affirmative �and �negative �covenants �that, �subject �to �certain �customary exceptions,�limit�the�Company�and�its�subsidiaries’�including,�in�certain�limited�circumstances,�WEX�Bank�and�the�Company’s�other�regulated�subsidiaries,�ability to,�among�other�things�(i)�incur�additional�debt,�(ii)�pay�dividends�or�make�other�distributions�on,�redeem�or�repurchase�capital�stock,�or�make�investments�or�other restricted �payments,�(iii)�enter �into�transactions�with�affiliates, �(iv)�dispose�of�assets �or�issue�stock�of�restricted�subsidiaries�or�regulated�subsidiaries, �(v)�create liens �on �assets, �or �(vi) �effect �a �consolidation �or �merger �or �sell �all, �or �substantially �all, �of �the �Company’s �assets. �Additionally, �the �indenture �governing �the Convertible�Notes�contains�customary�negative�and�affirmative�covenants�that,�subject�to�certain�customary�exceptions,�limit�the�Company�and�its�subsidiaries',�but excluding �WEX �Bank �and �the �Company's �other �regulated �subsidiaries, �ability �to, �among �other �things, �incur �additional �debt. �These �covenants �are �subject �to important�exceptions�and�qualifications.�At�any�time�that�the�Notes�are�rated�investment�grade,�which�is�not�currently�the�case,�and�subject�to�certain�conditions, certain �covenants �will �be �suspended �with �respect�to �the �Notes. �WEX �Bank �and �the �Company’s �other �regulated �subsidiaries �will �not �be �subject �to �some �of �the restrictive �covenants �in �the �Indenture �that �place �limitations �on �the �Company �and �its �restricted �subsidiaries’ �actions, �and �where �WEX �Bank�and �the �Company’s regulated �subsidiaries �are �subject �to �covenants, �there �are �significant �exceptions �and �limitations �on �the �application �of �those �covenants �to �WEX �Bank �and �the Company’s�regulated�subsidiaries. 65 The �2016 �Credit �Agreement �also �requires, �solely �for �the �benefit �of �the �lenders �of �the �Tranche �A �Term �Loan �and �lenders �under �the �Revolving �Credit Facility,�that�the�Company�maintain�at�the�end�of�each�fiscal�quarter�the�following�financial�ratios: • • a�Consolidated�Interest�Coverage�(as�defined�in�the�2016�Credit�Agreement)�of�no�less�than�2.75�to�1.00�at�December�31,�2020�and�through�March�31, 2021,�after�which�the�ratio�reverts�back�to�no�less�than�3.00�to�1.00;�and a �Consolidated �Leverage�Ratio �(as�defined �in �the�2016 �Credit�Agreement) �of�no �more �than�7.50 �to�1.00 �through�March �31,�2021, �7.00�to �1.00�for �the quarter�ending�June�30,�2021,�6.50�to�1.00�for�the�quarter�ending�September�30,�2021,�6.00�to�1.00�for�the�quarters�ending�December�31,�2021�through September�30,�2022,�and�5.00�to�1.00�thereafter. ����We�were�in�compliance�with�all�material�covenants�and�restrictions�at�December�31,�2020. During�2020,�the�Company�entered�into�an�eighth,�ninth,�tenth�and�eleventh�amendment�to�the�2016�Credit�Agreement.�For�a�description�of�the�Eighth Amendment,�Ninth�Amendment,�Tenth�Amendment�and�Eleventh�Amendment�to�the�2016�Credit�Agreement,�see�Other�Liquidity�Matters�below. ����As�of�December�31,�2020,�we�had�no�outstanding�borrowings�against �our�$870.0�million�revolving�credit�facility.�The�combined�outstanding�debt�under�our tranche�A�term�loan�facility�and�our�tranche�B�term�loan�facility�totaled�$2.3�billion�at�December�31,�2020.�As�of�December�31,�2020,�amounts�outstanding�under the�2016�Credit�Agreement�bore�a�weighted�average�effective�interest�rate�of�2.3�percent. See�Item�8�–�Note�16,�Financing�and�Other�Debt,�for�further�information�regarding�interest�rates,�voluntary�prepayments�rights�and�principal�payments required�under�the�2016�Credit�Agreement. Notes�Outstanding ����On�January�30,�2013,�the�Company�completed�an�offering�in�an�aggregate�principal�amount�of�$400.0�million�of�4.750�percent�senior�notes.�Such�Notes�mature on�February�1,�2023.�The�Notes�can�be�redeemed�at�the�option�of�WEX�without�penalty.�On�February�11,�2020,�the�Company�provided�irrevocable�notice�to�The Bank�of�New�York�Mellon�Trust�Company,�N.A.,�the�trustee�for�the�Notes,�of�its�intent�to�redeem�the�Notes�on�March�15,�2021.�We�have�elected�to�redeem�for cash�all�of�the�$400.0�million�aggregate�principal�amount�of�the�Notes�in�accordance�with�the�terms�of�the�indenture�governing�the�Notes.�The�redemption�date�for the�Notes�will�be�March�15,�2021�(the�“Redemption�Date”).�The�Notes�will�be�redeemed�at�a�redemption�price�equal�to�100%�of�the�principal�amount�of�the�Notes to�be�redeemed,�plus�accrued�and�unpaid�interest�thereon,�if�any,�to,�but�excluding,�the�Redemption�Date. Convertible�Notes�Outstanding On�July�1,�2020,�the�Company�closed�on�a�private�placement�with�Warburg�Pincus,�pursuant�to�which�the�Company�issued�$310.0�million�in�aggregate principal �amount �of �its �Convertible �Senior �Notes �due �2027. �The �issuance �of �the �Convertible �Notes �provided �the �Company �with �net �proceeds �of �approximately $299.2�million�after�original�issue�discount.�The�Convertible�Notes�have�a�seven-year�term�and�mature�on�July�15,�2027,�unless�earlier�converted,�repurchased�or redeemed.�Interest�on�the�Convertible�Notes�is�calculated�at�a�fixed�rate�of�6.5%�per�annum,�payable�semi-annually�in�arrears�on�January�15�and�July�15�of�each year,�with�the�first�interest�payment�due�January�15,�2021.�At�the�Company's�option,�interest�is�either�payable�in�cash,�through�accretion�to�the�principal�amount�of the�Convertible�Notes,�or�a�combination�of�cash�and�accretion. The�Convertible�Notes�may�be�converted�at�the�option�of�the�holders�at�any�time�prior�to�maturity,�or�earlier�redemption�or�repurchase�of�the�Convertible Notes, �based�upon�an�initial�conversion�price�of�$200�per�share�of�common�stock.�The�Company�may�settle�conversions�of�Convertible�Notes,�at�its�election,�in cash, �shares �of �the �Company’s �common �stock, �or �a �combination �thereof. �The �initial �conversion �price �is �subject �to �adjustments �customary �for �convertible �debt securities�and�a�weighted�average�adjustment�in�the�event�of�issuances�of�equity�and�equity�linked�securities�by�the�Company�at�prices�below�the�then�applicable conversion�price�for�the�Convertible�Notes�or�the�then�market�price�of�the�Company’s�common�stock,�subject�to�certain�exceptions. The �Company �will �have �the �right, �at �any �time �after �July �1, �2023, �to �redeem �the �Convertible �Notes �in �whole �or �in �part �if �the �closing �price �of �WEX’s common�stock�is�at�least�200%�of�the�conversion�price�of�the�Convertible�Notes�for�20�trading�days�(whether�or�not�consecutive)�out�of�any�30�consecutive�trading day�period�prior�to�the�time�the�Company�delivers�a�redemption�notice�(including�at�least�one�of�the�five�trading�days�immediately�preceding�the�last�day�of�such�30 trading�day�period),�subject�to�the�right�of�holders�of�the�Convertible�Notes�to�convert�its�Convertible�Notes�prior�to�the�redemption�date. 66 WEX�Latin�America�Debt The �Company �sold �its �WEX �Latin �America �subsidiary �on �September �30, �2020. �WEX �Latin �America �had �debt �of �approximately �$2.7 �million �as �of December�30,�2019,�which�was�comprised�of�credit�facilities�held�in�Brazil�and�loan�arrangements�related�to�our�accounts�receivable,�with�various�maturity�dates, and�an�effective�interest�rate�of�35.04%.�The�Company�sold�its�WEX�Latin�America�subsidiary�on�September�30,�2020�and�the�Company�no�longer�has�this�debt obligation. Participation�Debt From�time�to�time,�WEX�Bank�enters�into�participation�agreements�with�third-party�banks�to�fund�customer�balances�that�exceed�WEX�Bank’s�lending limit�to�individual�customers.�Associated�unsecured�borrowings�carry�a�variable�interest�rate�of�1�month�to�3�month�LIBOR�plus�a�margin�of�225�basis�points. The�following�table�provides�the�amounts�available�and�outstanding�and�the�remaining�funding�capacity�under�the�participation�debt�agreements�in�place: (In�thousands) Participation�debt December�31,�2020 December�31,�2019 Amounts 1 Available $ 60,000� Amounts�Outstanding —� Remaining Funding�Capacity 60,000� Amounts Available Amounts�Outstanding 2 Remaining Funding Capacity $ 80,000� 50,000� $ 30,000� Average�interest�rate�on�participation�debt Not�applicable 4.17� % 1 2 �Amounts�available�includes�up�to�$60�million�under�an�agreement�that�terminates�on�December�31,�2021. �Amounts�outstanding�are�recorded�in�short-term�debt,�net�in�our�financial�statements. Australian�Securitization�Facility ����The�Company�maintains�a�securitized�debt�agreement�with�the�Bank�of�Tokyo-Mitsubishi�UFJ,�Ltd.,�which�currently�extends�through�April�2021.�Under�the terms �of �the �agreement, �each �month, �on �a �revolving �basis, �the �Company �sells �certain �of �its �Australian �receivables �to �the �Company’s �Australian �Securitization Subsidiary. �The �Australian �Securitization �Subsidiary, �in �turn, �uses �the �receivables �as �collateral �to �issue �asset-backed �commercial �paper �(“securitized �debt”) �for approximately �85 �percent �of �the �securitized �receivables. �The �amount �collected �on �the�securitized �receivables �is �restricted �to �pay �the�securitized �debt �and �is �not available�for�general�corporate�purposes. ����The�Company�pays�a�variable�interest�rate�on�the�outstanding�balance�of�the�securitized�debt,�based�on�the�Australian�Bank�Bill�Rate�plus�an�applicable�margin. The �interest �rate �was �0.97 �percent �and �1.80 �percent �as �of �December �31, �2020 �and �2019, �respectively. �The �Company �had �securitized �debt �under �this �facility �of approximately�$62.6�million�and�$78.6�million�as�of�December�31,�2020�and�2019,�respectively.���� European�Securitization�Facility ����On�April�7,�2016,�the�Company�entered�into�a�five-year�securitized�debt�agreement�with�the�Bank�of�Tokyo-Mitsubishi�UFJ,�Ltd,�which�expires�in�April�2021. Under�the�terms�of�the�agreement,�the�Company�sells�certain�of�its�receivables�from�selected�European�countries�to�our�European�Securitization�Subsidiary.�The European �Securitization �Subsidiary, �in �turn, �uses �the �receivables �as �collateral �to �issue �securitized �debt. �The �amount �collected �on �the �securitized �receivables �is restricted�to�pay�the�securitized�debt�and�is�not�available�for�general�corporate�purposes.�The�interest�rate�was�0.98�percent�and�0.63�percent�as�of�December�31, 2020�and�December�31,�2019,�respectively.�The�Company�had�$23.4�million�and�$25.7�million�of�securitized�debt�under�this�facility�as�of�December�31,�2020�and December�31,�2019,�respectively. 67 WEX�Latin�America�Securitization�of�Receivables Prior�to�the�sale�of�WEX�Latin�America�on�September�30,�2020,�the�Company�transferred�certain�unsecured�receivables�associated�with�its�salary�advance payment�card�product�to�an�investment�fund�in�which�WEX�Latin�America�held�a�non-controlling�equity�interest,�and�that�is�managed�by�an�unrelated�third-party. During�the�year�ended�December�31,�2020,�the�Company�received�an�insignificant�distribution�from�the�investment�fund�and�did�not�make�equity�contributions�to the�investment�fund�during�the�year�ended�December�31,�2019.�During�the�year�ended�December�31,�2018,�the�Company’s�equity�contributions�to�the�investment fund �totaled �$2.8 �million. �The �securitization �arrangement �met �the �derecognition �conditions �under �GAAP �and �transfers �beginning �July �1, �2018 �under �this arrangement �were �treated �as �sales �and �accounted �for �as �a �reduction �of �trade �receivables. �During �the �year �ended �December �31, �2018, �the �Company �recognized operating�interest�expense�of�$4.4�million�under�this�financing�arrangement.�During�the�years�ended�December�31,�2020�and�2019,�the�Company�recognized�a�gain on �sale �of �$6.5 �million �and �$16.1 �million, �respectively. �The �gain �recognized �consists �of �the �difference �between �the �sales �price �and �the �carrying �value �of �the receivables,�and�is�recorded�within�other�revenue.�Cash�proceeds�from�the�transfer�of�these�receivables�are�recorded�within�operating�activities�in�the�consolidated statements�of�cash�flows. WEX�Bank�Accounts�Receivable�Factoring ����WEX�Bank�has�entered�into�a�receivables�purchase�agreement�with�an�unrelated�third-party�financial�institution�to�sell�certain�of�our�trade�accounts�receivable under�non-recourse�transactions�through�July�31,�2021.�The�purchase�agreement�can�be�renewed�for�successive�one-year�periods�assuming�WEX�provides�advance written�notice�that�is�accepted�by�the�purchaser.�WEX�Bank�continues�to�service�the�receivables�post-transfer�with�no�participating�interest.�The�Company�obtained a�true-sale�opinion�from�an�independent�attorney,�which�states�that�the�factoring�agreement�provides�legal�isolation�upon�WEX�Bank�bankruptcy�or�receivership under �local �law. �As �such, �transfers �under �this �arrangement �are �treated �as �a �sale. �Proceeds �from �the �sale �are �reported �net �of �a �negotiated �discount �rate �and �are accounted�for�as�a�reduction�in�trade�receivables�because�the�agreements�transfer�effective�control�of�the�receivables�to�the�buyer. ����The�Company�sold�approximately�$4.1�billion�and�$14.8�billion�of�trade�accounts�receivable�under�this�arrangement�during�the�years�ended�December�31,�2020 and�2019,�respectively.�Proceeds�from�the�sale,�which�are�reported�net�of�a�negotiated�discount�rate,�are�recorded�in�operating�activities�within�our�consolidated statement�of�cash�flows.�The�loss�on�factoring�was�insignificant�and�$3.7�million�for�the�years�ended�December�31,�2020�and�2019,�respectively. WEX�Europe�Services�Accounts�Receivable�Factoring ����WEX�Europe�Services�has�entered�into�a�factoring�arrangement�with�an�unrelated�third-party�financial�institution�(the�“Purchasing�Bank”)�to�sell�certain�of�its accounts�receivable�through�December�31,�2020�in�order�to�accelerate�the�collection�of�the�Company’s�cash�and�reduce�internal�costs,�thereby�improving�liquidity. Under�this�arrangement,�the�Purchasing�Bank�establishes�a�credit�limit�for�each�customer�account.�The�factored�receivables�are�without�recourse�to�the�extent�that the�customer�balances�are�maintained�at�or�below�the�established�credit�limit.�For�customer�receivable�balances�in�excess�of�the�Purchasing�Bank’s�credit�limit,�the Company�maintains�the�risk�of�default.�The�Company�obtained�a�true�sale�opinion�from�an�independent�attorney,�which�states�that�the�factoring�agreement�creates�a sale�of�receivables�under�local�law�for�amounts�transferred�both�below�and�above�the�established�credit�limits.�The�Company�continues�to�service�these�receivables post-transfer �with�no�participating �interest.�As�a �result,�the�Purchasing �Bank�is�deemed�the �purchaser�of�these�receivables �and�is�entitled �to�enforce�payment �of these�amounts�from�the�debtor. � � � �This �factoring �arrangement �is �accounted �for �as �a �sale �and �accordingly �the �Company �records �the �receivables �sold �as �a �reduction �of �accounts �receivable �and proceeds �as �cash �provided �by �operating �activities. �The �Company �sold �approximately �$452.2 �million �and �$630.3 �million �of �receivables �under �this �arrangement during �years �ended �December �31, �2020 �and �December �31, �2019, �respectively. �Charge-backs �on �balances �in �excess �of �the �credit �limit �during �the �years �ended December�31,�2020�and�December�31,�2019�were�insignificant. WEX�Bank WEX�Bank,�is�subject�to�various�regulatory�capital�requirements�administered�by�the�FDIC�and�the�Utah�DFI.�Under�capital�adequacy�guidelines�and�the regulatory �framework�for�prompt�corrective �action,�WEX�Bank�must�meet�specific�capital�guidelines �that�involve�quantitative�measures�of�WEX�Bank’s�assets, liabilities �and�certain �off-balance �sheet �items. �WEX �Bank’s �capital �amounts �and�classification �are �also �subject�to �qualitative �judgments �by �the�regulators �about components,�risk�weightings�and�other�factors.�Failure�to�meet�minimum�capital�requirements�can�initiate�certain�mandatory�and�possible�additional�discretionary actions�by�regulators�that,�if�undertaken,�could�limit�our�business�activities�and�have�a�material�adverse�effect�on�our�business,�results�of�operations�and�financial condition.�Qualitative�measures�established�by�regulation�to�ensure�capital�adequacy�require�WEX�Bank�to�maintain�minimum�amounts�and�ratios�as�defined�in�the regulations.�As�of�December 68 31,�2020,�WEX�Bank�met�all�the�requirements�to�be�deemed�“well-capitalized”�pursuant�to�FDIC�regulation�and�for�purposes�of�the�Federal�Deposit�Insurance�Act. Other�Liquidity�Matters At �December �31, �2020, �we �had �variable-rate �borrowings �of �$2.3 �billion �under �our �2016 �Credit �Agreement. �We �periodically �review �our �projected borrowings�under�our�2016�Credit�Agreement�and�the�current�interest�rate�environment�in�order�to�ascertain�whether�interest�rate�swaps�should�be�used�to�reduce our�exposure�to�interest�rate�volatility.�As�of�December�31,�2020,�we�maintained�six�interest�rate�swap�contracts�that�mature�at�various�times�through�December 2023.�Collectively,�these�derivative�contracts�are�intended�to�fix�the�future�interest�payments�associated�with�$1.4�billion�of�our�variable�rate�borrowings�at�between 0.743�percent�to�2.413�percent.�See�Item�8�–�Note�12,�Derivative�Instruments,�Item�8�–�Note�19,�Fair�Value,�for�more�information. On �January �24, �2020, �the �Company �entered �into �a �purchase �agreement �to �purchase �eNett �and �Optal �for �an �aggregate �purchase �price �comprised �of approximately �$1.3 �billion �in �cash �and �2.0 �million �shares �of �the �Company’s �common �stock �and �subject �to �certain �working �capital �and �other �adjustments �as described �in �the �purchase �agreement. �On �December �15, �2020, �the �Company �entered �into �a �Deed �of �Settlement �with �eNett, �Optal �and �the �other �parties �thereto dismissing�the�legal�proceedings�and�appeals�relating�to�the�acquisition�and�purchase�agreement,�described�more�fully�in�Item�3�of�Part�I�of�the�Annual�Report�on Form�10-K,�and�amending�the�purchase�agreement�to�provide�a�reduction�of�the�aggregate�purchase�price�for�the�acquisition�to�$577.5�million�(subject�to�certain adjustments)�consisting�entirely�of�cash,�which�the�Company�paid�with�cash�on�hand.�The�closing�of�the�acquisition�occurred�concurrent�with�the�execution�of�the Deed�of�Settlement�on�December�15,�2020. In �connection �with �the�purchase �agreement, �the�Company �entered �into �a�commitment �letter �with �Bank�of �America,�N.A.�and �BofA�Securities, �Inc. �on January�24,�2020�(the�“Original�Commitment�Letter”)�for�senior�secured�and�unsecured�credit�facilities�in�the�aggregate�amount�of�up�to�$3.1�billion,�inclusive�of backstops�totaling�$1.7�billion�that�reduced�to�zero�under�the�terms�of�the�Eighth�Amendment�to�the�2016�Credit�Agreement.�The�Third�Amended�and�Restated Commitment �Letter �most �recently �amended �and �restated �the �Original �Commitment �Letter �to �among �other �things, �reallocate �$600.0 �million �of �aggregate �credit commitments�from�a�senior�secured�bridge�facility�to�a�364-day�unsecured�credit�facility�and�to�extend�this�portion�of�the�commitment�by�six�months�to�April�22, 2021.�The �remaining �$752.0 �million �consisted �of �a �seven-year �term �loan �B �facility �commitment �(the �“TLB �Commitment”) �that �was�not �affected �by �the �Third Amended �and �Restated �Commitment �Letter. �The �TLB �Commitment �terminated �in �October �2020 �and �the �Third �Amended �and �Restated �Commitment �Letter terminated�concurrently�with�the�closing�of�the�acquisition�on�December�15,�2020,�without�the�funding�of�any�loans�pursuant�thereto. In�connection�with�the�Original�Commitment�Letter,�on�February�10,�2020,�the�Company�entered�into�an�eighth�amendment�(the�“Eighth�Amendment”)�to the�2016�Credit�Agreement.�The�Eighth�Amendment,�among�other�things,�effectuated�financial�covenant�amendments�contemplated�by�the�Original�Commitment Letter�and�increased�the�Company’s�capacity�to�incur�additional�incremental�loan�facilities�up�to�$1.4�billion�The�amendments�set�forth�in�the�Eighth�Amendment would�have�become�effective�concurrently�with�the�closing�of�the�pending�acquisition�of�eNett�and�Optal,�but�were�superseded�by�the�amendments�set�forth�in�the Ninth�Amendment�to�the�2016�Credit�Agreement. On �June�26,�2020,�the �Company�entered�into�a�Ninth�Amendment, �which�made�certain �changes�to�the �2016�Credit�Agreement, �including�among �other things,�increasing�the�maximum�consolidated�leverage�ratio�following�the�closing�of�the�eNett�and�Optal�acquisition�to�7.5X�at�December�31,�2020�and�March�31, 2021,�with�step-downs�thereafter, �tested�using �consolidated�funded �indebtedness�(excluding�(i) �up�to,�for �the�purpose�of �determining�the �applicable�pricing�tier, $350.0�million�and,�for�any�other�purpose,�$400.0�million,�of�consolidated�funded�indebtedness�due�to�permitted�securitization�transactions�and�(ii)�the�amount�of consolidated �funded �indebtedness �constituting�the �non-recourse �portion�of �permitted �factoring �transactions,�and �netting �up�to �(x) �with�respect �to�calculating �the consolidated�leverage�ratio�for�purposes�of�the�periods�ending�prior�to�June�15,�2021,�for�the�purpose�of�determining�the�applicable�pricing�tier,�$287.6�million�and, for�any�other�purpose,�an�unlimited�amount,�and�(y)�with�respect�to�calculating�the�consolidated�leverage�ratio�for�purposes�of�the�periods�ending�thereafter,�$400.0 million, �of �unrestricted �cash �and �cash �equivalents �denominated �in �U.S. �dollars �or �other �lawful �currencies �(provided �that �such �other �currencies �are �readily convertible�to,�and�deliverable�in,�U.S.�dollars)�held�by�the�Company�and�its�subsidiaries)�to�consolidated�EBITDA,�adding�a�fourth�pricing�tier�and�limits�certain investment�and�restricted�payment�covenants�in�the�case�that�the�consolidated�leverage�ratio�equals�or�exceeds�5.5X�and�introducing�a�LIBOR�floor�on�revolving credit�facility�borrowings�of�75�basis�points. On �July �29,�2020, �the�Company �entered�into�a �Tenth�Amendment �to �the�2016 �Credit�Agreement, �which �increased �commitments �under �the�Company's secured�revolving�credit�facility�from�$820.0�million�to�$870.0�million.�On�August�20,�2020,�the�Company�entered�into�an�eleventh�amendment�(the�“�Eleventh Amendment")�to�the�2016�Credit�Agreement,�which�limited�the�borrowing�conditions�for�a�$752�million�portion�of�the�revolving�credit�facility�solely�with�respect to�any�borrowing�for�the�purpose�of�consummating�the�acquisition�of�eNett�and�Optal�on�or�prior�to�April�22,�2021.�Upon�the�closing�of�the 69 acquisition�of�eNett�and�Optal�on�December�15,�2020,�as�described�above,�and�the�payment�of�the�purchase�price�with�cash,�the�foregoing�ability�to�borrow�a�$752 million�portion�of�the�revolving�credit�facility�with�limited�conditions�terminated. ����The�Company’s�long-term�cash�requirements�consist�primarily�of�amounts�owed�on�the�2016�Credit�Agreement,�the�Notes�and�various�facility�lease�agreements. � � ��As �of �December�31, �2020, �we�had �$51.6 �million�in �letters �of �credit�outstanding�and �$818.4�million �in �remaining �borrowing�capacity �under �the �2016�Credit Agreement,�subject�to�the�covenants�as�described�above. ����We�currently�have�authorization�from�our�board�of�directors�to�purchase�up�to�$150�million�of�our�common�stock�until�September�2021,�which�is�entirely�unused as�of�December�31,�2020.�The�program�is�funded�either�through�our�future�cash�flows�or�through�borrowings�on�our�2016�Credit�Agreement.�Share�repurchases�are made �on �the �open �market �and �may �be �commenced �or �suspended �at �any �time. �The �Company’s �management, �based �on �its �evaluation �of �market �and �economic conditions�and�other�factors,�determines�the�timing�and�number�of�shares�repurchased. Contractual�Obligations The�table�below�summarizes�the�estimated�amounts�of�payments�under�contractual�obligations�as�of�December�31,�2020: (1) (In�thousands) Operating�Lease�Obligations Debt�Obligations: ��Term�loans ��Interest�payments�on�term�loans ��$400�million�notes ��Interest�on�$400�million�notes ��Interest�of�certificates�of�deposit ��Convertible�Notes ��Interest�payments�on�Convertible�Notes ��Borrowed�federal�funds (4) ��Securitization�facility (2) (6) (3) Other�Commitments: ��Certificates�of�deposit ��Interest-bearing�money�market�deposits ��Minimum�volume�purchase�commitments ��Other (5) Total Total Less�than�1�Year Payments�Due�By�Period 1-3�Years 3-5�Years $ 124,951� $ 20,942� $ 29,460� $ 17,369� $ More�Than�5�Years 57,180� 2,316,145� 228,535� 400,000� 47,500� 6,091� 310,000� 141,834� 20,000� 85,945� 503,398� 439,894� 49,602� 17,663� 4,691,558� $ 64,611� 52,616� —� 19,000� 5,318� —� 20,934� 20,000� 85,945� 853,208� 93,189� 400,000� 28,500� 773� —� 40,300� —� —� 29,361� 66,325� —� —� —� —� 40,300� —� —� 354,807� 439,894� 12,035� 10,227� 1,106,329� $ 148,591� —� 24,795� 7,436� 1,626,252� $ $ —� —� 12,772� —� 166,127� $ 1,368,965� 16,405� —� —� —� 310,000� 40,300� —� —� —� —� —� —� 1,792,850� (1) �Operating�lease�obligations�–�Primarily�represents�undiscounted�cash�flows�for�remaining�lease�payments�under�long-term�operating�leases�for�office�space.�See�Item�8�–�Note�15,�Leases,�for more�information�regarding�our�leases. (2) �Interest�payments�on�term�loans�–�Interest�payments�are�based�on�effective�rates�and�credit�spreads�in�effect�as�of�December�31,�2020.�See�Item�8�–�Note�16,�Financing�and�Other�Debt,�for more�information. (3) �Interest�payments�on�Convertible�Notes�–�Interest�payments�are�based�on�the�coupon�rate�and�assuming�that�the�Company�will�elect�to�settle�all�interest�payments�in�cash.�See�Item�8�–�Note 16,�Financing�and�Other�Debt,�for�more�information. (4) �Securitization�facility�–�Interest�payments�due�on�the�securitization�facility�are�not�included�as�the�amount�was�not�material. (5) �Minimum �volume �purchase �commitments�– �Two �of �the �Company’s �subsidiaries �are �required �to �purchase �a �minimum �amount �of �fuel �from �suppliers �on �an �annual �basis. �If �the �minimum requirement �is �not �fulfilled, �they�are �subject �to�penalties �based�on �the �amount �of�spend �below �the �minimum�annual �volume �commitment. �The �table �above�represents �the �Company’s �annual penalty�assuming�we�purchase�no�fuel�under�these�commitments�after�December�31,�2020. (6)� Notes�–�Included�within�1-3�year�column�due�to�contractual�maturity�date�of�February�2023,�however,�as�discussed�in�Item�8�–�Note�28,�Subsequent�Events,�the�Company�intends�to�early redeem�the�Notes�in�full�during�March�2021. 70 Off-balance�Sheet�Arrangements ����In�addition�to�the�operating�leases�included�in�the�table�above,�we�have�the�following�off-balance�sheet�arrangements�as�of�December�31,�2020: • • Extension�of�credit�to�customers�–�We �have�entered�into�commitments �to�extend�credit�in�the�ordinary�course �of�business.�We�had�approximately�$6.6 billion �of �unused �commitments �to �extend �credit �at �December �31, �2020, �as �part �of �established �customer �agreements. �These �amounts �may �increase �or decrease �during �2021�as �we�increase �or�decrease �credit �to�customers, �subject �to�appropriate �credit �reviews, �as �part�of �our�lending �product�agreements. Many�of�these�commitments�are�not�expected�to�be�utilized.�We�can�adjust�most�of�our�customers’�credit�lines�at�our�discretion�at�any�time.�Therefore,�we do�not�believe�total�unused�credit�available�to�customers�and�customers�of�strategic�relationships�represents�future�cash�requirements.�We�believe�that�we can�adequately�fund�actual�cash�requirements�related�to�these�credit�commitments�through�the�issuance�of�certificates�of�deposit,�borrowed�federal�funds and�other�debt�facilities. Letters �of �credit �–� As �of �December �31, �2020, �we �had �$51.6 �million �outstanding �in �irrevocable �letters �of �credit �issued �by �us �in �favor �of �third-party beneficiaries, �primarily �related �to �facility �lease �agreements �and �virtual �card �and �fuel �payment �processing �activity �at �our �foreign �subsidiaries. �These irrevocable�letters�of�credit�are�unsecured�and�are�renewed�on�an�annual�basis�unless�the�Company�chooses�not�to�renew�them. • Accounts�receivable�factoring�and�securitization�–�See�Item�8�–�Note�13,�Off-Balance�Sheet�Arrangements,�for�further�information. ITEM�7A.�QUANTITATIVE�AND�QUALITATIVE�DISCLOSURES�ABOUT�MARKET�RISK The�Company�is�exposed�to�market�risk�related�to�interest�rates,�foreign�currency�exchange�rates�and�commodity�prices.�From�time�to�time,�the�Company enters�into�derivative�instrument�arrangements�to�manage�these�risks. Interest�Rate�Risk 2016�Credit�Agreement As �of �December �31, �2020, �we �had �variable-rate �borrowings �of �$2.3 �billion �under �the �2016 �Credit �Agreement. �As �of �December �31, �2020, �outstanding interest�rate�swap�contracts�are�intended�to�fix�the�future�interest�payments�associated�with�$1.4�billion�of�the�$2.3�billion�of�outstanding�variable-rate�borrowings. We�periodically�review�the�projected�borrowings�under�our�2016�Credit�Agreement�and�the�current�interest�rate�environment�in�order�to�ascertain�whether�interest rate�swaps�should�be�used�to�reduce�our�exposure�to�interest�rate�volatility.�See�Item�8�–�Note�12,�Derivative�Instruments,�for�more�information. Deposits At�December�31,�2020,�WEX�Bank�had�deposits�(including�certificates�of�deposits�and�interest-bearing�brokered�money�market�deposits)�outstanding�of $1.1�billion.�The�deposits�are�generally�short-term�in�nature,�though�they�are�issued�in�up�to�five-year�maturities.�Upon�maturity,�the�deposits�will�likely�be�replaced by�issuing�new�deposits�to�the�extent�they�are�needed.�See�Item�8�–�Note�11,�Deposits,�for�more�information. Sensitivity�Analysis The �following �table �presents �a �sensitivity �analysis �of �the �impact �of �changes �in �interest �rates �on �our �deposits �and �corporate �debt, �assuming �amounts outstanding,�the�notional�amounts�of�our�interest�rate�swap�agreements,�and�certificate�of�deposit�maturities�in�place�as�of�December�31,�2020�remain�the�same. Actual�results�may�differ�materially. 2016�Credit�Agreement Securitized�debt Federal�funds Certificates�of�deposits Money�market�deposits 2021�impact�of�1.00% increase�in�interest rates $ $ $ $ $ 8,811� 859� 200� 3,052� 4,399� 71 Foreign�Currency�Risk � � � �Our �exposure �to �foreign �currency �fluctuation �is �due �to �our �financial �statements �being �presented �in �U.S. �dollars �and �our �foreign �subsidiaries �transacting �in currencies�other�than�the�U.S.�dollar,�which�results�in�gains�and�losses�that�are�reflected�in�our�consolidated�statements�of�operations.�We�currently�do�not�utilize hedging�instruments�to�mitigate�these�risks.�However,�growth�in�our�international�operations�increases�this�exposure�and�we�may�initiate�strategies�to�hedge�certain foreign�currency�risks�in�the�future. Commodity�Price�Risk The�Company�is�not�hedged�for�changes�in�fuel�prices.�Management�will�continue�to�monitor�the�fuel�price�market�and�evaluate�its�alternatives�as�it�relates to�a�hedging�program. 72 ITEM�8.�FINANCIAL�STATEMENTS�AND�SUPPLEMENTARY�DATA Index�to�Consolidated�Financial�Statements Report�of�Independent�Registered�Public�Accounting�Firm Consolidated�Statements�of�Operations�for�the�Years�Ended�December�31,�2020,�2019�and�2018 Consolidated�Statements�of�Comprehensive�(Loss)�Income�for�the�Years�Ended�December�31,�2020,�2019�and�2018 Consolidated�Balance�Sheets�at�December�31,�2020�and�2019 Consolidated�Statements�of�Stockholders’�Equity�for�the�Years�Ended�December�31,�2020,�2019�and�2018 Consolidated�Statements�of�Cash�Flows�for�the�Years�Ended�December�31,�2020,�2019�and�2018 Notes�to�Consolidated�Financial�Statements 74 77 78 79 80 81 82 73 REPORT�OF�INDEPENDENT�REGISTERED�PUBLIC�ACCOUNTING�FIRM To�the�Shareholders�and�the�Board�of�Directors�of�WEX�Inc. Opinion�on�the�Financial�Statements We�have�audited�the�accompanying�consolidated�balance�sheets�of�WEX�Inc.�and�subsidiaries�(the�"Company")�as�of�December�31,�2020�and�2019,�the�related�consolidated statements�of�operations,�comprehensive�(loss)�income,�shareholders'�equity,�and�cash�flows,�for�each�of�the�three�years�in�the�period�ended�December�31,�2020,�and�the�related notes�(collectively�referred�to�as�the�"financial�statements").�In�our�opinion,�the�financial�statements�present�fairly,�in�all�material�respects,�the�financial�position�of�the�Company as�of�December�31,�2020�and�2019,�and�the�results�of�its�operations�and�its�cash�flows�for�each�of�the�three�years�in�the�period�ended�December�31,�2020,�in�conformity�with accounting�principles�generally�accepted�in�the�United�States�of�America. We�have�also�audited,�in�accordance�with�the�standards�of�the�Public�Company�Accounting�Oversight�Board�(United�States)�(PCAOB),�the�Company's�internal�control�over financial�reporting�as�of�December�31,�2020,�based�on�criteria�established�in�Internal�Control�—�Integrated�Framework�(2013)�issued�by�the�Committee�of�Sponsoring Organizations�of�the�Treadway�Commission�and�our�report�dated�March�1,�2021,�expressed�an�unqualified�opinion�on�the�Company's�internal�control�over�financial�reporting. Basis�for�Opinion These�financial�statements�are�the�responsibility�of�the�Company's�management.�Our�responsibility�is�to�express�an�opinion�on�the�Company's�financial�statements�based�on�our audits.�We�are�a�public�accounting�firm�registered�with�the�PCAOB�and�are�required�to�be�independent�with�respect�to�the�Company�in�accordance�with�the�U.S.�federal securities�laws�and�the�applicable�rules�and�regulations�of�the�Securities�and�Exchange�Commission�and�the�PCAOB. We�conducted�our�audits�in�accordance�with�the�standards�of�the�PCAOB.�Those�standards�require�that�we�plan�and�perform�the�audit�to�obtain�reasonable�assurance�about whether�the�financial�statements�are�free�of�material�misstatement,�whether�due�to�error�or�fraud.�Our�audits�included�performing�procedures�to�assess�the�risks�of�material misstatement�of�the�financial�statements,�whether�due�to�error�or�fraud,�and�performing�procedures�that�respond�to�those�risks.�Such�procedures�included�examining,�on�a�test basis,�evidence�regarding�the�amounts�and�disclosures�in�the�financial�statements.�Our�audits�also�included�evaluating�the�accounting�principles�used�and�significant�estimates made�by�management,�as�well�as�evaluating�the�overall�presentation�of�the�financial�statements.�We�believe�that�our�audits�provide�a�reasonable�basis�for�our�opinion. Critical�Audit�Matters The�critical�audit�matters�communicated�below�are�matters�arising�from�the�current-period�audit�of�the�financial�statements�that�was�communicated�or�required�to�be communicated�to�the�audit�committee�and�that�(1)�relates�to�accounts�or�disclosures�that�are�material�to�the�financial�statements�and�(2)�involved�our�especially�challenging, subjective,�or�complex�judgments.�The�communication�of�critical�audit�matters�does�not�alter�in�any�way�our�opinion�on�the�financial�statements,�taken�as�a�whole,�and�we�are not,�by�communicating�the�critical�audit�matters�below,�providing�a�separate�opinion�on�the�critical�audit�matters�or�on�the�accounts�or�disclosures�to�which�they�relate. Revenue�—�Refer�to�Notes�1�and�3�to�the�financial�statements Critical�Audit�Matter�Description The�Company’s�revenue�is�comprised�of�transaction-based�fees�made�up�of�a�significant�volume�of�low-dollar�transactions,�sourced�from�multiple�systems,�databases,�and�other tools.�The�processing�and�recording�of�revenue�is�highly�automated�and�is�based�on�contractual�terms�with�merchants,�customers�and�other�parties.�Because�of�the�nature�of�the Company’s�transaction-based�fees,�the�Company�uses�automated�systems�to�process�and�record�its�revenue�transactions. Given�the�Company’s�systems�to�process�and�record�revenue�are�highly�automated,�auditing�revenue�is�complex�and�challenging�due�to�the�extent�of�audit�effort�required�and involvement�of�professionals�with�expertise�in�information�technology�(IT)�necessary�to�identify,�test,�and�evaluate�the�Company’s�systems,�software�applications,�and automated�controls. How�the�Critical�Audit�Matter�Was�Addressed�in�the�Audit Our�audit�procedures�related�to�the�Company’s�systems�to�process�revenue�transactions�included�the�following�procedures,�among�others: • With�the�assistance�of�our�IT�specialists,�we: – – Identified�the�significant�systems�used�to�process�revenue�transactions�and�tested�the�effectiveness�of�general�IT�controls�over�each�of�these�systems, including�testing�of�user�access�controls,�change�management�controls,�and�IT�operations�controls. Performed�testing�of�the�effectiveness�of�system�interface�controls�and�automated�controls�within�the�relevant�revenue�streams,�as�well�as�the�controls designed�to�ensure�the�accuracy�and�completeness�of�revenue. 74 • We�tested�the�effectiveness�of�controls�over�the�Company’s�relevant�revenue�business�processes,�including�those�in�place�to�reconcile�the�various�systems�to�the Company’s�general�ledger. • With�the�assistance�of�our�data�specialists,�we�created�data�visualizations�to�evaluate�recorded�revenue�and�evaluate�trends�in�the�transactional�revenue�data. • For�a�sample�of�revenue�transactions,�we�performed�detail�transaction�testing�by�agreeing�the�amounts�recognized�to�source�documents�and�testing�the�mathematical accuracy�of�the�recorded�revenue. Convertible�Notes�—�Refer�to�Note�16�to�the�financial�statements Critical�Audit�Matter�Description In�July�2020,�the�Company�issued�shares�of�the�Company’s�common�stock�and�convertible�notes�(“Convertible�Notes”)�for�an�aggregate�purchase�price�of�$389.2�million.�The Company�allocated�the�total�proceeds�on�a�relative�fair�value�basis�to�the�sale�of�the�Company’s�common�stock�and�the�Convertible�Notes.�Next,�as�the�Convertible�Notes�permit the�Company�to�settle�the�conversion�in�cash,�the�Company�allocated�the�Convertible�Notes�into�liability�and�equity�components.�The�fair�value�of�the�liability�component�was determined�utilizing�a�combination�of�a�binomial�lattice-based�model�and�a�discounted�cash�flow�model�that�includes�assumptions�such�as�implied�credit�spread,�expected volatility,�and�the�risk-free�rate�for�notes�with�a�similar�term.�The�carrying�amount�of�the�equity�component�was�determined�by�deducting�the�fair�value�of�the�liability�component from�the�total�proceeds�allocated�to�the�Convertible�Notes. Given�(a)�the�complexity�of�applying�the�accounting�framework�for�the�Convertible�Notes,�and�(b)�the�determination�of�the�fair�value�of�the�liability�component�requires�the Company�to�make�significant�estimates�and�assumptions�relating�to�the�implied�credit�spread,�expected�volatility,�and�the�risk-free�rate,�performing�audit�procedures�to�(a) evaluate�the�appropriateness�of�the�accounting�framework�and�(b)�the�reasonableness�of�these�estimates�and�assumptions�required�a�high�degree�of�auditor�judgment�and�an increased�extent�of�effort,�including�the�need�to�involve�our�fair�value�specialists. How�the�Critical�Audit�Matter�Was�Addressed�in�the�Audit Our�audit�procedures�related�to�the�accounting�for�the�Convertible�Notes,�including�the�Company’s�judgments�and�calculations�related�to�the�fair�value�of�the�liability component,�included�the�following�procedures,�among�others: • We�tested�the�effectiveness�of�controls�over�the�Company’s�accounting�for�the�Convertible�Notes,�and�over�the�determination�of�the�fair�value�of�the�liability component. • With�the�assistance�of�professionals�in�our�firm�having�expertise�in�debt�issuance�accounting,�we�evaluated�the�Company’s�conclusions�regarding�the�accounting treatment�applied�to�the�Convertible�Notes. • With�the�assistance�of�our�fair�value�specialists,�we�evaluated�the�reasonableness�of�the�valuation�methodology�and�the�significant�assumptions�used�to�determine�the fair�value�of�the�liability�component,�by: – – Testing�the�source�information�underlying�the�fair�value�of�the�liability�component�and�the�mathematical�accuracy�of�the�calculations. Developing�an�independent�expectation�of�certain�of�the�significant�assumptions,�including�the�implied�credit�spread�and�expected�volatility,�and�comparing our�estimate�to�the�Company’s�estimate. Acquisitions�—�Refer�to�Note�4�to�the�financial�statements Critical�Audit�Matter�Description On�December�15,�2020,�the�Company�entered�into�a�settlement�agreement�dismissing�the�legal�proceedings�and�appeals�between�the�Company�and�the�shareholders�of�eNett, Optal�and�other�parties�thereto�and�closed�on�the�acquisition�of�the�eNett�and�Optal�businesses�for�an�aggregate�purchase�price�of�$577.5�million. The�Company�determined�the�aggregate�purchase�price�represents�consideration�paid�for�two�separate�elements,�the�businesses�acquired�and�the�settlement�of�litigation�and allocated�$415�million�of�the�purchase�price�to�the�acquired�businesses�based�on�their�estimated�fair�value�with�the�residual�value�of�$162.5�million�allocated�to�the�legal settlement. Management�has�estimated�the�provisional�fair�value�of�the�acquired�businesses�utilizing�a�discounted�cash�flow�method�and�guideline�transaction�method�that�required�the Company�to�make�significant�estimates�and�assumptions�related�to�future�cash�flows�and�the�selection�of�the�discount�rate. We�identified�the�fair�value�of�the�business�as�a�critical�audit�matter�because�of�the�significant�estimates�and�assumptions�the�Company�makes�to�calculate�fair�value�of�the businesses�for�purposes�of�recording�the�acquisition�and�the�legal�settlement.�This�required�a�high�degree�of�auditor�judgment�and�an�increased�extent�of�effort�when�performing audit�procedures�to�evaluate�the�reasonableness�of�the�Company’s�forecasts�of�future�cash�flows�as�well�as�the�selection�of�the�discount�rate,�including�the�need�to�involve�our internal�fair�value�specialists. 75 How�the�Critical�Audit�Matter�Was�Addressed�in�the�Audit Our�audit�procedures�related�to�the�forecasts�of�future�cash�flows�and�the�selection�of�the�discount�rate�for�the�acquired�businesses�included�the�following,�among�others: • We�tested�the�effectiveness�of�controls�over�the�valuation�of�the�acquired�businesses,�including�management’s�control�over�the�forecasts�of�future�cash�flows�and selection�of�the�discount�rate. • We�evaluated�the�Company’s�conclusions�regarding�the�accounting�treatment�applied�to�the�acquisition�and�legal�settlement. • We�assessed�the�reasonableness�of�management’s�forecasts�of�future�cash�flows�by�comparing�the�projections�to�historical�results,�certain�peer�companies�and�industry data. • We�also�held�various�discussions�with�accounting�and�operations�management�regarding�the�business�assumptions�utilized�in�the�valuation�models�and,�on�a�test�basis, obtained�audit�support�to�substantiate�the�assumptions�therein. • With�the�assistance�of�our�fair�value�specialists,�we�evaluated�the�reasonableness�of�the�(1)�valuation�methodologies�and�(2)�discount�rate�used�by: – – – Evaluating�the�valuation�models�to�ensure�consistency�with�generally�accepted�valuation�practices. Testing�the�source�information�underlying�the�determination�of�the�discount�rate�and�testing�the�mathematical�accuracy�of�the�calculations. Developing�a�range�of�independent�estimates�and�comparing�those�to�the�discount�rate�selected�by�management. • We�evaluated�whether�the�estimated�future�cash�flows�were�consistent�with�evidence�obtained�in�other�areas�of�the�audit. /s/�Deloitte�&�Touche�LLP Boston,�Massachusetts March�1,�2021 We�have�served�as�the�Company's�auditor�since�2003. 76 WEX�INC. CONSOLIDATED�STATEMENTS�OF�OPERATIONS (in�thousands,�except�per�share�data) � �� Revenues Payment�processing�revenue Account�servicing�revenue Finance�fee�revenue Other�revenue Total�revenues Cost�of�services Processing�costs Service�fees Provision�for�credit�losses Operating�interest Depreciation�and�amortization Total�cost�of�services General�and�administrative Sales�and�marketing Depreciation�and�amortization Legal�settlement Impairment�charges Loss�on�sale�of�subsidiary Operating�(loss)�income Financing�interest�expense Net�foreign�currency�loss Non-cash�adjustments�related�to�tax�receivable�agreement Net�unrealized�(loss)�gain�on�financial�instruments (Loss)�income�before�income�taxes Income�tax�(benefit)�provision Net�(loss)�income Less:�Net�income�(loss)�from�non-controlling�interests Net�(loss)�income�attributable�to�WEX�Inc. Change�in�value�of�redeemable�non-controlling�interest Net�(loss)�income�attributable�to�shareholders Net�(loss)�income�attributable�to�shareholders�per�share: Basic Diluted Weighted�average�common�shares�outstanding: Basic Diluted See�notes�to�consolidated�financial�statements. $ $ $ $ Year�ended�December�31, 2020 2019 2018 $ 698,891� 449,456� 198,523� 212,999� 1,559,869� $ 825,592� 413,552� 247,318� 237,229� 1,723,691� 723,991� 308,096� 208,627� 251,925� 1,492,639� 419,041� 47,289� 78,443� 23,810� 104,592� 673,175� 292,109� 266,684� 157,334� 162,500� 53,378� 46,362� (91,673) (157,080) (25,783) 491� (27,036) (301,081) (20,597) (280,484) 3,466� (283,950) 40,312� (243,638) $ (5.56) $ (5.56) $ 43,842� 43,842� 400,439� 57,027� 65,664� 41,915� 94,725� 659,770� 275,807� 259,869� 142,404� —� —� —� 385,841� (134,677) (926) 932� (34,654) 216,516� 61,223� 155,293� (1,030) 156,323� (57,317) 99,006� 2.29� 2.26� 43,316� 43,769� $ $ $ 309,450� 53,655� 66,482� 38,407� 79,935� 547,929� 209,319� 229,234� 119,870� —� 5,649� —� 380,638� (105,023) (38,800) (775) 2,579� 238,619� 68,843� 169,776� 1,481� 168,295� —� 168,295� 3.90� 3.86� 43,156� 43,574� 77 WEX�INC. CONSOLIDATED�STATEMENTS�OF�COMPREHENSIVE�(LOSS)�INCOME (in�thousands) � �� Net�(loss)�income Foreign�currency�translation Comprehensive�(loss)�income Less:�Comprehensive�income�(loss)�attributable�to�non-controlling�interest Comprehensive�(loss)�income�attributable�to�WEX�Inc. See�notes�to�consolidated�financial�statements. Year�ended�December�31, 2020 2019 2018 $ $ $ (280,484) 27,864� (252,620) 4,289� (256,909) $ 155,293� 1,784� 157,077� (1,088) 158,165� $ $ 169,776� (28,535) 141,241� 1,007� 140,234� 78 WEX�INC. CONSOLIDATED�BALANCE�SHEETS (in�thousands,�except�per�share�data) � �� Assets Cash�and�cash�equivalents Restricted�cash Accounts�receivable�(net�of�allowances�of�$59,147�in�2020�and�$52,274�in�2019) Securitized�accounts�receivable,�restricted Prepaid�expenses�and�other�current�assets Total�current�assets Property,�equipment�and�capitalized�software�(net�of�accumulated�depreciation�of�$402,406�in�2020�and�$344,212�in�2019) Goodwill Other�intangible�assets�(net�of�accumulated�amortization�of�$835,163�in�2020�and�$666,793�in�2019) Investment�securities Deferred�income�taxes,�net Other�assets Total�assets Liabilities�and�Stockholders’�Equity Accounts�payable Accrued�expenses Restricted�cash�payable Short-term�deposits Short-term�debt,�net Other�current�liabilities Total�current�liabilities Long-term�debt,�net Long-term�deposits Deferred�income�taxes,�net Other�liabilities Total�liabilities Commitments�and�contingencies�(Note�21) Redeemable�non-controlling�interest Stockholders’�Equity Common�stock�$0.01�par�value;�175,000�shares�authorized;�48,616�shares�issued�in�2020�and�47,749�in�2019;�44,188�shares�outstanding�in�2020�and 43,321�in�2019 Additional�paid-in�capital Retained�earnings Accumulated�other�comprehensive�loss Treasury�stock�at�cost;�4,428�shares�in�2020�and�2019 Total�WEX�Inc.�stockholders’�equity Non-controlling�interest Total�stockholders’�equity Total�liabilities�and�stockholders’�equity See�notes�to�consolidated�financial�statements. December�31, 2020 2019 $ $ $ 852,033� 477,620� 1,993,329� 93,236� 86,629� 3,502,847� 188,340� 2,688,138� 1,552,012� 37,273� 17,524� 197,227� 8,183,361� 778,207� 362,472� 477,620� 911,395� 152,730� 58,429� 2,740,853� 2,874,113� 148,591� 220,122� 164,546� 6,148,225� 810,932� 170,449� 2,661,108� 112,192� 87,694� 3,842,375� 212,475� 2,441,201� 1,575,050� 30,460� 12,833� 184,024� 8,298,418� 969,816� 315,642� 170,449� 1,310,813� 248,531� 34,692� 3,049,943� 2,686,513� 143,399� 218,740� 106,422� 6,205,017� 117,219� 156,879� 485� 872,711� 1,286,976� (82,935) (172,342) 1,904,895� 13,022� 1,917,917� 8,183,361� $ 477� 675,060� 1,539,201� (115,449) (172,342) 1,926,947� 9,575� 1,936,522� 8,298,418� $ $ $ $ 79 WEX�INC. CONSOLIDATED�STATEMENTS�OF�STOCKHOLDERS’�EQUITY (in�thousands)� �� �� Balance�at�January�1,�2018 Stock�issued�under�share-based�compensation�plans Share�repurchases�for�tax�withholdings Stock-based�compensation�expense Foreign�currency�translation Net�income�(loss) Balance�at�January�1,�2019 Stock�issued�under�share-based�compensation�plans Share�repurchases�for�tax�withholdings Stock-based�compensation�expense Adjustments�of�redeemable�non-controlling�interest Foreign�currency�translation Net�income Balance�at�December�31,�2019 Cumulative�effect�adjustment�(Note�2) Balance�at�January�1,�2020 Stock�issued�under�share-based�compensation�plans Fair�value�of�stock�issued�through�private�placement,�net�of issuance�costs�of�$968�(Note�16) Share�repurchases�for�tax�withholdings Equity�component�of�the�convertible�notes,�net�of�allocated issuance�costs�of�$570�and�taxes�of�$13,623�(Note�16) Stock-based�compensation�expense Change�in�value�of�redeemable�non-controlling�interest Foreign�currency�translation Transfer�of�cumulative�translation�adjustment�on�the�sale�of subsidiary Net�(loss)�income Common�Stock�Issued Shares Amount Additional� Paid-in� Capital Accumulated� Other� Comprehensive� Loss Treasury� Stock Retained� Earnings Non-Controlling Interest Total Stockholders’ Equity $ $ 47,352� 205� —� —� —� —� 47,557� 192� —� —� —� —� —� 47,749� 47,749� 290� $ 577� —� —� —� —� —� —� —� $ $ $ 473� 2� —� —� —� —� 475� 2� —� —� —� —� —� 477� 477� 2� 6� —� —� —� —� —� —� —� $ $ 569,319� 2,428� (12,372) 33,887� —� —� 593,262� 4,939� (10,352) 45,811� 41,400� —� —� 675,060� $ $ (89,230) —� —� —� (28,061) —� (117,291) —� —� —� —� 1,842� —� (115,449) $ $ (172,342) —� —� —� —� —� (172,342) —� —� —� —� —� —� (172,342) 675,060� 9,271� $ (115,449) —� $ (172,342) —� $ 92,970� (9,519) 41,066� 63,863� —� —� —� —� —� —� —� —� —� 27,041� 5,473� —� —� —� —� —� —� —� —� —� $ $ $ 1,313,298� —� —� —� —� 168,295� 1,481,593� —� —� —� (98,715) 156,323� 1,539,201� (8,587) 1,530,614� —� —� —� —� —� 40,312� —� —� (283,950) $ $ $ 9,220� —� —� —� (474) 1,481� 10,227� —� —� —� —� (58) (594) 9,575� (190) 9,385� —� —� —� —� —� —� 823� —� 2,814� 1,630,738� 2,430� (12,372) 33,887� (28,535) 169,776� 1,795,924� 4,941� (10,352) 45,811� (57,315) 1,784� 155,729� 1,936,522� (8,777) 1,927,745� 9,273� 92,976� (9,519) 41,066� 63,863� 40,312� 27,864� 5,473� (281,136) 1,917,917� Balance�at�December�31,�2020 48,616� $ 485� $ 872,711� $ (82,935) $ (172,342) $ 1,286,976� $ 13,022� $ See�notes�to�consolidated�financial�statements. 80 WEX�INC. CONSOLIDATED�STATEMENTS�OF�CASH�FLOWS (in�thousands) �� Cash�flows�from�operating�activities Net�(loss)�income Adjustments�to�reconcile�net�income�to�net�cash�provided�by�operating�activities: Net�unrealized�loss Stock-based�compensation Depreciation�and�amortization Loss�on�sale�of�subsidiary Debt�restructuring�and�debt�issuance�cost�amortization (Benefit)�provision�for�deferred�taxes Provision�for�credit�losses Impairment�charges Non-cash�adjustments�related�to�tax�receivable�agreement Changes�in�operating�assets�and�liabilities,�net�of�effects�of�acquisitions: Accounts�receivable�and�securitized�accounts�receivable Prepaid�expenses�and�other�current�and�other�long-term�assets Accounts�payable Accrued�expenses�and�restricted�cash�payable Income�taxes Other�current�and�other�long-term�liabilities Net�cash�provided�by�operating�activities Cash�flows�from�investing�activities Purchases�of�property,�equipment�and�capitalized�software Cash�paid�on�sale�of�subsidiary Distribution�(contribution)�of�equity�investment Purchases�of�investment�securities Maturities�of�investment�securities Acquisitions,�net�of�cash�and�restricted�cash�acquired Net�cash�used�for�investing�activities Cash�flows�from� financing�activities Repurchase�of�share-based�awards�to�satisfy�tax�withholdings Proceeds�from�stock�option�exercises Net�change�in�deposits Net�activity�on�other�debt Borrowings�on�revolving�credit�facility Repayments�on�revolving�credit�facility Borrowings�on�term�loans Repayments�on�term�loans Proceeds�from�issuance�of�convertible�notes Proceeds�from�issuance�of�common�stock Issuance�costs Net�change�in�securitized�debt Net�cash�(used�for)�provided�by�financing�activities Effect�of�exchange�rates�on�cash,�cash�equivalents�and�restricted�cash Net�change�in�cash,�cash�equivalents�and�restricted�cash Cash,�cash�equivalents�and�restricted�cash,�beginning�of�year Cash,�cash�equivalents�and�restricted�cash,�end�of�year (a) (a) 2020 Year�ended�December�31, 2019 2018 $ (280,484) $ 155,293� $ 169,776� 48,042� 63,863� 261,926� 46,362� 26,196� (29,342) 78,443� 53,378� (491) 592,947� 6,514� (183,708) 151,236� 15,083� 7,054� 857,019� (80,471) (22,470) 837� (6,459) 181� (220,704) (329,086) (9,519) 9,273� (396,065) (66,915) 300,000� (300,000) —� (64,611) 299,150� 90,000� (17,048) (23,521) (179,256) (405) 348,272� 981,381� 1,329,653� $ 29,792� 45,811� 237,129� —� 9,942� 19,667� 65,664� —� (932) (67,645) 31,337� 139,187� 31,627� (12,266) (21,435) 663,171� (102,860) —� —� (5,567) 230� (882,417) (990,614) (10,352) 4,941� 176,603� (43,148) 1,267,704� (1,265,251) 688,990� (64,329) —� —� (3,442) (1,943) 749,773� 4,020� 426,350� 555,031� 981,381� $ 21,924� 33,887� 199,805� —� 9,674� 31,334� 66,482� 5,649� 775� (201,637) 68,014� (3,588) 8,654� (2,107) (8,413) 400,229� (87,152) —� (2,771) (1,768) 266� (162,750) (254,175) (12,372) 2,430� (20,360) (62,290) 1,570,983� (1,707,478) 178,000� (35,791) —� —� (5,841) (10,009) (102,728) (10,680) 32,646� 522,385� 555,031� $ 81 Supplemental�cash�flow�information Interest�paid Income�taxes�(refunded)�paid Supplemental�disclosure�of�non-cash�investing�and�financing�activities Capital�expenditures�incurred�but�not�paid 2020 2019 2018 163,292� $ (8,444) $ 175,993� $ 50,964� $ 141,476� 39,225� 3,179� $ 4,771� $ 8,569� $ $ $ (a) �The�following�table�provides�a�reconciliation�of�cash,�cash�equivalents�and�restricted�cash�reported�within�our�consolidated�balance�sheets�to�amounts�within�our�consolidated�statements�of cash�flows�for�the�years�ended�December�31,�2020,�2019�and�2018: � � Cash�and�cash�equivalents�at�beginning�of�year Restricted�cash�at�beginning�of�year Cash,�cash�equivalents�and�restricted�cash�at�beginning�of�year Cash�and�cash�equivalents�at�end�of�year Restricted�cash�at�end�of�year Cash,�cash�equivalents�and�restricted�cash�at�end�of�year See�notes�to�consolidated�financial�statements. 2020 810,932� 170,449� 981,381� 852,033� 477,620� 1,329,653� $ $ $ $ $ $ $ $ December�31, 2019 2018 541,498� 13,533� 555,031� 810,932� 170,449� 981,381� $ $ $ $ 503,519� 18,866� 522,385� 541,498� 13,533� 555,031� 82 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) 1. Basis�of�Presentation�and�Summary�of�Significant�Accounting�Policies Business�Description � � � �WEX �Inc. �(“Company”, �“we” �or �“our”) �is �a �leading �financial �technology �service �provider �having �simplified �the �complexities �of �payment �systems �across continents�and�industries.�The�Company�provides�products�and�services�that�meet�the�needs�of�businesses�in�various�geographic�regions�including�North�America, Asia �Pacific �and �Europe. �The �Company’s �Fleet �Solutions, �Travel �and �Corporate �Solutions, �and �Health �and �Employee �Benefit �Solutions �segments �provide �our customers�with�security�and�control�for�complex�payments�across�a�wide�spectrum�of�business�sectors. Basis�of�Presentation�and�Use�of�Estimates�and�Assumptions � � � �The�accompanying �consolidated �financial �statements �for �the �years�ended �December �31, �2020,�2019 �and �2018, �include�the �accounts �of �the�Company�and �its wholly�and�majority-owned�subsidiaries.�All�intercompany�accounts�and�transactions�have�been�eliminated�in�consolidation. The �Company �prepares �its �consolidated �financial �statements �in �conformity �with �GAAP �and �with �the �Rules �and �Regulations �of �the �SEC, �specifically Regulation�S–X�and�the�instructions�to�Form�10–K.�These�principles�require�management�to�make�estimates�and�assumptions�that�affect�the�reported�amounts�of assets �and �liabilities �and �the �disclosures �of �contingent �assets �and �liabilities �as �of �the �date �of�the �financial �statements �and �the �reported �amounts �of �revenue �and expenses�during�the�period.�Actual�results�could�differ�from�those�estimates�and�those�differences�may�be�material. � � ��The �Company�rounds �amounts �in�the �consolidated �financial�statements �to �thousands�within �tables �and�millions �within �text�(unless �otherwise �specified),�and calculates �all �percentages �and �per-share �data �from �underlying �whole-dollar �amounts. �Thus, �certain �amounts �may �not �foot, �crossfoot, �or �recalculate �based �on reported�numbers�due�to�rounding. COVID-19�Pandemic�Response�and�Impact A�novel�strain�of�coronavirus�(COVID-19)�was �first�identified�in�Wuhan, �China�in�January�2020,�and�subsequently �declared�a�global�pandemic �by�the World�Health�Organization�on�March�11,�2020. During�the�first�quarter�of�2020,�the�Company�took�a�number�of�precautionary�steps�to�safeguard�its�business�and�employees�from�the�effects�of�COVID- 19�including�restricting�business�travel,�temporarily�closing�offices�and�canceling�participation�in�various�industry�events.�Additionally,�in�an�effort�to�rescale�the business �and �safeguard �shareholder �value �in �this �unprecedented �operating �environment, �we �took �certain �measures �to �both �permanently �reduce �headcount �and furlough �employees �across �our �worldwide �offices �where �necessary. �Aside �from �the �employee �furloughs, �which �ended �during �the �third �quarter �of �2020, �the precautionary �steps �described �above �largely �remain �in �force �as �the �Company �continues �to �closely �track �and �assess �the �evolving �effect �of �the �pandemic. �The Company�is�actively�managing�its�responses�in�collaboration�with�its�employees,�customers�and�suppliers. The�spread�of�COVID-19,�and�conditions�arising�in�connection�with�it,�including�restrictions�on�businesses�and�individuals�and�wider�changes�in�business and�customer�behavior,�had�a�negative�impact�on�the�Company’s�businesses�during�the�year�ended�December�31,�2020.�The�following�describes�these�impacts�by reportable�segment: Fleet�Solutions�—�The�Fleet�Solutions�segment�has�seen�both�positive�and�negative�impacts�as�a�result�of�the�world's�response�to�COVID-19,�with�the negative �impacts �significantly �outweighing �the �positive. �Firstly, �2020 �revenue �has �significantly �decreased �as �a �result �of �lower �transaction �prices �driven �by �a decrease�in�the�average�U.S.�price�per�gallon�of�fuel�as�compared�to�2019.�Volumes�have�also�negatively�impacted�the�segment's�results�during�2020�as�compared to �2019 �due �to �lower �volumes �in �the �North �American �fleet �and �international �portions �of �the �business. �Partly �offsetting �these �negatively �impacted �areas �of �the business�were�volume�trends�in�our�over-the-road�trucking�business,�which�have�increased�relative�to�prior�year�due�to�increased�shipping�to�individuals�during�the U.S.�lockdown,�but�represent�a�smaller�portion�of�the�overall�segment. Travel�and�Corporate�Solutions�—�Of�the�Company's�segments,�Travel�and�Corporate�Solutions�has�been�the�most�severely�impacted�by�the�pandemic and�the�corresponding�decline�in�worldwide�travel�and�tourism.�Purchase�volume�in�the�travel�portion�of�the�segment�was�significantly�lower�in�2020�as�compared to�2019. �In�contrast, �the �corporate �payments�portion �of �the�segment �has �seen �an�increase �in �purchase�volumes �during �2020,�which �is �largely �attributable �to�the ongoing�migration�of�businesses�to�virtual�payments�and �increasing�usage�of�our�accounts�payable�products.�These�improvements, �however,�represent�a�smaller percentage�of�the�total�segment. 83 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) Health�and�Employee�Benefit�Solutions�—�The�Health�and�Employee�Benefit�Solutions'�volume�was�most�challenged�by�the�pandemic�during�the�second quarter�of�2020�as�a�result�of�cardholders�deferring�non-essential�medical�treatments�when�U.S.�lockdown�restrictions�were�most�severe.�However,�by�the�fourth quarter�of�2020,�the�U.S.�Health�business�saw�a�slight�increase�in�purchase�volumes�relative�to�the�same�period�in�the�prior�year. Significant�Accounting�Policies Cash�and�Cash�Equivalents ����Highly�liquid�investments�with�original�maturities�at�the�time�of�purchase�of�three�months�or�less�(that�are�readily�convertible�to�cash)�are�considered�to�be�cash equivalents�and�are�stated�at�cost,�which�approximates�fair�value.�Cash�and�cash�equivalents�include�Eurodollar�time�deposits,�and�money�market�funds,�which�are unsecured�short-term�investments�entered�into�with�financial�institutions. Restricted�Cash Restricted �cash �represents �funds �collected �from �individuals �or �employers �on �behalf �of �our �customers �that �are �to �be �remitted �to �third �parties �or �funds required�to�be�maintained�under�certain�vendor�agreements.�With�the�acquisition�of�eNett�and�Optal,�restricted�cash�as�of�December�31,�2020�also�includes�amounts received�from�online�travel�agencies�held�in�segregated�accounts�until�a�transaction�is�settled.�Restricted�cash�is�not�available�to�fund�the�Company’s�operations. Additionally,�we�maintain�an�offsetting�liability�against�restricted�cash. Accounts�Receivable,�Net�of�Allowances Accounts�receivable�consists�of�amounts�billed�and�due�from�third�parties.�We�often�extend�short-term�credit�to�cardholders�and�pay�the�merchant�for�the purchase�price,�less�the�fees�we�retain�and�record�as�revenue.�We�subsequently�collect�the�total�purchase�price�from�the�cardholder. ����The�Company�adopted�Topic�326�on�January�1,�2020,�utilizing�the�modified-retrospective�approach,�under�which�prior�period�comparable�financial�information was�not�adjusted.�Topic�326�amends�the�impairment�model�by�requiring�entities�to�use�a�forward-looking�approach�based�on�expected�losses�rather�than�incurred losses�to�estimate�credit�losses�on�certain�types�of�financial�instruments,�including�trade�receivables�and�off-balance�sheet�credit�exposures. The�following�table�illustrates�the�adoption�impact�of�Topic�326: (In�thousands) Allowance�for�accounts�receivable Deferred�income�taxes,�net�(within�total�assets) Deferred�income�taxes,�net�(within�total�liabilities) Retained�earnings Non-controlling�interest 1 Prior�to�Adoption $ $ $ $ $ 52,274� 12,833� 218,740� 1,539,201� 9,575� $ $ $ $ $ January�1,�2020 Impact�of� Topic�326 11,577� $ 570� $ (2,230) $ (8,587) $ (190) $ As�Reported 63,851� 13,403� 216,510� 1,530,614� 9,385� 1 �This�impact�does�not�reflect�the�economic�disruption�resulting�from�the�COVID-19�pandemic�since�it�occurred�subsequent�to�January�1,�2020. Allowance�for�Accounts�Receivable The�allowance�for�accounts�receivable�reflects�management’s�current�estimate�of�uncollectible�balances�on�its�accounts�receivable�and�consists�primarily of�reserves�for�credit�losses.�As�a�result �of�the�adoption�of�Topic�326,�the�reserve �for�expected�credit�losses�includes �both�a�quantitative�and�qualitative �reserve component. �The�quantitative�component �is�primarily�calculated �using�an�analytic�model, �which�includes�the�consideration �of�historical�loss�experience �and�past events �to �calculate �actual �loss-rates �at �the�portfolio �level. �It�also �includes �reserves �against �specific �customer�account �balances �determined�to �be �at�risk �for�non- collection �based �on �customer �information �including �delinquency, �changes �in �payment �patterns �and �other �information. �The �qualitative �component �is �determined through �analyzing �recent �trends �in �economic �indicators �and �other �current �and �forecasted �information �to �determine �whether �loss-rates �are �expected �to �change significantly�in�comparison�to�historical�loss-rates�at�the�portfolio�level.�When�such�indicators�are�forecasted�to�deviate�from�the�current�or�historical�median,�the Company�qualitatively�assesses�what�impact,�if�any,�the�trends�are�expected�to�have�on�the�reserve�for�credit�losses.�Economic�indicators�include 84 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) consumer�price�indices,�consumer�spending�and�unemployment�trends,�among�others.�See�Note�6,�Accounts�Receivable,�for�discussion�regarding�the�adjustments made�during�the�year�ended�December�31,�2020�as�a�result�of�these�assessments. Accounts�receivable�are�evaluated�for�credit�losses�on�a�pooling�basis�based�on�similar�risk�characteristics�including�industry�of�the�borrower,�historical�or expected�credit�loss�patterns,�risk�ratings�or�classification,�and�geographic�location.�As�a�result�of�this�evaluation,�our�portfolio�segments�consist�of�the�following: • • • Fleet�Solutions�-�The�majority�of�the�customer�base�consists�of�companies�within�the�transportation,�logistics�and�fleet�industries.�The�associated�credit losses�by�customer�are�generally�low,�however,�the�Fleet�Solutions�segment�has�historically�comprised�the�majority�of�the�Company’s�provision�for�credit loss.�Credit�losses�generally�correlate�with�changes�in�consumer�price�indices�and�other�indices�that�measure�trends�and�volatility�including�the�Institute�of Supply�Management�Purchasing�Index�and�the�U.S.�Volatility�Index. Travel �and �Corporate �Solutions �- �The �customer �base �is �comprised �of �businesses �operating �in �a �wide �range �of �industries �including �large �online �travel agencies.�With�the�exception�of�the�eNett�and�Noventis�portfolios,�which�have�minimal�credit�risk�due�to�their�respective�business�models�and�collection terms, �the �associated �credit �losses �are�sporadic �and �closely �correlate �with �trends�in �consumer �metrics, �including �consumer �spending �and �the �consumer price�index. Health �and �Employee �Benefit �Solutions �- �The �customer �base �includes �third-party �administrators, �individual �employers �and �employees. �The �associated credit�losses�are�generally�low.�Prior�to�the�sale�of�WEX�Latin�America,�the�Company�maintained�credit�exposure�on�certain�associated�receivables�not sold �to �the �securitization �fund �and �accordingly �established �an �allowance �for �credit �losses, �which �was �included �in �the �Health �and �Employee �Benefit Solutions�balance. When �accounts �receivable �exhibit �elevated �credit �risk �characteristics �as �a �result �of �bankruptcies, �disputes, �conversations �with �customers, �or �other significant�credit�loss�events,�they�are�assessed�account�level�credit�loss�estimates.�Assumptions�regarding�expected�credit�losses�are�reviewed�each�reporting�period and�may�be�impacted�by�actual�performance�of�accounts�receivable�and�changes�in�any�of�the�factors�discussed�above. Prior �to �the �adoption �of �Topic �326 �on �January �1, �2020, �the �accounts �receivable �allowance �reflected �management’s �estimate �of �uncollectible �balances resulting�from�credit�losses�and�based�on�the�determination�of�the�amount�of�expected�losses�inherent�in�the�accounts�receivable�as�of�the�reporting�date. The�allowance�for�accounts�receivable�also�includes�reserves�for�waived�finance�fees,�which�are�used�to�maintain�customer�goodwill�and�recorded�against the�late�fee�revenue�recognized,�as�well�as�reserves�for�fraud�losses,�which�are�recorded�as�credit�losses.�Management�monitors�known�and�suspected�fraudulent activity�identified�by�the�Company,�as�well�as�fraudulent�claims�reported�by�customers,�in�estimating�the�reserve�for�expected�fraud�losses. Off-Balance�Sheet�Arrangements The �Company �has �various �off-balance �sheet �commitments, �including �the �extension �of �credit �to �customers, �accounts �receivable �factoring �and �accounts receivable �securitization, �which �carry �credit �risk �exposure. �Such �arrangements �are �described �in �Note �21, �Commitments �and �Contingencies, �and �Note �13, �Off- Balance�Sheet�Arrangements.�These�items�were�not�significantly�impacted�by�the�adoption�of�Topic�326�as�of�December�31,�2020. Investment�Securities � � � �Changes �in �the �fair �value �of �investment �securities �are �included �in �net �unrealized �(loss) �gain �on �financial �instruments �within �our �consolidated �statements �of operations.�Realized�gains�and�losses�and�declines�in�fair�value�determined�to�be�other-than-temporary�are�included�in�non-operating�expenses.�The�cost�basis�of securities�is�based�on�the�specific�identification�method.�Investment�securities�held�by�the�Company�were�purchased�and�are�held�by�WEX�Bank�primarily�in�order to�meet�the�requirements�of�the�Community�Reinvestment�Act. Derivatives ����From�time�to�time,�the�Company�utilizes�derivative�instruments�as�part�of�its�overall�strategy�to�reduce�the�impact�of�interest�and�foreign�currency�exchange�rate volatility.�The�Company’s�derivative�instruments�are�recorded�at�fair�value�on�the�consolidated�balance�sheets.�The�Company’s�derivative�instruments�outstanding at�December�31,�2020�and�2019�consist�entirely�of�interest�rate�swap�agreements�that�have�not�been�designated�as�hedges.�Realized�and�unrealized�gains�and�losses on�the�derivatives�are�recognized�in�financing�interest�and�unrealized�gains�and�losses�on�financial�instruments,�respectively.�For 85 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) the�purposes�of�cash�flow�presentation,�realized�and�unrealized�gains�or�losses�are�included�within�cash�flows�from�operating�activities. Leases ����Effective�January�1,�2019,�the�Company's�real�estate�leases�are�accounted�for�using�a�right-of-use�model,�which�recognizes�that�at�the�date�of�commencement,�a lessee �has �a �financial �obligation �to �make �lease �payments �to �the �lessor �for �the �right �to �use �the �underlying �asset �during �the �lease �term. �The �lessee �recognizes �a corresponding�right-of-use�asset�related�to�this�right.�The�Company�made�an�accounting�policy�election�to�not�recognize�assets�or�liabilities�for�leases�with�a�term of �less �than �twelve �months �and �to �account �for �all �components �in �a �lease �arrangement �as �a �single �combined �lease �component. �Certain �of �our �lease �agreements include �variable �rent �payments, �consisting �primarily �of �rental �payments �adjusted �periodically �for �inflation �and �amounts �paid �to �the �lessor �based �on �cost �or consumption,�such�as�maintenance�and�utilities.�These�costs�are�expensed�as�incurred.�As�the�Company’s�leases�do�not�specify�an�implicit�rate,�the�Company�uses an�incremental�borrowing�rate�based�on�information�available�at�the�lease�commencement�date�to�determine�the�present�value�of�the�lease�payments. The�Company�evaluates�right-of-use�assets�for�impairment�when�events�or�changes�in�circumstances�indicate�that�the�carrying�value�of�the�asset�may�not be�recoverable.�Specifically,�the�Company�may�choose�to�exit�a�lease�prior�to�the�end�of�the�lease�term.�In�circumstances�when�the�Company�has�made�the�decision to�exit�the�lease�and�does�not�have�the�ability�and�intent�to�sublease�such�exited�facility,�the�Company�adjusts�the�estimated�useful�life�of�the�right-of-use�asset�so that�it�ends�on�the�cease�use�date.�The�accelerated�lease�expense�is�recognized�on�a�straight-line�basis�through�the�end�of�the�useful�life. See�Note�15,�Leases,�for�further�information. Property,�Equipment�and�Capitalized�Software ����Property,�equipment�and�capitalized�software�are�stated�at�cost,�net�of�accumulated�depreciation�and�amortization.�Replacements,�renewals�and�improvements are �capitalized �and�costs �for�repair �and�maintenance �are�expensed �as�incurred. �Leasehold�improvements �are�depreciated �using�the �straight-line �method�over �the shorter�of�the�remaining�lease�term�or�the�useful�life�of�the�improvement.�Depreciation�and�amortization�for�all�other�property,�equipment�and�capitalized�software is�primarily�computed�using�the�straight-line�method�over�the�estimated�useful�lives�shown�below. �� Furniture,�fixtures�and�equipment Internal-use�computer�software Computer�software Estimated�Useful�Lives 3�to�5�years 1.5�to�5�years 3�years ���� The�Company’s�developed�software�is�used�to�provide�processing�and�information�management�services�to�customers.�A�significant�portion�of�the�Company’s capital �expenditures �is�devoted �to�the �development�of �such�internal-use �computer�software. �Costs�incurred �during�the �preliminary�project �stage �are�expensed�as incurred. �Software �development �costs �are �capitalized �during �the �application �development �stage. �Capitalization �begins �when �the �preliminary �project �stage �is complete, �as�well �as �when �management �authorizes �and �commits �to �the �funding �of �the �project. �Capitalization �of �costs �ceases �when �the �software �is�ready �for �its intended�use.�Costs�related�to�maintenance�of�internal-use�software�are�expensed�as�incurred. ����Below�are�the�amounts�of�internal-use�computer�software�capitalized�within�property,�equipment�and�capitalized�software�and�the�related�amortization�expense incurred�on�all�internal-use�computer�software�during�the�years�ended�December�31: (in�thousands) Gross�amounts�capitalized�for�internal-use�computer�software�(including�construction-in-process) Amounts�expensed�for�amortization�of�internal-use�computer�software 2020 2019 2018 $ $ 58,881� 72,363� $ $ 74,432� 57,821� $ $ 46,382� 38,632� Cloud�Computing�Arrangements The�Company�capitalizes�implementation�costs�in�cloud�computing�arrangements,�including�development�costs�on�third�party�technology�platforms.�Such amounts�are�amortized,�when�ready�for�intended�use,�over�the�lesser�of�the�term�of�the�hosting�arrangement�or�the�useful�life�of�the�underlying�software. 86 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) As�of�December�31,�2020,�the�Company�had�the�following�costs�capitalized�with�respect�to�cloud�computing�arrangements�on�the�consolidated�balance sheet: (in�thousands) Gross�cloud�computing�costs�(inclusive�of�in-process�amounts) Accumulated�amortization Net�cloud�computing�costs Included�in�prepaid�expenses�and�other�current�assets Included�in�other�assets The�Company�had�no�cloud�computing�costs�capitalized�prior�to�2020. Acquisitions 2020 6,360� 387� 5,973� 4,570� 1,403� $ $ $ $ � � � �For �acquisitions �that �meet �the �definition �of �a �business �combination, �the �Company �applies �the �acquisition �method �of �accounting �where �assets �acquired �and liabilities �assumed �are �recorded �at �fair �value �at �the �date �of �each �acquisition. �Any �excess �of �the �consideration �transferred �by �the �Company �over �the �amounts recognized�for�assets�acquired�and�liabilities�assumed�is�recorded�as�goodwill.�The�Company�continues�to�evaluate�acquisitions�for�a�period�not�to�exceed�one�year after�the�acquisition �date�of�each�transaction�to�determine�whether�any�additional�adjustments�are�needed�to�the�allocation�of�the�purchase�price.�The�acquiree’s results�of�operations�are�included�in�consolidated�results�of�the�Company�from�the�date�of�the�respective�acquisition. � � � �All �other�acquisitions �are �accounted �for �as �asset�acquisitions �and �the �purchase �price �is�allocated �to �the �net �assets �acquired �with �no �recognition �of �goodwill. Following�the�acquisition�date,�the�purchase�price�is�not�subsequently�adjusted. � � � �The �fair �value �of �assets �acquired �and �liabilities �assumed �is �based�on �management’s �estimates �and �assumptions, �as �well �as �other �information �compiled �by management.�Fair�values�are�typically�determined�using�a�discounted�cash�flow�valuation�method,�though�the�Company�utilizes�alternative�valuation�methods�when deemed�appropriate.�Significant�acquisition�valuation�assumptions�typically�include�timing�and�amount�of�future�cash�flows,�effective�income�tax�rates,�discount rates,�long-term�growth�expectations�and�customer�attrition�rates. Goodwill�and�Other�Intangible�Assets � � � �The �Company �tests �goodwill �for �impairment �at �least �annually �or �more �frequently �if �facts �or �circumstances �indicate �that �the �goodwill �might �be �impaired. Goodwill�is�assigned�to�reporting�units,�which�are�one�level�below�the�Company’s�operating�segments.�The�Company�performs�goodwill�impairment�tests�at�the reporting�unit�level�annually�as�of�October�1.�Such�impairment�tests�include�comparing�the�fair�value�of�the�respective�reporting�units�with�their�carrying�values, including�goodwill.�The�Company�uses�both�discounted�cash�flow�analyses�and�comparable�company�pricing�multiples�to�determine�the�fair�value�of�its�reporting units.�Such�analyses�are�corroborated�using�market�analytics.�Certain�assumptions�are�used�in�determining�the�fair�value,�including�assumptions�about�future�cash flows �and �terminal �values. �When �appropriate, �the �Company �considers �the �assumptions �that �it �believes �hypothetical �marketplace �participants �would �use �in estimating�future�cash�flows.�In�addition,�an�appropriate�discount�rate�is�used,�based�on�the�Company’s�cost�of�capital�or�reporting�unit-specific�economic�factors. When�the�fair�value�of�a�reporting�unit�is�less�than�its�carrying�value,�a�goodwill�impairment�charge�is�recorded�equal�to�the�amount�by�which�the�carrying�value�of the�reporting�unit,�including�goodwill,�exceeds�its�fair�value,�limited�to�the�total�amount�of�goodwill�allocated�to�that�reporting�unit. During�our�annual�goodwill�impairment�test�performed�as�of�October�1,�2020,�we�determined�that�the�reduced�volumes�attributable�in�part�to�COVID-19, had�a�significant�negative�impact�on�the�fair�value�of�the�WEX�Fleet�Europe�reporting�unit�(the�2019�Go�Fuel�Card�acquisition).�Based�on�the�carrying�value�of�this reporting �unit�exceeding �its�fair �value,�the �Company�recorded �a�$53.4�million �goodwill�impairment �charge�during �the�year�ended �December�31, �2020.�There�is $65.8�million�remaining�goodwill�associated �with�this�reporting�unit. �See�Note�9,�Goodwill�and�Other �Intangible�Assets,�and�Note�24,�Impairment �Charges,�for further�information�regarding�the�outcome�of�the�Company’s�annual�goodwill�impairment�test�performed�as�of�October�1,�2020,�2019,�and�2018. ����Intangible�assets�that�are�deemed�to�have�definite�lives�are�generally�amortized�using�a�method�reflective�of�the�pattern�in�which�the�economic�benefits�of�the assets �are �expected �to�be �consumed. �If �that �pattern �cannot �be �reliably �determined, �the �assets �are �amortized �using �a �straight-line �method �over �their �useful �lives, which �is �the �period �of �time �that �the �asset �is �expected �to �contribute �directly �or �indirectly �to �future �cash �flows. �The �Company �determines �the �useful �lives �of �its identifiable�intangible 87 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) assets�after�considering�the�specific�facts�and�circumstances�related�to�each�intangible�asset.�The�factors�that�management�considers�when�determining�useful�lives include�the�contractual�term�of�agreements,�the�history�of�the�asset,�the�Company’s�long-term�strategy�for�the�use�of�the�asset,�any�laws�or�other�local�regulations which �could �impact �the �useful �life �of �the �asset �and �other �economic �factors, �including �competition �and �specific �market �conditions. �The �Company �performs �an evaluation�of�the�remaining�useful�lives�of�the�definite-lived�intangible�assets�periodically�to�determine�if�any�change�is�warranted. The �Company �assesses�the �realizability �of�intangible �assets �other�than �goodwill �whenever�conditions �exist�that �indicate �the�carrying �value �may�not �be recoverable.�Such�conditions�may�include�a�reduction�in�operating�cash�flow�or�a�dramatic�change�in�the�manner�in�which�the�asset�is�intended�to�be�used. Impairment�of�Long-Lived�Assets ����The�Company’s�long-lived�assets�primarily�include�property,�plant�and�equipment�and�intangible�assets.�The�carrying�values�of�long-lived�assets�are�reviewed for�impairment�whenever�events�or�changes�in�business�circumstances�indicate�that�the�carrying�amount�of�an�asset�may�not�be�recoverable. To�test�for�impairment�of�long-lived�assets,�the�Company�generally�uses�a�probability-weighted�estimate�of�the�future�undiscounted�net�cash�flows�of�the assets�over�their�remaining�lives�to�determine�if�the�value�of�the�asset�is�recoverable.�Long-lived�assets�are�grouped�with�other�assets�and�liabilities�at�the�lowest level�for�which�independent�identifiable�cash�flows�are�determinable. An�asset�impairment�is�recognized�when�the�carrying�value�of�the�asset�is�not�recoverable�based�on�the�analysis�described�above,�in�which�case�the�asset�is written�down�to�its�fair�value.�If�the�asset�does�not�have�a�readily�determinable�market�value,�a�discounted�cash�flow�model�may�be�used�to�determine�the�fair�value of�the�asset.�In�circumstances�when�an�asset�does�not�have�separate�identifiable�cash�flows,�an�impairment�charge�is�recorded�when�the�Company�no�longer�intends to�use�the�asset. Fair�Value�of�Financial�Instruments ����The�Company�holds�mortgage-backed�securities,�fixed-income�mutual�funds,�money�market�funds,�derivatives�(see�Note�12,�Derivative�Instruments)�and�certain other �financial �instruments �that �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.�Various�factors�are�considered�in�determining�the�fair value�of�the�Company’s�obligations,�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. ����Additionally,�the�Company�holds�certain�investments�that�are�measured�at�their�NAV�as�a�practical�expedient,�which�are�excluded�from�the�fair�value�hierarchy. ����Assets�and�liabilities�measured�at�fair�value�are�classified�in�their�entirety�based�on�the�lowest�level�of�input�that�is�significant�to�the�fair�value�measurement.�Our assessment �of�the�significance �of�a�particular �input�to�the�fair �value�measurement�in �its�entirety�requires�judgment �and�considers�factors �specific�to�the�asset �or liability. Revenue�Recognition ����The�Company�generally�accounts�for�its�revenue�under�Topic�606�or�ASC�310,�Receivables�for�rights�or�obligations�associated�with�financial�instruments.�The Company �generally �records �revenue �net, �equal �to �consideration �retained, �based �upon �its �conclusion �that �the �Company �is �the �agent �in �its �principal �versus �agent relationships.�The�Company�evaluated�the�nature�of�its 88 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) promise�to�the �customer �and �determined�that �it�does �not�control �a�promised �good�or �service�before �transferring�that �good�or�service �to�the �customer,�but �rather arranges�for�another�entity�to�provide�the�goods�or�services.���� ����The�vast�majority�of�the�Company’s�Topic�606�revenue�is�derived�from�stand-ready�obligations�to�provide�payment�processing,�transaction�processing�and�SaaS services�and�support.�As�such,�we�view�these�services�as�comprising�a�series�of�distinct�days�of�service�that�are�substantially�the�same�and�have�the�same�pattern�of transfer �to �the �customer. �Accordingly, �the �promise �to �stand �ready �is �accounted �for �as �a �single-series �performance �obligation. �The �transaction-based �fees �are generally�calculated�based�on�measures�such�as�(i)�percentage�of�dollar�value�of�volume�processed;�(ii)�number�of�transactions�processed;�or�(iii)�some�combination thereof. �The �Company �has �entered �into �agreements �with �major �oil �companies, �fuel �retailers, �vehicle �maintenance �providers, �online �travel �agencies �and �health partners,�which�provide�services�and�limited�products�to�the�Company’s�customers.�These�agreements�specify�that�a�transaction�is�deemed�to�be�captured�when�the Company�has�validated�that�the�transaction�has�no�errors�and�has�accepted�and�posted�the�data�to�the�Company’s�records.�Revenue�is�recognized�based�on�the�value of�services�transferred�to�date�using�a�time�elapsed�output�method.�See�Note�3,�Revenue,�for�a�description�of�the�major�components�of�revenue.���� � � � �The �Company �enters �into �contracts �with �certain �large �customers �or �partners �that �provide �for �fee �rebates �tied �to �performance �milestones. �Such �rebates �and incentives�are�calculated�based�on�estimated�performance�and�the�terms�of�the�related�business�agreements�and�are�typically�recorded�as�a�reduction�of�revenue. Amounts �paid �to �certain �partners �in �our �Fleet �Solutions �and �Travel �and �Corporate �Solutions �segments �are �recorded �within �sales �and �marketing �expense �on �our consolidated�statements�of�operations. Stock-Based�Compensation ����The�Company�recognizes�the�fair�value�of�all�stock-based�payments�to�employees�and�directors�in�its�financial�statements.�The�Company�estimates�the�fair�value of�service-based�stock�option�awards�on�the�grant�date�using�a�Black-Scholes-Merton�valuation�model.�The�Company�estimates�the�fair�value�of�awards�granted with�market�conditions�(including�market�performance-based�stock�option�awards�and�TSR�performance�awards)�on�the�grant�date�using�a�Monte�Carlo�simulation model.�The�fair�value�of�RSUs,�including�PBRSUs�based�on�Company�performance�goals,�is�determined�and�fixed�on�the�grant�date�based�on�the�closing�price�of the�Company’s�stock. Stock-based�compensation�expense�is�recorded�net�of�estimated�forfeitures�over�each�award’s�requisite�service�period.�The�Company�uses�the�straight-line methodology �for �recognizing �the �expense �associated �with �service-based �stock �options �and �RSU �grants �and �a �graded-vesting �methodology �for �the �expense recognition�of�market�performance-based�stock�options�and�PBRSUs. See�Note�23,�Stock-Based�Compensation,�for�further�information. Advertising�Costs ����Advertising�and�marketing�costs�are�expensed�in�the�period�incurred.�During�the�years�ended�December�31,�2020,�2019�and�2018,�advertising�expense�was�$17.4 million,�$17.9�million�and�$16.3�million,�respectively. Income�Taxes � � � �Income �taxes�are �accounted �for �under �the�asset �and �liability �method. �Under �this�method, �deferred �tax �assets �and �liabilities �are�recognized �for �the �future �tax consequences�attributable�to�differences�between�the�financial�statement�carrying�amounts�of�existing�assets�and�liabilities�and�their�respective�tax�bases.�Deferred tax�assets�and�liabilities�are�measured�using�enacted�tax�rates�expected�to�apply�to�taxable�income�in�the�years�in�which�those�temporary�differences�are�expected�to be�recovered�or�settled.�The�effect�on�deferred�tax�assets�and�liabilities�of�a�change�in�tax�rates�is�recognized�in�the�period�that�includes�the�enactment�date. The �ultimate �realization �of �deferred �tax �assets �is �dependent �upon �the �generation �of �future �taxable �income �during �the �periods �in �which �the �associated temporary�differences�become�deductible.�A�valuation�allowance�is�established�for�those�jurisdictions�in�which�the�realization�of�deferred�tax�assets�is�not�deemed to�be�more�likely�than�not. ����Accounting�guidance�prescribes�a�recognition�threshold�and�measurement�attribute�for�the�financial�statement�recognition�and�measurement�of�a�tax�position taken�or�expected�to�be�taken�in�a�tax�return.�This�accounting�guidance�also�provides�guidance�on�derecognition,�classification,�interest�and�penalties,�accounting�in the�interim�periods,�disclosure,�and�transition.�Penalties�and�interest�related�to�uncertain�tax�positions�are�recognized�as�a�component�of�income�tax�expense.�To�the 89 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) extent�penalties�and�interest�are�not�assessed�with�respect�to�uncertain�tax�positions,�amounts�accrued�are�reduced�and�reflected�as�a�reduction�of�the�overall�income tax�provision. Earnings�per�Share ����Basic�earnings�per�share�is�computed�by�dividing�net�income�attributable�to�shareholders�by�the�weighted�average�number�of�shares�of�common�stock�and�vested DSUs �outstanding �during �the �year. �The �computation �of �diluted �earnings �per �share �is �similar �to �the �computation �of �basic �earnings �per �share, �except �that �the numerator �is �increased �for �tax �effected �interest �expense �associated �with �our �Convertible �Notes �and �the �denominator �is �increased �for �the �assumed �issuance �of common�shares�issuable�on�convertible�securities�under�the�"if�converted"�method�unless�the�effect�is�anti-dilutive.�Also,�diluted�earnings�per�share�includes�the assumed �exercise �of�dilutive�options�and�the�assumed�issuance�of�unvested�RSUs�and�performance-based�awards�for�which�the�performance�condition�has�been met�as�of�the�date�of�determination�using�the�treasury�stock�method�unless�the�effect�is�anti-dilutive.�The�treasury�stock�method�assumes�that�proceeds,�including cash�received�from�the�exercise�of�employee�stock�options�and�the�average�unrecognized�compensation�expense�for�unvested�share-based�compensation�awards, would�be�used�to�purchase�the�Company’s�common�stock�at�the�average�market�price�during�the�period. ����The�following�table�summarizes�net�(loss)�income�attributable�to�shareholders�and�reconciles�basic�and�diluted�shares�outstanding�used�in�the�earnings�per�share computations: (In�thousands) Net�(loss)�income�attributable�to�shareholders Weighted�average�common�shares�outstanding�–�Basic Dilutive�impact�of�share-based�compensation�awards Weighted�average�common�shares�outstanding�–�Diluted 1 2020 Year�ended�December�31, 2019 2018 $ (243,638) $ 99,006� $ 168,295� 43,842� —� 43,842� 43,316� 453� 43,769� 43,156� 418� 43,574� 1 �Due�to�the�Company’s�net�loss�position�for�the�year�ended�December�31,�2020,�0.5�million�incremental�shares,�are�excluded�from�the�table�above�as�the�effect�of�including�those�shares�would be�anti-dilutive. �For �the �years �ended �December �31, �2019 �and�2018, �an�immaterial �number �of �outstanding �share-based �compensation�awards�were �excluded �from �the �computation �of �diluted earnings�per�share,�as�the�effect�of�including�these�awards�would�be�anti-dilutive. It �is �the �Company's �current �intention �to �settle �all �conversions �of �the �Convertible �Notes �in �shares �of �the �Company's �common �stock. �Under �the �"if- converted"�method,�1.6�million�shares�of�the�Company's�common�stock�associated�with�the�assumed�conversion�of�these�Convertible�Notes�as�of�the�beginning�of the�period�have�been�excluded�from�diluted�shares�outstanding�for�the�year�ended�December�31,�2020�as�the�effect�of�including�such�shares�would�be�anti-dilutive. Foreign�Currency�Movement ����The�financial�statements�of�the�Company’s�foreign�subsidiaries,�where�the�local�currency�is�the�functional�currency,�are�translated�to�U.S.�dollars�using�year-end spot�exchange�rates�for�assets�and�liabilities,�average�exchange�rates�for�revenue�and�expenses�and�historical�exchange�rates�for�equity�transactions.�The�resulting foreign�currency�translation�adjustment�is�recorded�as�a�component�of�accumulated�other�comprehensive�loss. ����Gains�and�losses�on�foreign�currency�transactions�as�well�as�the�remeasurement�of�the�Company’s�cash,�receivable�and�payable�balances�that�are�denominated�in foreign �currencies, �are �recorded �directly �in �net �foreign �currency �(loss) �gain �in �the �consolidated �statements �of �income. �However, �gains �or �losses �resulting �from intercompany �transactions �where �repayment �is �not �anticipated �for �the �foreseeable �future �are �not �recognized �in �the �consolidated �statements �of �income. �In �these situations,�the�gains�or�losses�are�deferred�and�included�as�a�component�of�accumulated�other�comprehensive�loss.�In�addition,�gains�and�losses�associated�with�the Company’s�foreign�currency�exchange�derivatives�are�recorded�in�net�foreign�currency�(loss)�gain�in�the�consolidated�statements�of�income. Accumulated�Other�Comprehensive�Loss�(“AOCL”) ����For�the�years�ended�December�31,�2020,�2019�and�2018,�AOCL�consisted�entirely�of�unrealized�gains�and�losses�on�foreign�currency�translation�adjustments pertaining�to�the�net�investment�in�foreign�operations. 90 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) 2. Recent�Accounting�Pronouncements ����The�following�table�provides�a�brief�description�of�recent�accounting�pronouncements�that�have�had,�or�could�have,�a�material�effect�on�our�financial�statements: Description Standard Adopted�During�the�Year�Ended�December�31,�2020 ASU�2016–13,�Financial Instruments–Credit�Losses: Measurement�of�Credit Losses�on�Financial Instruments This�standard�amends�the�impairment�model�to utilize�an�expected�loss�methodology�in�place�of the�incurred�loss�methodology�for�financial instruments,�including�trade�receivables�and�off- balance�sheet�credit�exposures.�The�standard requires�entities�to�consider�a�broader�range�of information�to�estimate�expected�credit�losses, including�historical�experience,�current conditions�and�reasonable�and�supportable forecasts�that�impact�the�collectability�of�the reported�amount. Not�Yet�Adopted�as�of�December�31,�2020 ASU�2020–04,�Reference Rate�Reform ASU�2020–06,�Debt�–�Debt with�Conversion�and�Other Options�(Subtopic�470-20) and�Derivatives�and Hedging�–Contracts�in Entity's�Own�Equity (Subtopic�815-40) This�standard�provides�optional�guidance�for�a limited�period�of�time�to�ease�the�potential financial�reporting�burden�in�accounting�for�(or recognizing�the�effects�of)�the�discontinuation�of LIBOR�resulting�from�reference�rate�reform. The�amendments�provide�optional�expedients and�exceptions�for�applying�GAAP�to�contracts and�other�transactions�impacted�by�reference rate�reform.�If�certain�criteria�are�met,�an�entity will�not�be�required�to�remeasure�or�reassess contracts�impacted�by�reference�rate�reform. This�standard�simplifies�the�accounting�for certain�financial�instruments�with�characteristics of�liabilities�and�equity,�including�convertible instruments�and�contracts�in�an�entity's�own equity.�Among�other�changes,�this�standard removes�from�GAAP�the�liability�and�equity separation�model�for�convertible�instruments with�a�cash�conversion�feature.�Instead,�entities will�account�for�a�convertible�debt�instrument wholly�as�debt�unless�(1)�a�convertible�debt instrument�contains�features�that�require bifurcation�as�a�derivative�under�ASC�Topic 815,�Derivatives�and�Hedging,�or�(2)�a convertible�debt�instrument�was�issued�at�a substantial�premium.�The�standard�also�requires the�application�of�the�if-converted�method�to calculate�the�impact�of�convertible�instruments on�diluted�earnings�per�share. Date/Method�of�Adoption Effect�on�financial�statements�or�other�significant�matters The�Company�adopted�ASU 2016–13�effective�January�1, 2020�using�the�modified- retrospective�approach. The�amendments�of�this�new�standard�were�applied�through�a�cumulative- effect�adjustment�to�total�stockholders’�equity�of�$8.8�million,�net�of�a�$2.8 million�income�tax�benefit,�as�of�January�1,�2020.�This�adjustment�was driven�by�the�incorporation�of�economic�forecasts�into�the�Company’s expected�credit�loss�reserve�methodology.�The�consolidated�financial statements�for�the�year�ended�December�31,�2020�are�presented�under�the new�standard.�Comparative�periods�presented�have�not�been�adjusted.�Refer to�Note�1,�Basis�of�Presentation�and�Significant�Accounting�Policies,�for discussion�of�the�Company’s�credit�loss�methodology. Election�is�available�through December�31,�2022. The�Company�is�currently�evaluating�the�implications�of�these�amendments to�its�current�efforts�for�reference�rate�reform�implementation�and�any impact�the�adoption�of�this�ASU�would�have�on�its�financial�condition�and results�of�operations. Effective�for�fiscal�years beginning�after�December�15, 2021�and�may�be�early�adopted for�the�fiscal�year�beginning after�December�15,�2020�using�a modified�retrospective�or�fully retrospective�method�of transition. The�Company�will�early�adopt�this�ASU�effective�January�1,�2021. Adoption�will�eliminate�the�bifurcation�of�the�equity�component�associated with�our�Convertible�Notes,�which�was�originally�recorded�within�equity. Going�forward,�this�equity�component�will�be�included�as�part�of�the carrying�value�of�the�Convertible�Notes.�Additionally,�interest�expense�is expected�to�decline�approximately�$6�million�during�the�year�ended December�31,�2021�as�result�of�the�adoption�of�this�ASU. 91 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) 3. Revenue ����In�accordance�with�Topic�606,�revenue�is�recognized�when,�or�as,�performance�obligations�are�satisfied�as�defined�by�the�terms�of�the�contract,�in�an�amount�that reflects�the�consideration�to�which�the�Company�expects�to�be�entitled�in�exchange�for�goods�or�services�provided. ����The�following�tables�disaggregate�our�consolidated�revenue: (In�thousands) Topic�606�revenues Payment�processing�revenue Account�servicing�revenue Other�revenue Topic�606�revenues Non-Topic�606�revenues Total�revenues (In�thousands) Topic�606�revenues Payment�processing�revenue Account�servicing�revenue Other�revenue Topic�606�revenues Non-Topic�606�revenues Total�revenues (In�thousands) Topic�606�revenues Payment�processing�revenue Account�servicing�revenue Other�revenue Topic�606�revenues Non-Topic�606�revenues Total�revenues Fleet�Solutions Travel�and�Corporate Solutions Health�and�Employee Benefit�Solutions Total Year�Ended�December�31,�2020 $ $ $ $ $ $ $ $ $ $ $ $ 404,843� 17,512� 78,620� 500,975� 417,335� 918,310� Fleet�Solutions 457,244� 17,709� 83,765� 558,718� 479,677� 1,038,395� Fleet�Solutions 464,980� 30,385� 66,379� 561,744� 413,396� 975,140� $ $ $ $ $ $ $ $ $ $ $ $ 229,144� 41,927� 2,559� 273,630� 4,210� 277,840� $ $ $ $ 64,904� 253,706� 35,734� 354,344� 9,375� 363,719� Year�Ended�December�31,�2019 Travel�and�Corporate Solutions Health�and�Employee Benefit�Solutions 303,385� 43,293� 3,340� 350,018� 17,808� 367,826� $ $ $ $ 64,963� 205,524� 28,225� 298,712� 18,758� 317,470� Year�Ended�December�31,�2018 Travel�and�Corporate Solutions Health�and�Employee Benefit�Solutions 203,289� 37,262� 4,906� 245,457� 57,887� 303,344� $ $ $ $ 55,722� 108,172� 25,668� 189,562� 24,593� 214,155� $ $ $ $ $ $ $ $ $ $ $ $ 698,891� 313,145� 116,913� 1,128,949� 430,920� 1,559,869� 825,592� 266,526� 115,330� 1,207,448� 516,243� 1,723,691� 723,991� 175,819� 96,953� 996,763� 495,876� 1,492,639� Total Total ����The�vast�majority�of�the�above�revenue�relates�to�services�transferred�to�the�customer�over�time.�Point-in-time�revenue�recognized�was�immaterial�during�the years�ended�December�31,�2020,�2019,�and�2018. Payment�Processing�Revenue ����Payment�processing�revenue�consists�primarily�of�interchange�income.�Interchange�income�is�a�fee�paid�by�a�merchant�bank�(“merchant”)�to�the�card-issuing bank�(generally�the�Company)�in�exchange�for�the�Company�facilitating�and�processing�transactions�with�cardholders.�Interchange�fees�are�set�by�the�card�network. WEX�processes�transactions�through�both�closed-loop�and�open-loop�networks. • Fleet�Solutions�segment�interchange�income�primarily�relates�to�revenue�earned�on�transactions�processed�through�the�Company’s�proprietary�closed-loop fuel �networks.�In�closed-loop�fuel�network�arrangements,�written�contracts �are�entered �into�between�the�Company�and�merchants,�which�determine�the interchange�fee�charged�on�transactions.�The 92 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) Company�extends�short-term�credit�to�the�fleet�cardholder�and�pays�the�merchant�the�purchase�price�for�the�cardholder’s�transaction,�less�the�interchange fees�the�Company�retains.�The�Company�collects�the�total�purchase�price�from�the�fleet�cardholder.�In�Europe,�interchange�income�is�specifically�derived from�the�difference�between�the�negotiated�price�of�fuel�from�the�supplier�and�the�agreed�upon�price�paid�by�fleet�cardholders. • Interchange�income�in�our�Travel�and�Corporate�Solutions�and�Health�and�Employee�Benefit�Solutions�segments�relates�to�revenue�earned�on�transactions processed �through �open-loop �networks. �In �open-loop �network �arrangements, �there �are �several �intermediaries �involved �between �the �merchant �and �the cardholder�and�written�contracts�between�all�parties�involved�in�the�process�do�not�exist.�Rather,�the�transaction�is�governed�by�the�rates�determined�by�the card �network �at �the �point-of-sale. �This �framework �dictates �the �interchange �rate, �the �risk �of �loss, �dispute �procedures �and �timing �of �payment. �For �these transactions,�there�is�an�implied�contract�between�the�Company�and�the�merchant.�In�our�Travel�and�Corporate�Solutions�segment,�the�Company�remits payment�to�the�card�network�for�the�purchase�price�of�the�cardholder�transaction,�less�the�interchange�fees�the�Company�earns.�The�Company�collects�the total�purchase�price�from�the�cardholder.�In�our�Health�and�Employee�Benefit�Solutions�segment,�funding�of�transactions�and�collections�from�cardholders is�performed�by�third-party�sponsor�banks,�who�remit�a�portion�of�the�interchange�fee�to�us. ����The�Company�has�determined�that�the�merchant�is�the�customer�as�it�relates�to�interchange�income�regardless�of�the�type�of�network�through�which�transactions are�processed.�The�Company’s�primary�performance�obligation�to�merchants�is�a�stand-ready�commitment�to�provide�payment�and�transaction�processing�services as�the�merchant�requires,�which�is�satisfied�over�time�in�daily�increments.�Since�the�timing�and�quantity�of�transactions�to�be�processed�by�us�is�not�determinable, the�total�consideration�is�determined�to�be�variable�consideration.�The�variable�consideration�for�our�payment�and�transaction�processing�service�is�usage-based�and therefore�specifically�relates�to�our�efforts�to�satisfy�our�obligation.�The�variability�is�satisfied�each�day�the�service�is�provided�to�the�customer.�We�directly�ascribe variable�fees�to�the�distinct�day�of�service�to�which�it�relates,�and�we�consider�the�services�performed�each�day�in�order�to�ascribe�the�appropriate�amount�of�total fees�to�that�day.�Therefore,�we�measure�interchange�income�on�a�daily�basis�based�on�the�services�that�are�performed�on�that�day. ��� �In�determining �the�amount �of�consideration �received�related �to �these�services, �the�Company �applied�the �principal-agent�guidance �in�Topic �606�and �assessed whether �it �controls �services �performed �by �other �intermediaries. �Based �on �this �assessment, �the �Company �determined �that �WEX �does �not �control �the �services performed �by �merchant�acquirers, �card�networks �and�sponsor �banks�as �each�of �these�parties �is�the �primary �obligor�for �their�portion �of�payment �and�transaction processing �services �performed. �Therefore, �interchange�income�is�recognized�net�of�any�fees�owed�to�these�intermediaries.�Conversely,�the�Company�determined that�services�performed�by�third-party�payment�processors�are�controlled�by�the�Company�as�it�is�responsible�for�directing�how�the�third-party�payment�processor authorizes�and�processes�transactions.�Therefore,�such�fees�paid�to�third-party�payment�processors�are�recorded�as�service�fees�within�cost�of�services. ����Additionally,�the�Company�enters�into�contracts�with�certain�large�customers�or�strategic�cardholders�that�provide�for�fee�rebates�tied�to�performance�milestones. When �such �fee �rebates �constitute �consideration �payable �to �a �customer �or �other �party �that �purchases �services �from �the �customer, �they �are �considered �variable consideration�and�are�recorded�as�a�reduction�in�payment�processing�revenue�in�the�same�period�that�related�interchange�income�is�recognized.�For�the�years�ended December �31, �2020, �2019, �and �2018, �such �variable �consideration �totaled �$537.7 �million, �$891.0 �million, �and �$858.9 �million �respectively. �Fee �rebates �made �to certain�other�partners�were�determined�to�be�costs�to�obtain�a�contract�and�are�recorded�as�sales�and�marketing�expenses. Account�Servicing�Revenue � �� �In �our �Fleet �Solutions �segment, �account �servicing �revenue �is �primarily �comprised �of �monthly �fees �charged �to �cardholders �based �on �the �number �of �vehicles serviced. �These �fees �are �primarily �in �return �for �providing �monthly �vehicle �data �reports �and �are �recognized �on �a �monthly �basis �as �the �service �is �provided. �The Company �also �recognizes �account �servicing �revenue �related �to �reporting �services �on �telematics �hardware �placements �and �permit �sales �to �our �over-the-road customers,�both�of�which�are�within�the�scope�of�Topic�606.�Additionally,�account�servicing�revenue�includes�other�fees�recognized�as�revenue�when�assessed�to the�cardholder�as�part�of�the�lending�relationship,�which�are�outside�the�scope�of�Topic�606. ����In�our�Travel�and�Corporate�Solutions�segment,�account�servicing�reflects�licensing�fees�earned�for�use�of�our�accounts�receivable�and�accounts�payable�SaaS platforms,�all�of�which�is�within�the�scope�of�Topic�606. ����In�our�Health�and�Employee�Benefit�Solutions�segment,�we�recognize�account�servicing�fees�for�the�per-participant�per-month�fee�charged�per�consumer�on�our SaaS�healthcare�technology�platform.�Customers�including�health�plans,�third-party 93 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) administrators, �financial�institutions�and�payroll�companies�typically�enter�into�three�to�five-year�contracts,�which�contain�significant�termination�penalties. �This revenue�is�within�the�scope�of�Topic�606. � � � �Our �Travel �and �Corporate �Solutions �and �Health �and �Employee �Benefit �Solutions �segments �provide �SaaS �services �and �support, �which �are �stand-ready commitments�and�are�satisfied�over�time�in�a�series�of�daily�increments.�Revenue�is�recognized�based�on�an�output�method�using�days�elapsed�to�measure�progress as�the�Company�transfers�control�evenly�over�each�monthly�subscription�period. Finance�Fee�Revenue ����The�Company�earns�revenue�on�overdue�accounts,�which�is�recognized�when�the�fees�are�assessed.�The�finance�fee�is�calculated�using�the�greater�of�a�minimum charge�or�a�stated�late�fee�rate�multiplied�by�the�outstanding�balance�that�is�subject�to�a�late�fee�charge.�On�occasion,�these�fees�are�waived�to�maintain�customer goodwill. �The �established �reserve �for �such �waived �amounts �is �estimated �and �offset �against �the �late �fee �revenue �recognized. �Finance �fee �revenue �also �includes amounts�earned�by�the�Company’s�factoring�business,�which�purchases�accounts�receivable�from�third-parties�at�a�discount.�This�revenue�is�outside�the�scope�of Topic�606. Other�Revenue ����In�our�Fleet�Solutions�segment,�other�revenue�primarily�consists�of�transaction�processing�revenue,�other�fees�charged�to�the�merchants,�professional�services, including�software�development�projects�and�other�services�sold�subsequent�to�the�core�offerings,�and�the�sales�of�telematics�hardware,�all�of�which�are�within�the scope�of�Topic�606.�Revenue�is�recognized�when�control�of�the�services�or�hardware�is�transferred�to�our�customers,�in�an�amount�that�reflects�the�consideration that�we�expect�to�receive�in�exchange�for�those�services.�We�also�recognize�fees�charged�to�cardholders�in�other�revenue,�which�are�outside�the�scope�of�Topic�606. ����In�our�Travel�and�Corporate�Solutions�segment,�the�majority�of�other�revenue�reflects�international�settlement�fees,�which�is�outside�the�scope�of�Topic�606�and recognized�as�the�service�is�performed.�In�our�Health�and�Employee�Benefit�Solutions�segment,�other�revenue�primarily�consists�of�professional�services,�which�is within�the�Topic�606,�and�is�recognized�as�the�services�are�performed,�in�the�amount�we�expect�to�receive�from�these�services.�Prior�to�the�sale�of�the�WEX�Latin America�business,�other�revenue�in�our�Health�and�Employee�Benefit�Solutions�segment�also�included�the�gain�on�sale�of�WEX�Latin�America�receivables,�which was�outside�the�scope�of�Topic�606�and�is�recognized�on�the�sale�date�of�the�receivables. Contract�Balances The�majority�of�the�Company’s�receivables,�which�are�excluded�from�the�table�below,�are�either�due�from�cardholders�who�have�not�been�deemed�our customer �as �it �relates �to �interchange �income, �or �from �revenues �earned �outside �of �the �scope �of �Topic �606. �The �Company’s �contract �assets �consist �of �upfront payments �made �to �customers �under �long-term �contracts �and �are �recorded �upon �payment �or �when �due. �The �resulting �asset �is �amortized �against �revenue �as �the Company�performs�its�obligations�under�these�arrangements.�The�Company’s�contract�liabilities�consist�of�customer�payments�received�before�the�Company�has satisfied�the�associated�performance�obligations�and�upfront�payments�due�to�the�customer. ����The�following�table�provides�information�about�these�contract�balances: (In�thousands) Contract�balance Receivables Contract�assets Contract�assets Contract�liabilities Contract�liabilities Refund�liabilities Location�on�the�consolidated�balance�sheets December�31,�2020 December�31,�2019 Accounts�receivable,�net Prepaid�expenses�and�other�current�assets Other�assets Other�current�liabilities Other�liabilities Accrued�expenses $ $ $ $ $ $ 43,541� 5,495� 19,927� 8,530� 24,614� 5,265� $ $ $ $ $ $ 43,092� 4,593� 20,496� 5,171� —� —� ����Impairment�losses�recognized�on�our�contract�assets�were�immaterial�for�the�years�ended�December�31,�2020,�2019�and�2018.�In�the�years�ended�December�31, 2020�and�2019,�we�recognized�revenue�of�$5.2�million�and�$7.2�million�included�in�the�opening�contract�liabilities�balances,�respectively. 94 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) Remaining�Performance�Obligations The�Company’s�unsatisfied,�or�partially�unsatisfied�performance�obligations�as�of�December�31,�2020�represent�the�remaining�minimum�monthly�fees�on a�portion�of�contracts�across�the�lines�of�business�and�contractually�obligated�professional�services�yet�to�be�provided�by�the�Company.�The�remaining�performance obligations�also�includes�payments�to�the�Company�for�providing�payment�processing�services�and�facilitating�transactions�under�certain�long-term�noncancellable contracts �for �which �the �Company �has �not �satisfied �its �performance �obligations. �The �total �remaining �performance �obligations �below �is �not �indicative �of �the Company’s�future�revenue,�as�it�relates�to�an�insignificant�portion�of�the�Company’s�operations. The�following�table�includes�revenue�expected�to�be�recognized�related�to�remaining�performance�obligations�at�the�end�of�the�reporting�period. (In�thousands) Minimum�monthly�fees 1 Professional�services 2 Other 3 Total�remaining�performance�obligations 2021 2022 2023 2024 2025 Thereafter Total $ $ 46,657� $ 31,879� $ 17,766� $ 7,340� $ 2,404� $ 36� $ 106,082� 3,679� 2,771� 53,107� $ 60� 3,302� 35,241� $ —� 3,349� 21,115� $ —� 3,770� 11,110� $ —� 4,321� 6,725� $ —� 9,301� 9,337� $ 3,739� 26,814� 136,635� 1� The�transaction�price�allocated�to�the�remaining�performance�obligations�represents�the�minimum�monthly�fees�on�certain�service�contracts,�which�contain�substantive�termination�penalties�that require�the�counterparty�to�pay�the�Company�for�the�aggregate�remaining�minimum�monthly�fees�upon�an�early�termination�for�convenience. 2 �Includes�software�development�projects�and�other�services�sold�subsequent�to�the�core�offerings,�to�which�the�customer�is�contractually�obligated. 3� Represents�deferred�revenue�associated�with�remaining�payment�processing�service�obligations. 4. Acquisitions ����The�Company�incurred�and�expensed�costs�directly�related�to�completed�acquisitions�of�$97.9�million,�$13.0�million�and�$2.5�million�in�2020,�2019�and�2018, respectively. �Acquisition �costs �incurred�and �expensed �during�2020 �include�financing �fees, �investment �banker�success �fees �and�other �legal �and�professional �fees incurred�in�conjunction�with�the�2020�acquisition.�Costs�incurred�and�expensed�related�to�acquisitions�in�process�were�immaterial �as�of�December�31,�2020�and $4.8�million �as�of�December �31,�2019. �Acquisition-related �costs �for�all �years�presented �are�included�within�general �and�administrative �expenses,�except �for�the financing�fees�incurred�in�2020,�that�are�presented�in�financing�interest�expense�in�the�consolidated�statements�of�operations. Asset�Acquisition ����During�October�2018,�the�Company�entered�into�a�definitive�asset�purchase�agreement �to�acquire�Chevron’s�existing�trade�accounts�receivable�and�customer portfolio�from�a�third-party�for�$223.4�million.�During�2018,�the�consideration�paid�consisted�of�$162.8�million�to�acquire�the�customer�portfolio�and�a�deposit�of $38.9�million�was�paid�into�escrow�for �a�portion�of�the�outstanding�accounts �receivable �at�the�date�of�the �agreement. �The�actual�amount�of�accounts �receivable purchased �from�the�third �party�during�the�second �quarter�of�2019�was�less �than�the�amount�deposited �in�escrow,�resulting �in�the�Company�receiving �the�excess funds�of�approximately�$27�million�from�the�escrow�agent�in�January�2020.�During�the�second�quarter�of�2019,�the�Company�determined�that�it�obtained�control�of the�customer�portfolio�and�accounted�for�this�transaction�under�the�asset�acquisition�method�of�accounting.�At�that�time,�we�allocated�approximately�$168.0�million of�consideration�paid�to�a�customer�relationship�intangible�asset�and�established�the�accounts�receivable�at�fair�value.�This�customer�relationship�intangible�asset�is being �amortized �over �the �13 �year �term �of �the �Chevron �agreement, �which �has �been �determined �to �be �the �period �of �anticipated �benefit, �which �began �when �the Company�took�possession�of�the�customer�portfolio�during�the�second�quarter�of�2019.�Transaction�costs�related�to�the�acquisition�were�insignificant�and�expensed as�incurred. Business�Acquisitions 2020�Acquisition/Legal�Settlement On�January�24,�2020,�the�Company�entered�into�a�purchase�agreement�(the�"Original�Purchase�Agreement")�to�purchase�eNett�and�Optal�for�an�aggregate purchase �price �comprised �of �$1.3 �billion �in �cash �and �2.0 �million �shares �of �the �Company’s �common �stock �and �subject �to �certain �working �capital �and �other adjustments �as �described �in �the �purchase �agreement. �The �parties’ �obligations �to �consummate �the �acquisition �were �subject �to �customary �closing �conditions, including�the�absence�of�a 95 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) Material�Adverse�Effect�(as�defined�in�the�Original�Purchase�Agreement�between�WEX,�eNett�and�Optal,�among�others).�The�Company�subsequently�concluded that�the�COVID-19�pandemic�and�conditions�arising�in�connection�with�it�had�a�Material�Adverse�Effect�on�the�businesses,�which�was�disproportionate�to�the�effect on�others�in�the�relevant�industry.�Because�of�this�Material�Adverse�Effect,�WEX�formally�advised�eNett�and�Optal�on�May�4,�2020�that�it�was�not�required�to�close the�transaction�pursuant�to�the�terms�of�the�purchase�agreement.�On�May�11,�2020,�the�shareholders�of�eNett�and�Optal�each�initiated�separate�legal�proceedings�in the�High�Court�of�Justice�of�England�and�Wales�in�the�United�Kingdom�against�the�Company�seeking�a�declaration�that�no�Material�Adverse�Effect�had�occurred and �an�order�for�specific�performance �of�WEX's�obligations�under�the�Original�Purchase �Agreement.�From�September�21,�2020 �through�September�29,�2020,�a London �court �held �a �trial �of �certain �preliminary �issues, �and �handed �down �its �judgement �on �October �12, �2020. �The �Company �and �the �claimants �each �sought permission�to�appeal�certain�portions�of�the�Court’s�judgment. On�December�15,�2020,�the�Company�entered�into�a�Deed�of�Settlement�(the�“Settlement�Deed”)�between�the�Company,�eNett,�Optal�and�the�other�parties thereto,�providing�for,�among�other�things,�(i)�the�dismissal�with�prejudice�of�the�legal�proceedings�and�appeals�described�above,�(ii)�the�amendment�of�the�Original Purchase�Agreement�(as�amended�by�the�Settlement�Deed,�the�“Amended�Purchase�Agreement”)�and�(iii)�the�release�of�all�claims�capable�of�arising�out�of,�or�in any�way�connected�with�or�relating�to�the�COVID-19�pandemic,�but�excluding�any�of�the�claims�arising�under�the�Amended�Purchase�Agreement. The�closing�of�the�acquisition�occurred�concurrent�with�the�execution�of�the�Settlement�Deed�on�December�15,�2020.�The�Amended�Purchase�Agreement provided �for,�among�other�things,�a�reduction�of�the�aggregate�purchase�price�for�the�acquisition �to�$577.5�million�(subject�to�certain�working�capital�and�other adjustments �as �described �in �the �Amended �Purchase �Agreement, �which �resulted �in �a �total �cash �payment �of �$615.4 �million). �The �Company �purchased �these businesses�to�complement�its�existing�Travel�and�Corporate�Solutions�segment�and�expand�its�international�footprint. The �Company �determined �the �aggregate �purchase �price �represents �consideration �paid �for �the �businesses �acquired �and �for �the �settlement �of �legal proceedings�described�above.�The�preliminary�fair�value�of�the�businesses�acquired�was�estimated�to�be�$415.0�million�using�a�discounted�cash�flow�analysis�and guideline�transaction�method.�Since�the�Company�was�not�able�to�reliably�estimate�the�fair�value�of�the�legal�settlement,�the�residual�value�of�$162.5�million�has been �allocated�to�the�legal �proceedings �settlement,�which�has�been �included�in�legal�settlement �expense�in�the�consolidated�statement �of�operations�for�the�year ended�December�31,�2020. This �acquisition �has �been �accounted �for �using �the �acquisition �method �of �accounting �which �requires �the �assets �acquired �and �liabilities �assumed �be recognized �at �their �respective �fair �values �on �the �acquisition �date. �The �table �below �summarizes �the �preliminary �estimated �fair �values �of �the �assets �acquired �and liabilities�assumed�on�the�acquisition�date.�These�preliminary�estimates�will�be�revised�during�the�measurement�period�as�third-party�valuations�on�the�intangible assets�are�received�and�finalized,�further�information�becomes�available�and�additional�analyses�are�performed,�and�these�adjustments�could�have�a�material�impact on�the�preliminary�purchase�price�allocation. 96 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) The�following�is�a�summary�of�the�preliminary�allocation�of�the�purchase�price�to�the�assets�and�liabilities�acquired,�based�on�the�fair�value�at�the�date�of acquisition: (In�thousands) Cash�consideration�transferred,�net�of�$232,155�in�cash�and�restricted�cash�acquired Less:�legal�settlement (a)(d) (b)(d) Total�consideration,�net Less: Accounts�receivable Prepaid�and�other�current�assets Property�and�equipment Customer�relationships Developed�technologies (c)(d) License�agreements Deferred�income�tax�asset Other�assets Accounts�payable Accrued�expenses Restricted�cash�payable Other�current�liabilities Deferred�income�tax�liability Other�liabilities Recorded�goodwill (a) �Weighted�average�life�-�5�years. (b) �Weighted�average�life�-�2.5�years. (c)� Weighted�average�life�-�6.5�years. $ $ $ 383,204� (162,500) 220,704� 14,449� 11,660� 876� 79,923� 63,125� 4,208� 9,424� 4,945� (16,244) (21,898) (186,956) (11,376) (20,152) (3,164) 291,884� (d) �The�weighted�average�life�of�the�$147.3�million�of�amortizable�intangible�assets�acquired�in�this�business�combination�is�4.0�years. Goodwill�is�calculated�as�the�excess�of�the�consideration�transferred�over�the�net�assets�recognized�and�represents�the�anticipated�synergies�of�acquiring the�businesses.�The�majority�of�the�goodwill �recognized �as�a�result�of�the�acquisition �is�not�expected�to�be�deductible�for �tax�purposes.�Given�the�timing�of�the acquisition, �the �Company �utilized �a �benchmarking �approach �based �on �the �Company's �prior �acquisitions �and �similar �industry �acquisitions �to �determine �the preliminary�fair�values�for�intangible�assets.�See�Note�9,�Goodwill�and�Other�Intangible�Assets,�for�additional�information. Since�the�acquisition�date�and�through�December�31,�2020,�eNett�and�Optal�have�contributed�immaterial�total�revenues�and�loss�before�income�taxes. The �pro �forma �information �below �gives �effect �to �the �acquisition �as �if �it �had �been �completed �on �January �1, �2019. �These �pro �forma �results �have �been calculated �after �applying �the �Company’s �accounting �policies, �adjustments �to �reflect �amortization �associated �with �intangibles �acquired �and �related �income �tax results.�Additionally,�nonrecurring�pro-forma�adjustments�of�$162.5�million�in�legal�settlement�costs�and�transaction-related�costs�incurred�in�the�fourth�quarter�of 2020�have�been�reflected�in�the�proforma�results�for�the�year�ended�December�31,�2019.�The�pro�forma�financial�information�is�presented�for�comparative�purposes only,�based�on�certain�estimates�and�assumptions,�which�the�Company�believes�to�be�reasonable�but�not�necessarily�indicative�of�future�results�of�operations�or�the results�that�would�have�been�reported�if�the�acquisitions�had�been�completed�on�January�1,�2019. ����The�following�represents�unaudited�pro�forma�operational�results: �(In�thousands,�except�per�share�data) Total�revenues Net�loss�attributable�to�shareholders Net�loss�attributable�to�shareholders�per�share: Basic Diluted Year�Ended�December�31, 2020 2019 1,610,216� (63,595) $ $ 1,876,494� (71,788) (1.45) $ (1.45) $ (1.66) (1.66) $ $ $ $ 97 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) 2019�Business�Acquisitions As �of�December �31, �2020,�the �purchase�accounting �is �final�for �our�2019 �business�acquisitions. �No �adjustments�to �the�purchase �accounting �were�made during�the�year�ended�December�31,�2020. Discovery�Benefits ����On�March�5,�2019,�the�Company�acquired�Discovery�Benefits,�an�employee�benefits�administrator,�for�a�total�purchase�price�of�$526.1�million,�of�which�$50.0 million�was�paid�during�the�fourth�quarter�of�2019.�The�acquisition�was�primarily�funded�with�cash�and�through�borrowings�under�the�2016�Credit�Agreement.�The seller�of�Discovery�Benefits�obtained�a�4.9�percent�equity�interest�in�the�newly�formed�parent�company�of�WEX�Health�and�Discovery�Benefits,�which�constitutes the �U.S. �Health �business. �The �fair �value �of �the �equity �interest �was �determined �to �be �$100.0 �million �on �the �acquisition �date. �See �Note �20, �Redeemable �Non- Controlling�Interest,�for�further�information. � � � � �The �purpose �of �this �acquisition �was �to �obtain �the �comprehensive �suite �of �products �and �services �for �our �partners �and �customers �and �to �open �go-to-market channels �to�include�consulting�firms �and�brokers�in�our�Health�and �Employee�Benefit�Solutions�segment.�This�acquisition�has�been�accounted�for �as�a�business combination,�resulting�in�the�recording�of�goodwill.�The�majority�of�the�associated�goodwill�is�deductible�for�tax�purposes. ����The�following�is�a�summary�of�the�final�allocation�of�the�purchase�price�to�the�assets�and�liabilities�acquired,�based�on�the�fair�value�at�the�date�of�acquisition: (In�thousands) Cash�consideration,�net�of�$125,865�in�cash�and�restricted�cash�acquired Fair�value�of�redeemable�non-controlling�interest Total�consideration,�net�of�cash�and�restricted�cash�acquired Less: Accounts�receivable Property�and�equipment Customer�relationships Developed�technologies Trademarks�and�trade�names Other�assets Accounts�payable Accrued�expenses Restricted�cash�payable Deferred�income�taxes Other�liabilities (b)(d) (c)(d) (a)(d) Recorded�goodwill (a) �Weighted�average�life�-�7.3�years. (b) �Weighted�average�life�-�5.4�years. (c)� Weighted�average�life�-�7.3�years. $ $ $ 300,191� 100,000� 400,191� 10,722� 4,904� 213,600� 38,900� 13,800� 13,601� (3,071) (7,563) (125,346) (21,941) (9,814) 272,399� (d) �The�weighted�average�life�of�the�$266.3�million�of�amortizable�intangible�assets�acquired�in�this�business�combination�is�7.0�years. ����From�the�acquisition�date�to�December�31,�2019,�Discovery�Benefits�contributed�$94.7�million�in�total�revenues�and�income�before�income�taxes�of�$0.3�million. 98 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) Noventis ����On�January�24,�2019,�the�Company�acquired�Noventis,�a�long-time�customer�and�electronic�payments�network�focused�on�optimizing�payment�delivery�for�bills and �invoices �to �commercial �entities, �for �$338.7 �million, �which �was �primarily �funded �with �cash �and �through �borrowings �under �the �2016 �Credit �Agreement. Excluded�from�the�consideration�is�$5.5�million�paid�to�certain�Noventis�shareholders�who�held�unvested�option�awards�at�the�acquisition�date.�The�modification�of these�awards�to�accelerate�the�vesting�resulted�in�the�Company�recording�this�expense�as�general�and�administrative�expense�on�our�consolidated�income�statement. The�Company�purchased�Noventis�to�expand�our�reach�as�a�corporate�payments�supplier�and�provide�more�channels�to�billing�aggregators�and�financial�institutions in�our�Travel�and�Corporate�Solutions�segment.�This�acquisition�was�accounted�for�as�a�business�combination,�resulting�in�the�recording�of�goodwill.�The�goodwill associated�with�this�acquisition�is�not�deductible�for�tax�purposes. ����The�following�is�a�summary�of�the�final�allocation�of�the�purchase�price�to�the�assets�and�liabilities�acquired,�based�on�the�fair�value�at�the�date�of�acquisition: (In�thousands) Total�consideration,�net�of�$44,947�in�cash�acquired Less: Accounts�receivable Property�and�equipment Network�relationships Developed�technologies Other�assets Accounts�payable Deferred�income�taxes Other�liabilities (a)�(c) (b)�(c) Recorded�goodwill (a) �Weighted�average�life�-�8.3�years. (b) �Weighted�average�life�-�2.9�years. $ $ 293,767� 22,134� 549� 100,900� 15,000� 2,379� (33,521) (21,194) (2,367) 209,887� (c) �The�weighted�average�life�of�the�$115.9�million�of�amortizable�intangible�assets�acquired�in�this�business�combination�is�7.6�years. ����From�the�acquisition�date�to�December�31,�2019,�Noventis�contributed�$43.8�million�in�total�revenues�and�income�before�income�taxes�of�$8.2�million. Pavestone�Capital,�LLC ����On�February�14,�2019,�the�Company�acquired�Pavestone�Capital,�a�recourse�factoring�company�that�provides�working�capital�to�businesses,�for�a�purchase�price of�$28.0�million,�net�of�cash�acquired.�This�acquisition,�which�was�funded�with�cash,�has�been�accounted�for�as�a�business�combination.�The�Company�purchased Pavestone �Capital �to �complement �its �existing �factoring �business. �As �a �result, �the �purchase �price �is �primarily �allocated �to �goodwill, �accounts �receivable �and customer�relationships�in�amounts�of�$9.5�million,�$14.9�million�and�$3.9�million,�respectively.�The�goodwill�associated�with�this�acquisition�is�deductible�for�tax purposes.�The�customer�relationships�intangible�asset�has�a�weighted-average�amortization�period�of�6.5�years. � � � �From �the �acquisition �date�to �December �31, �2019, �Pavestone �Capital �revenues �and �income �before �income �taxes, �which �are �recorded �in �our �Fleet �Solutions segment, �were �not �material �to �Company �operations. �No �pro �forma �or �current �information �has �been �included �in �these �financial �statements �as �the �operations �of Pavestone�Capital�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. Go�Fuel�Card ����On�July�1,�2019,�the�Company�acquired�Go�Fuel�Card,�a�European�fuel�card�business,�for�a�total�purchase�price�of�€235.0�million�(equivalent�of�$266.0�million on�date�of�purchase).�This�acquisition,�which�was�funded�with�cash,�was�accounted�for�as�a�business�combination.�The�purpose�of�the�acquisition�was�to�strengthen our�position�in�the�European�market,�grow�our�existing�customer�base�and�reduce�our�sensitivity�to�retail�fuel�prices,�resulting�in�the�recording�of�goodwill.�The goodwill�associated�with�the�acquisition�of�Go�Fuel�Card�is�deductible�for�tax�purposes. 99 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) ����The�following�is�a�summary�of�the�final�allocation�of�the�purchase�price�to�the�assets�and�liabilities�acquired,�based�on�the�fair�value�at�the�date�of�acquisition: (In�thousands) Total�consideration,�net�of�$5,589�in�cash�acquired (a)�(d) (b)(d) Less: Network�relationships Customer�relationships Brand�name Deposits Accrued�expenses (c)�(d) Recorded�goodwill (a) �Weighted�average�life�-�10.1�years. (b)� Weighted�average�life�-�5.0�years. (c) �Weighted�average�life�-�1.0�year. $ $ 260,455� 112,893� 33,963� 442� (5,169) (420) 118,746� (d) �The�weighted�average�life�of�the�$147.3�million�of�amortizable�intangible�assets�acquired�in�this�business�combination�is�8.9�years. ����From�the�acquisition�date�to�December�31,�2019,�Go�Fuel�Card�contributed�$10.5�million�in�total�revenues�and�loss�before�income�taxes�of�$9.1�million.�No�pro forma�information�has�been�included�in�these�financial�statements�as�the�operations�of�Go�Fuel�Card�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. During�the�Company's�annual�goodwill�assessment�completed�as�of�October�1,�2020,�management�determined�that�the�carrying�value�of�this�reporting�unit exceeded�its�fair�value�and�the�Company�recorded�a�non-cash�goodwill�impairment�charge�of�$53.4�million,�reducing�the�Go�Fuel�Card�goodwill�to�$65.8�million. See�Note�9,�Goodwill�and�Other�Intangible�Assets,�for�further�information. Pro�Forma�Supplemental�Information�(Discovery�Benefits�and�Noventis) ����The�pro�forma�information�below�gives�effect�to�the�Discovery�Benefits�and�Noventis�acquisitions�as�if�they�had�been�completed�on�January�1,�2018.�These�pro forma�results�have�been�calculated�after�applying�the�Company’s�accounting�policies,�adjustments�to�reflect�amortization�associated�with�intangibles�acquired�and interest�expense�associated�with�the�incremental�borrowings�under�the�2016�Credit�Agreement�used�to�fund�the�acquisitions�and�related�income�tax�results.�The�pro forma�financial�information�is�presented�for�comparative�purposes�only,�based�on�certain�estimates�and�assumptions,�which�the�Company�believes�to�be�reasonable but�not�necessarily�indicative�of�future�results�of�operations�or�the�results�that�would�have�been�reported�if�the�acquisitions�had�been�completed�on�January�1,�2018. ����The�following�represents�unaudited�pro�forma�operational�results: �(In�thousands,�except�per�share�data) Total�revenues Net�income�attributable�to�shareholders Net�income�attributable�to�shareholders�per�share: Basic Diluted 5. Sale�of�Subsidiary Year�Ended�December�31, 2019 2018 $ $ $ $ 1,742,797� 113,851� 2.63� 2.60� $ $ $ $ 1,604,165� 134,564� 3.12� 3.09� ����On�September�30,�2020,�the�Company�sold�its�wholly-owned�subsidiary�UNIK�S.A,�(the�"WEX�Latin�America"�business).�The�operations�of�UNIK�S.A.,�were included�in�the�Health�and�Employee�Benefit�Solutions�and�Travel�and�Corporate�Solutions�segments�through�the�date�of�sale.�The�Company�does�not�view�this sale �of �subsidiary �as �a �strategic �shift �in �its �operations �and �therefore �it �did �not �meet �the �criteria �of �discontinued �operations. �Under �the �conditions �of �the �sale agreement,�the�Company�was�required�to�make�a�payment�to�the�buyer,�which�has�been�reflected�as�fair�value�of�consideration�transferred�to 100 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) the�buyer�in�the�table�below.�As�part�of�the�divestiture,�the�Company�entered�into�a�transition�services�agreement�with�the�buyer�of�up�to�six�months�post-closing related �to �various �operational �and �support �services. �The �Company �believes �the �transition �services �agreement �is �of �nominal �value. �The �Company �wrote-off �the associated�assets�and�liabilities�of�this�entity�as�of�the�date�of�sale�and�recorded�a�pre-tax�loss�on�sale�of�subsidiary�of�$46.4�million,�which�has�been�reflected�in�the consolidated�statement�of�operations�for�the�year�ended�December�31,�2020.�The�pre-tax�loss�related�to�the�sale�of�this�subsidiary�is�not�deductible�for�income�tax purposes. The�following�summarizes�the�loss�on�sale�of�subsidiary: (In�thousands) Fair�value�of�consideration�transferred�to�the�buyer Plus:�expenses�associated�with�the�sale Plus:�UNIK.S.A.�net�assets�and�liabilities,�including�$12,249�of�cash�and�cash�equivalents Loss�on�sale�of�subsidiary 6. Accounts�Receivable $ $ 7,415� 2,806� 36,141� 46,362� Accounts�receivable�consists�of�amounts�billed�to�and�due�from�customers�across�a�wide�range�of�industries�and�other�third�parties.�The�Company�often extends�short-term�credit�to�cardholders�and�pays�the�merchant�for�the�purchase�price,�less�the�fees�it�retains�and�records�as�revenue.�The�Company�subsequently collects�the�total�purchase�price�from�the�cardholder.�In�general,�the�Company’s�trade�receivables�provide�for�payment�terms�of�30�days�or�less.�Receivables�not paid�in�full�by�payment�due�dates�as�stated�within�the�terms�of�the�agreement�are�generally�considered�past�due�and�subject�to�late�fees�and�interest�based�upon�the outstanding�receivables�balance.�The�Company�discontinues�late�fee�and�interest�income�accruals�on�outstanding�receivables�once�customers�are�90�and�120�days past�the�invoice�due�date,�respectively.�Payments�received�subsequent�to�discontinuing�late�fee�and�interest�income�accruals�are�first�applied�to�outstanding�late�fees and�interest,�and�the�Company�resumes�accruing�interest�and�late�fee�income�as�earned�on�future�receivables�balances. ����The�Company�extends�revolving�credit�to�certain�small�fleets.�These�accounts�are�also�subject�to�late�fees�and�balances�that�are�not�paid�in�full�are�subject�to interest�charges�based�on�the�revolving�balance.�The�Company�had�approximately�$60.2�million�and�$62.4�million�in�receivables�with�revolving�credit�balances�as of�December�31,�2020�and�2019,�respectively.���� Allowance�for�Accounts�Receivable Receivables �are�generally �written�off�when�they �are�180�days �past�due�or�upon �declaration �of�bankruptcy �of�the�customer,�subject �to�local �regulatory restrictions.�The�allowance�for�accounts�receivable�consists�of�reserves�for�both�credit�and�fraud�losses.�The�reserve�for�credit�losses�is�primarily�calculated�using historical�loss-rates�applied�at�the�portfolio�level�and�specific�customer�balance�collectability�based�on�a�review�of�past�due�accounts�receivable�balances,�changes in�payment�patterns,�and�other�customer-specific�available�information.�Management�further�takes�into�account�qualitative�factors,�such�as�leading�economic�and market�indicator�trends,�to�the�extent�they�deviate�from�historical�loss-rate�trends�when�determining�the�need�for�additional�qualitative�reserves.�The�reserve�for fraud �losses �is �determined �by �monitoring �pending �fraud �cases, �customer-identified �fraudulent �activity �and �unconfirmed �suspicious �activity �in �order �to �make judgments�as�to�probable�fraud�losses.����� Accounts�receivable�are�evaluated�for�impairment�on�a�pooling�basis�based�on�similar�risk�characteristics�including�industry�of�the�borrower,�historical�or expected �credit�loss�patterns,�risk�ratings�or�classification, �and�geographic�location.�See�Note�1,�Basis�of�Presentation �and�Summary�of�Significant�Accounting Policies,�for�more�information. 101 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) The�following�tables�present�changes�in�the�accounts�receivable�allowances�by�portfolio�segment: � (In�thousands) Balance,�prior�to�Topic�326�adoption Impact�of�Topic�326�adoption 1 2 Balance,�beginning�of�year 1 Provision�for�credit�losses Other Charge-offs Recoveries�of�amounts�previously�charged-off Currency�translation Balance,�end�of�year 3 Year�ended�December�31, 2020 Fleet�Solutions Travel�and Corporate Solutions Health�and Employee�Benefit Solutions Total 2019 Total 2018 Total $ $ $ 40,620� 9,390� 50,010� 56,620� 19,019� (88,091) 10,421� 1,288� 49,267� $ $ $ 3,578� 2,187� 5,765� 21,610� —� (18,787) 175� 847� 9,610� $ $ $ 8,076� —� 8,076� 213� —� (5,419) 17� (2,617) 270� $ $ $ 52,274� 11,577� 63,851� 78,443� 19,019� (112,297) 10,613� (482) 59,147� $ $ $ 46,948� —� 46,948� 65,664� 22,746� (92,638) 9,781� (227) 52,274� $ $ $ 33,387� —� 33,387� 66,482� 19,067� (78,323) 6,854� (519) 46,948� 1 �The�provision�is�comprised�of�estimated�credit�losses�based�on�the�Company’s�loss-rate�experience�and�effective�January�1,�2020,�also�includes�adjustments�required�for�forecasted�credit�loss information.�The�provision�for�credit�losses�for�the�year�ended�December�31,�2020,�includes�estimates�of�expected�credit�losses�over�the�contractual�life�of�receivables�as�the�markets�in�which the�Company�operates�are�experiencing�a�decline,�primarily�due�to�the�impact�of�COVID-19.�The�provision�for�credit�losses�reported�within�this�table�also�includes�the�provision�for�fraud�losses. 2 �Consists�primarily�of�charges�to�other�accounts.�The�Company�earns�revenue�by�assessing�monthly�finance�fees�on�accounts�with�overdue�balances.�These�fees�are�recognized�as�revenue�at�the time�the�fees�are�assessed.�The�finance�fee�is�calculated�using�the�greater�of�a�minimum�charge�or�a�stated�late�fee�rate�multiplied�by�the�outstanding�balance�that�is�subject�to�a�late�fee�charge. On�occasion,�these�fees�are�waived�to�maintain�relationship�goodwill.�Charges�to�other�accounts�represents�the�offset�against�the�late�fee�revenue�recognized�when�the�Company�establishes�a reserve�for�such�waived�amounts. 3 �For�the�year�ended�December�31,�2020,�the�majority�of�the�Travel�and�Corporate�Solutions�segment�charge-offs�is�associated�with�the�sale�of�the�WEX�Latin�America�business.�Refer�to�Note 5,�Sale�of�Subsidiary,�for�further�information. Concentration�of�Credit�Risk ��� �The�receivables �portfolio�consists �of�a �large�group �of�homogeneous�smaller �balances �across �a�wide �range�of �industries,�which �are�collectively �evaluated�for impairment. �No �one �customer �receivable �balance �represented �10 �percent �or �more �of �the �outstanding �receivables �balance �at �December �31, �2020 �or �2019. �The following�table�presents�the�outstanding�balance�of�trade�accounts�receivable�that�are�less�than�30�and�60�days�past�due,�shown�in�each�case�as�a�percentage�of�total trade�accounts�receivable: Delinquency�Status 29�days�or�less�past�due 59�days�or�less�past�due December�31, 2020 2019 97�% 98�% 96�% 97�% 102 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) 7. Investment�Securities ����The�Company’s�investment�securities�as�of�December�31,�2020�and�2019,�are�presented�below:�� (In�thousands) 2020 Fixed�income�securities: ���Mortgage-backed�securities ���Asset-backed�securities ���Municipal�bonds ���Mutual�fund Pooled�investment�fund Total�investment�securities (b)(c) 2019 Fixed�income�securities: ���Mortgage-backed�securities ���Asset-backed�securities ���Municipal�bonds ���Mutual�fund Pooled�investment�fund Total�investment�securities (b)(c) Cost Gross� Unrealized� Gains Gross� Unrealized� Losses Fair�Value (a) $ $ $ $ 133� 211� 195� 27,680� 9,000� 37,219� 164� 248� 306� 25,221� 5,000� 30,939� $ $ $ $ 5� —� 2� 48� —� 55� 10� —� —� —� —� 10� $ $ $ $ —� 1� —� —� —� 1� —� 1� 4� 484� —� 489� $ $ $ $ 138� 210� 197� 27,728� 9,000� 37,273� 174� 247� 302� 24,737� 5,000� 30,460� �� (a) (b) (c) �The�Company’s�techniques�used�to�measure�the�fair�value�of�its�investments�are�discussed�in�Note�19,�Fair�Value. �The�Company’s�investment�securities�are�not�deemed�available�for�current�operations�and�have�been�classified�as�non-current�on�the�consolidated�balance�sheets. Excludes�$9.6�million�and�$8.0�million�in�equity�securities�designated�as�trading�as�of�December�31,�2020�and�2019,�respectively,�included�in�prepaid�expenses�and�other�current�assets�and other�assets�on�the�consolidated�balance�sheets.�See�Note�18,�Employee�Benefit�Plans,�for�additional�information. ����The�Company�reviews�its�investments�to�identify�and�evaluate�indications�of�possible�impairment.�Factors�considered�in�determining�whether�a�loss�is�temporary include�the�length�of�time�and�extent�to�which�the�fair�value�has�been�less�than�the�cost�basis,�the�financial�condition�and�near-term�prospects�of�the�investee,�and the�Company’s�intent�and�ability�to�hold�the�investment�for�a�period�of�time�sufficient�to�allow�for�any�anticipated�recovery�in�market�value.�Substantially�all�of�the Company’s�fixed�income�securities �are�rated �investment�grade�or�better. �The�Company’s�fixed-income �mutual�fund�and�certain�other�insignificant �fixed�income security�positions�have�been�in�an�unrealized�loss�position�for�greater�than�12�months�as�of�December�31,�2020�and�2019.�The�amount�by�which�these�investment securities �have �been �in �a�continuous �unrealized �loss �position�is �insignificant. �The �Company’s �management�has �determined �that �these �gross�unrealized �losses �at December�31,�2020�and�2019�are�temporary�in�nature. ����The�Company�had�insignificant�maturities�of�investment�securities�during�the�years�ended�December�31,�2020,�2019�and�2018,�respectively. ����The�contractual�maturity�dates�of�the�Company’s�investment�securities�are�as�follows: � � (In�thousands) Due�after�5�years�through�year�10 Due�after�10�years Mortgage-backed�securities�with�original�maturities�of�30�years Investment�securities�with�no�maturity�dates Total � December�31, 2020 2019 Cost Fair�Value Cost Fair�Value $ $ 236� 170� 133� 36,680� 37,219� $ $ 236� 171� 138� 36,728� 37,273� $ $ 278� 276� 164� 30,221� 30,939� $ $ 277� 272� 174� 29,737� 30,460� 103 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) 8. Property,�Equipment�and�Capitalized�Software,�Net ����Property,�equipment�and�capitalized�software,�net�consist�of�the�following:� � (In�thousands) Furniture,�fixtures�and�equipment Computer�software,�including�internal-use�software Leasehold�improvements Construction�in�progress Total Less:�accumulated�depreciation Total�property,�equipment�and�capitalized�software,�net December�31, 2020 2019 $ $ 87,111� 463,614� 32,111� 7,910� 590,746� (402,406) 188,340� $ $ 94,478� 411,308� 32,406� 18,495� 556,687� (344,212) 212,475� ����Depreciation�expense�was�$90.8�million,�$77.7�million�and�$61.6�million�in�2020,�2019�and�2018,�respectively. 9. Goodwill�and�Other�Intangible�Assets Goodwill���� ����The�changes�in�goodwill�during�the�period�January�1�to�December�31,�2020�were�as�follows: (In�thousands) Gross�goodwill,�January�1,�2020 Current�year�acquisition Current�year�sale�of�subsidiary Foreign�currency�translation Gross�goodwill,�December�31,�2020 Accumulated�impairment,�January�1,�2020 Current�year�sale�of�subsidiary WEX�Fleet�Europe�impairment 1 Accumulated�impairment,�December�31,�2020 Net�goodwill,�January�1,�2020 Net�goodwill,�December�31,�2020 Fleet� Solutions� Segment Travel�and�Corporate Solutions Segment Health�and�Employee Benefit�Solutions Segment Total $ $ $ $ $ $ 1,378,107� —� (3,225) 17,829� 1,392,711� $ $ (4,087) $ 3,225� (53,378) (54,240) $ 1,374,020� 1,338,471� $ $ 455,007� 291,884� —� 4,507� 751,398� $ $ (9,935) $ —� —� (9,935) $ 445,072� 741,463� $ $ 622,109� —� (9,936) (3,969) 608,204� —� —� —� —� 622,109� 608,204� $ $ $ $ $ $ 2,455,223� 291,884� (13,161) 18,367� 2,752,313� (14,022) 3,225� (53,378) (64,175) 2,441,201� 2,688,138� 1 �During�the�Company's�annual�goodwill�assessment�completed�as�of�October�1,�2020,�management�determined�that�the�reduced�volumes�attributable�in�part�to�COVID-19,�had�a significant�negative�impact�on�the�fair�value�of�the�WEX�Fleet�Europe�reporting�unit�(the�2019�Go�Fuel�Card�acquisition).�The�fair�value�of�the�reporting�unit�was�calculated using�a�combination�of�the�income�and�market�approaches,�utilizing�significant�judgments�including�estimated�cash�flows�and�market�prices�from�comparable�businesses.�As�the carrying �value �of�this �reporting�unit �exceeded�its�fair�value, �the�Company �recorded�a �non-cash�goodwill �impairment �charge�of �$53.4�million �to �the�Fleet �Solutions �segment. There�is�$65.8�million�remaining�goodwill�associated�with�this�reporting�unit. 104 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) ����The�changes�in�goodwill�during�the�period�January�1�to�December�31,�2019�were�as�follows:� (In�thousands) Gross�goodwill,�January�1,�2019 2019�acquisitions Foreign�currency�translation Gross�goodwill,�December�31,�2019 Accumulated�impairment,�January�1,�2019 Foreign�currency�translation Accumulated�impairment,�December�31,�2019 Net�goodwill,�January�1,�2019 Net�goodwill,�December�31,�2019 Other�Intangible�Assets���� ����Other�intangible�assets�consist�of�the�following: Fleet� Solutions� Segment Travel�and�Corporate Solutions Segment Health�and�Employee Benefit�Solutions� Segment Total $ $ $ $ $ $ 1,251,501� 128,251� (1,645) 1,378,107� $ $ (4,205) $ 118� (4,087) $ 1,247,296� 1,374,020� $ $ 244,632� 209,887� 488� 455,007� $ $ (9,992) $ 57� (9,935) $ 234,640� 445,072� $ $ 350,193� 272,399� (483) 622,109� —� —� —� 350,193� 622,109� $ $ $ $ $ $ 1,846,326� 610,537� (1,640) 2,455,223� (14,197) 175� (14,022) 1,832,129� 2,441,201� � December�31,�2020 December�31,�2019 (in�thousands) Definite-lived�intangible�assets Acquired�software�and�developed�technology Customer�relationships Licensing�agreements Patent Trade�names�and�brand�names Total Gross� Carrying� Amount Accumulated� Amortization Net�Carrying� Amount Gross� Carrying� Amount Accumulated� Amortization Net�Carrying� Amount $ $ 327,134� 1,842,709� 152,805� 2,549� 61,978� 2,387,175� $ $ (164,245) (608,178) (35,010) (2,549) (25,181) (835,163) $ $ 162,889� 1,234,531� 117,795� —� 36,797� 1,552,012� $ $ 269,888� 1,762,066� 145,295� 2,319� 62,275� 2,241,843� $ $ (142,239) (478,680) (24,160) (2,183) (19,531) (666,793) $ $ 127,649� 1,283,386� 121,135� 136� 42,744� 1,575,050� ����During�the�years�ended�December �31,�2020,�2019�and�2018,�amortization �expense�was�$171.1�million,�$159.4�million�and�$138.2�million,�respectively.�The following�table�presents�the�estimated�amortization�expense�related�to�the�definite-lived�intangible�assets�listed�above�for�each�of�the�next�five�fiscal�years: (in�thousands) 2021 2022 2023 2024 2025 10. Accounts�Payable ����Accounts�payable�consists�of: � (In�thousands) Merchant�payables Other�payables Accounts�payable � $ $ $ $ $ 182,080� 168,842� 157,711� 145,252� 130,911� December�31, 2020 2019 $ $ 647,090� 131,117� 778,207� $ $ 852,964� 116,852� 969,816� 105 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) 11. Deposits ���� � � � �WEX �Bank’s �regulatory �status �enables �it �to �raise �capital �to �fund �the �Company’s �working �capital �requirements �by �issuing �deposits, �subject �to �FDIC �rules governing�minimum�financial�ratios.�See�Note�26,�Supplementary�Regulatory�Capital�Disclosure,�for�further�information�concerning�these�FDIC�requirements. ����WEX�Bank�accepts�its�deposits�through:�(i)�certain�customers�as�required�collateral�for�credit�that�has�been�extended�(“customer�deposits”)�and�(ii)�contractual arrangements �with �brokerage �firms �for �both �certificate �of �deposit �and �brokered �money �market �deposit �products. �Customer �deposits �are �generally �non-interest bearing,�certificates�of�deposit�are�issued�at�fixed�rates�and�brokered�money�market�deposits�are�issued�at�variable�rates�based�on�LIBOR�or�the�Federal�Funds�rate. ����The�following�table�presents�the�composition�of�deposits,�which�are�classified�as�short-term�or�long-term�based�on�their�contractual�maturities: � �(in�thousands) 1 Interest-bearing�brokered�money�market�deposits Customer�deposits Certificates�of�deposits�with�maturities�within�1�year 1,2 Short-term�deposits Certificates�of�deposit�with�maturities�greater�than�1�year�and�less�than�5�years Total�deposits �1,2 Weighted�average�cost�of�funds�on�certificates�of�deposit�outstanding Weighted�average�cost�of�interest-bearing�brokered�money�market�deposits December�31, 2020 439,894� 116,694� 354,807� 911,395� 148,591� 1,059,986� $ $ 2019 362,246� 112,571� 835,996� 1,310,813� 143,399� 1,454,212� $ $ 1.81�% 0.27�% 2.57�% 1.88�% 1� As�of�December�31,�2020,�all�certificates�of�deposit�and�brokered�money�market�deposits�were�in�denominations�of�$250�thousand�or�less,�corresponding�to�FDIC�deposit�insurance�limits. 2� Original�maturities�range�from�1�year�to�5�years,�with�interest�rates�ranging�from�1.35�percent�to�3.52�percent�as�of�December�31,�2020.�At�December�31,�2019,�original�maturities�ranged�from 4�months�to�5�years�with�interest�rates�ranging�from�1.80�percent�to�3.52�percent. ����In�accordance�with�regulatory�requirements,�WEX�Bank�maintains�reserves�against�a�portion�of�its�outstanding�customer�deposits�by�keeping�balances�with�the Federal�Reserve�Bank.�There�was�no�required�reserve�at�December�31,�2020,�due�to�temporarily�relaxed�Federal�Reserve�requirements�enacted�in�response�to�the COVID-19�pandemic.�The�required�reserve�was�$24.9�million�at�December�31,�2019. ����The�following�table�presents�the�average�interest�rates�for�deposits�and�interest-bearing�brokered�money�market�deposits: (in�thousands) Average�interest�rate: Deposits Interest-bearing�brokered�money�market�deposits Sources�of�Funds ICS�Purchases 2020 Year�ended�December�31, 2019 2018 2.21�% 0.61�% 2.46�% 2.28�% 1.91�% 2.03�% ����From�time�to�time,�WEX�Bank�utilizes�alternative�funding�sources�such�as�Promontory�Interfinancial�Network,�LLC’s�ICS�service,�which�provides�for�one-way buy�transactions�among�banks �for �the �purposes �of �purchasing �cost-effective �variable-rate �funding �without �collateralization. �WEX�Bank �may�purchase�brokered money�market�demand�accounts�and�demand�deposit�accounts�in�amounts�not�to�exceed�$125.0�million�through�this�service.�There�were�no�outstanding�balances for�ICS�purchases�at�December�31,�2020�and�2019. 106 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) 12. Derivative�Instruments ����The�Company�is�exposed�to�certain�market�risks�relating�to�its�ongoing�business�operations.�From�time�to�time,�the�Company�enters�into�derivative�instrument arrangements�to�manage�various�risks�including�interest�rate�risk. As�of�December�31,�2019,�the�Company�had�seven�interest�rate�swap�contracts�in�effect�with�a�collective�notional�amount�at�inception�of�$1.5�billion,�with maturity �dates �from�December �31, �2020 �to �March �12, �2023, �at �interest �rates �between �1.108 �percent �and�2.425 �percent. �During �the �second �quarter �of �2020, �the Company�amended�and�extended�the�terms�of�five�of�its�interest�rate�swaps�with�a�collective�notional�amount�of�$935.0�million.�These�amendments�merged�two�of the�previously�existing�interest�rate�swap�agreements�into�one,�reduced�the�effective�fixed�interest�rates�payable�and�extended�the�maturity�date�of�each�previously existing�agreement �by�a �period�of�one �year.�As �of�December �31,�2020, �outstanding�interest �rate�swap �contracts�are �intended�to �fix�the �future�interest �payments associated�with�$1.4�billion�of�the�$2.3�billion�of�outstanding�borrowings�under�the�Company’s�2016�Credit�Agreement.����� ����The�following�table�presents�relevant�information�for�the�interest�rate�swap�agreements�outstanding�during�2020: Notional�amount�at�inception (in�thousands) Maturity�date Fixed�interest�rate Tranche�A Tranche�B Tranche�C 1 Tranche�D 1 Tranche�E Tranche�F 2 $150,000 3/13/2023 1.954% $100,000 3/12/2023 1.956% $200,000 3/12/2023 2.413% $300,000 12/30/2022 2.204% $200,000 12/30/2023 1.862% $485,000 12/31/2021 0.743% 1 �Not�amended�or�extended. 2� Result�of�the�merging�of�tranches�F�and�G,�which�were�disclosed�within�the�Company’s�Annual�Report�on�Form�10-K�for�the�year�ended�December�31,�2019. ����The�following�table�presents�information�on�the�location�and�amounts�of�interest�rate�swap�gains�and�losses: (In�thousands) Derivatives� Not�Designated�as�Hedging�Instruments Interest�rate�swap�agreements�–� unrealized�portion Interest�rate�swap�agreements�–� realized�portion Location�of�Gain�(Loss)�Recognized�in�Consolidated Statements�of�Income Net�unrealized�(loss)�gain�on�financial�instruments Financing�interest�expense Year�ended�December�31, 2020 2019 2018 $ $ (27,569) 15,842� $ $ (35,363) (5,411) $ $ 3,772� (6,160) ����Derivative �instruments�and �their�related �gains�and�losses �are�reported �within�cash�flows �from�operating �activities�within�the �consolidated�statements �of�cash flows.�See�Note�19,�Fair�Value,�for�more�information�regarding�the�valuation�of�the�Company’s�interest�rate�swaps. 107 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) 13. Off-Balance�Sheet�Arrangements WEX�Europe�Services�Accounts�Receivable�Factoring ����Under�a�factoring�arrangement�between�WEX�Europe�Services�and�an�unrelated�third-party�financial�institution,�the�Company�sells�customer�accounts�receivable balances �without �recourse �to �the �extent �that �the �customer �balances �are �maintained �at �or �below �the �credit �limit �established �by �the �buyer. �If �customer �receivable balances �exceed �the �buyer’s �credit �limit, �the �Company �maintains �the �risk �of �default. �The �Company �obtained �a �true-sale �opinion �from �an �independent �attorney, which �states �that�the �factoring �agreement �provides�legal �isolation �upon�WEX �Europe �Services�bankruptcy �or �receivership�under �local �law�and �creates �a�sale �of receivables�for�amounts�transferred�both�below�and�above�the�established�credit�limits.�The�Company�continues�to�service�these�receivables�post-transfer�with�no participating �interest. �As �such, �transfers �under �this �arrangement �are �treated �as �sales �and �are �accounted �for �as �reductions �in �trade �accounts �receivable �because effective�control�of�the�receivables�is�transferred�to�the�buyer.�The�Company�sold�$452.2�million�and�$630.3�million�of�accounts�receivable�under�this�arrangement during �the �years �ended �December �31, �2020 �and �2019, �respectively. �Proceeds �received, �which �are �recorded �net �of �applicable �costs, �including �interest �and commissions,�are�recorded�in�operating�activities�in�the�consolidated�statements�of�cash�flows.�The�loss�on�factoring�was�$2.4�million�and�$3.5�million�for�the�years ended�December�31,�2020�and�2019,�respectively,�and�was�recorded�within�cost�of�services�in�the�consolidated�statements�of�income.�As�of�December�31,�2020�and 2019,�the�amount�of�outstanding�transferred�receivables�in�excess�of�the�established�credit�limit�was�immaterial.�Charge-backs�on�balances�in�excess�of�the�credit limit�during�the�year�ended�December�31,�2020�and�2019�were�insignificant. WEX�Bank�Accounts�Receivable�Factoring ����In�August�2018,�WEX�Bank�entered�into�a�factoring�agreement�with�an�unrelated�third-party�financial�institution�to�sell�certain�of�its�trade�accounts�receivable under�non-recourse�transactions.�The�Company�obtained�a�true-sale�opinion�from�an�independent�attorney,�which�states�that�the�factoring�agreement�provides�legal isolation�upon�WEX�Bank�bankruptcy�or�receivership�under�local�law.�WEX�Bank�continues�to�service�the�receivables�post-transfer�with�no�participating�interest. As�such,�transfers�under�this�arrangement�are�treated�as�a�sale�and�are�accounted�for�as�a�reduction�in�trade�accounts�receivable�because�effective�control�of�the receivables�is�transferred�to�the�buyer.�The�Company�sold�$4.1�billion�and�$14.8�billion�of�trade�accounts�receivable�under�this�arrangement�during�the�years�ended December �31, �2020 �and �2019, �respectively. �Proceeds �received, �which �are �reported �net �of �a �negotiated �discount �rate, �are �recorded �in �operating �activities �in �the consolidated �statements �of �cash �flows. �The �loss �on �factoring, �which �is �recorded �within �cost �of �services �in �the �consolidated �statements �of �operations, �was insignificant�and�$3.7�million�for�the�years�ended�December�31,�2020�and�2019,�respectively. WEX�Latin�America�Securitization�of�Receivables ��� � Prior�to �the �sale �of �WEX �Latin �America �on �September �30, �2020, �the �Company �transferred �certain �unsecured �receivables �associated �with �its �salary �advance payment�card�product�to�an�investment�fund�in�which�WEX�Latin�America�held�a�non-controlling�equity�interest,�and�that�is�managed�by�an�unrelated�third-party. During�the�year�ended�December�31,�2020,�the�Company�received�an�insignificant�distribution�from�the�investment�fund�and�did�not�make�equity�contributions�to the�investment�fund�during�the�year�ended�December�31,�2019.�During�the�year�ended�December�31,�2018,�the�Company’s�equity�contributions�to�the�investment fund �totaled �$2.8 �million. �The �securitization �arrangement �met �the �derecognition �conditions �under �GAAP �and �transfers �beginning �July �1, �2018 �under �this arrangement �were �treated �as �sales �and �accounted �for �as �a �reduction �of �trade �receivables. �During �the �year �ended �December �31, �2018, �the �Company �recognized operating�interest�expense�of�$4.4�million�under�this�financing�arrangement.�During�the�years�ended�December�31,�2020�and�2019,�the�Company�recognized�a�gain on �sale �of �$6.5 �million �and �$16.1 �million, �respectively. �The �gain �recognized �consists �of �the �difference �between �the �sales �price �and �the �carrying �value �of �the receivables,�and�is�recorded�within�other�revenue.�Cash�proceeds�from�the�transfer�of�these�receivables�are�recorded�within�operating�activities�in�the�consolidated statements�of�cash�flows. 108 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) 14. Income�Taxes ����Income�before�income�taxes�consisted�of�the�following:� (In�thousands) United�States Foreign Total � 2020 Year�ended�December�31, 2019 2018 $ $ (163,014) $ (138,067) (301,081) $ 178,235� 38,281� 216,516� $ $ 194,770� 43,849� 238,619� ����Income�taxes�from�continuing�operations�consisted�of�the�following�for�the�years�ended�December�31: (In�thousands) 2020 Current Deferred Income�taxes 2019 Current Deferred Income�taxes 2018 Current Deferred Income�taxes ������ United�States State� and�Local Foreign Total $ $ $ $ $ $ (7,546) (22,568) 20,748� 19,946� 16,027� 29,520� $ $ $ $ $ $ 2,509� (4,943) 4,486� 3,831� 3,566� 8,016� $ $ $ $ $ $ 13,782� $ (1,831) $ $ 16,322� $ (4,110) $ $ 17,916� $ (6,202) $ $ 8,745� (29,342) (20,597) 41,556� 19,667� 61,223� 37,509� 31,334� 68,843� Undistributed �earnings �of �certain �foreign �subsidiaries �of �the �Company �amounted �to �$58.5 �million �and �$77.4 �million �at �December �31, �2020 �and �2019, respectively. �The �Company �had �historically �asserted �that �the �undistributed �earnings �of �foreign �subsidiaries �were �considered �indefinitely �reinvested �outside �the United�States.�The�Company�reevaluated�its�historic�indefinite�reinvestment�assertion�and�determined�that�any�historical�undistributed�earnings�as�well�as�the�future earnings�for�WEX�Australia�are�no�longer�considered�to�be�indefinitely�reinvested.�The�Company�continues�to�maintain�its�indefinite�reinvestment�assertion�for�its remaining�foreign�subsidiaries.�The�deferred�tax�liability�related�to�the�foreign�and�state�tax�costs�associated�with�this�change�in�assertion�was�immaterial.�Upon distribution�of�the�foreign�subsidiaries�earnings�in�which�the�Company�continues�to�assert�indefinite�reinvestment,�the�Company�would�be�subject�to�withholding taxes�payable�to�foreign�countries,�where�applicable,�but�would�generally�have�no�further�federal�income�tax�liability. 109 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) ����The�reconciliation�between�the�income�tax�computed�by�applying�the�U.S.�federal�statutory�rate�and�the�reported�effective�tax�rate�on�income�from�continuing operations�is�as�follows: (In�thousands�except�for�tax�rates) Federal�statutory�rate State�income�taxes�(net�of�federal�income�tax�benefit) Foreign�income�tax�rate�differential Revaluation�of�deferred�tax�assets�for�foreign�and�state�tax�rate�changes,�net Loss�on�sale�of�subsidiary Legal�settlement Purchase�accounting�adjustments Research�and�development�credit Tax�reserves Withholding�taxes 2017�Tax�Act Change�in�valuation�allowance Nondeductible�expenses Incremental�tax�benefit�from�share-based�compensation�awards GILTI Other Effective�tax�rate Year�ended�December�31,��������� 2019 2018 2020 21.0�% 1.6� 3.3� (1.9) (2.3) (5.1) 4.3� —� (0.1) (0.1) —� (13.5) (1.6) 0.2� —� 1.0� 6.8�% 21.0� % 1.4� 0.8� (1.0) —� —� —� (0.5) 0.8� 0.7� —� 3.1� 2.3� (2.0) 0.5� 1.2� 28.3� % 21.0� % 2.2� 1.1� (1.3) —� —� —� (0.2) 2.0� 0.2� (0.2) 4.5� 1.4� (1.7) 0.8� (0.9) 28.9� % We�recorded�an�income�tax�benefit�for�2020�as�compared�to�an�income�tax�provision�for�2019.�The�Company's�effective�tax�rate�for�the�year�ended December�31,�2020�was�impacted�by�no�income�tax�benefit�being�recorded�for�i)�operating�losses�generated�by�WEX�Latin�America�during�the�current�year through�the�date�of�sale,�ii)�the�loss�on�sale�of�WEX�Latin�America,�and�iii)�the�legal�settlement.�These�losses�were�included�as�part�of�the�current�year�loss�and have�been�determined�to�be�either�non-deductible�for�income�tax�purposes�or�required�a�valuation�allowance. A �portion �of �the �legal �settlement �resulted �in �a �foreign �capital �loss, �which �the �Company �concluded �was �not �more �likely �than �not �to �be �realized �and accordingly �recorded �a �full �valuation �allowance �against �it. �The �remaining �portion �of �the �legal �settlement �was �determined �to �be �non-deductible �for �income �tax purposes. Purchase �accounting �adjustments �relate �to �the �additional �tax �basis �and �attributes �for �Discovery �Benefits �and �Noventis �recognized �in �the �income �tax (benefit)�provision�as�the�respective�measurement�periods�had�ended. The�lower�effective�tax�rate�for�the�year�ended�December�31,�2019�relative�to�2018�was�primarily�due�to�the�jurisdictional�earnings�mix. ���� 110 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) The �tax�effects�of�temporary�differences �in�the�recognition�of �income�and�expense�for�tax�and �financial�reporting�purposes�that�give �rise�to�significant portions�of�the�deferred�tax�assets�and�liabilities�are�presented�below: (In�thousands) Deferred�tax�assets�related�to: Reserve�for�credit�losses Tax�credit�carryforwards Stock-based�compensation,�net Net�operating�loss�carry�forwards Capital�loss�carry�forwards Accruals Operating�lease�liabilities Other Total Deferred�tax�liabilities�related�to: Deferred�financing�costs Property,�equipment�and�capitalized�software Intangibles Operating�lease�assets Other�liabilities Total Valuation�allowance Deferred�income�taxes,�net ����Net�deferred�tax�(liabilities)�assets�by�jurisdiction�are�as�follows: (In�thousands) United�States Australia Europe New�Zealand Singapore Mexico Brazil Canada $ $ $ $ $ $ December�31, 2020 2019 14,484� 1,371� 21,376� 45,612� 28,211� 29,477� 24,142� 9,013� 173,686� $ $ (13,590) $ (34,232) (247,361) (20,425) (107) (315,715) (60,569) (202,598) $ $ 11,831� 2,570� 16,070� 49,464� —� 18,934� 18,892� 4,283� 122,044� (1,090) (35,273) (243,229) (15,602) (86) (295,280) (32,671) (205,907) December�31, 2020 2019 $ (201,739) 4,009� 14,839� 123� (19,863) 6� —� 27� (217,927) (795) 5,645� 237� —� —� 6,820� 113� (205,907) Deferred�income�taxes,�net $ (202,598) $ � � � �The �Company �had �approximately �$511.5 �million �of �post �apportionment �state, �$19.8 �million �of �federal �and �$76.4 �million �of �foreign �net �operating �loss carryforwards �at �December �31, �2020 �and �approximately �$608.7 �million �of �post �apportionment �state, �$31.3 �million �of �federal �and �$58.6 �million �of �foreign �net operating �loss�carryforwards�at�December �31,�2019.�The�U.S.�losses�expire�at �various �times�through�2040.�Foreign�losses �in�Australia�and�the�United �Kingdom have�indefinite�carryforward�periods. ����At�December�31,�2020,�the�Company’s�valuation�allowance�primarily�pertains�to�net�deferred�tax�assets�for�certain�states�and�foreign�capital�losses�arising�from a�portion�of�the�legal�settlement.�In�each�case,�the�Company�has�determined�it�is�not�more�likely�than�not�that�the�benefits�will�be�utilized.�During�2020�and�2019, the �Company �recorded �tax �expense �of �$40.6 �million �and �$6.6 �million, �respectively, �for �net �increases �to �the �valuation �allowance. �The �increase �in �the �valuation allowance�in�2020�was�primarily�related�to�the�foreign�capital�losses�arising�from�a�portion�of�the�legal�settlement�and�operating�losses�generated�from�WEX�Latin America�during�the�current�year�through�the�date�of�sale.�WEX�Latin�America’s�deferred�tax�assets�and�related�valuation�allowance�are�not�reflected�in�the�tables above,�since�the�Company�sold�WEX�Latin�America�on�September�30,�2020.�The�majority�of�the�increase�in�valuation�allowance�in�2019�was�related�to�state�net operating�losses�driven�from�the�Company’s�parent�company�separate�state�filings. 111 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) ����At�December�31,�2020,�the�Company�had�$4.1�million�of�unrecognized�tax�benefits,�net�of�federal�income�tax�benefit,�of�which�$3.6�million�would�decrease�our effective �tax �rate �if�fully �recognized. �The�Company �does �not�expect �any �changes �to �the�unrecognized �tax �benefits �within�the �next �twelve�months �as �a�result �of settlements�of�certain�examinations�or�expiration�of�statutes�of�limitations.�The�Company�recognizes�interest�and�penalties�related�to�unrecognized�tax�benefits�in income�tax�expense.�The�total�amounts�of�interest�and�penalties�were�not�material�for�the�years�ended�December�31,�2020,�2019�and�2018,�and�as�of�December�31, 2020�and�2019,�the�Company�had�no�material�amounts�accrued�for�interest�and�penalties�related�to�unrecognized�tax�benefits. ����A�reconciliation�of�the�beginning�and�ending�amount�of�gross�unrecognized�tax�benefits�excluding�interest�and�penalties�is�as�follows: (In�thousands) Beginning�balance Increases�related�to�prior�year�tax�positions Increases�related�to�current�year�tax�positions Decreases�related�to�prior�year�tax�positions Settlements Ending�balance Year�ended�December�31, 2019 2018 2020 $ $ 10,320� —� —� (826) (5,361) 4,133� $ $ 8,996� 1,727� —� (39) (364) 10,320� $ $ 5,898� 4,831� —� —� (1,733) 8,996� ���� �The�Company’s�primary�tax�jurisdictions�are�the�United�States,�Australia�and�the�United�Kingdom.�The�Company�or�one�of�its�subsidiaries�files�income�tax returns�in�the�United�States�federal�jurisdiction�and�various�state�and�foreign�jurisdictions,�where�required.�In�the�normal�course�of�business,�the�Company�is�no longer �subject �to �income �tax �examination �after �the �Internal �Revenue �Service �statute �of �limitations �of �three �years. �The �Internal �Revenue �Service �is �currently examining�the�Company’s�U.S.�federal�income�tax�returns�for�2013�through�2015.�The�Company�concluded�the�appeals�process�with�the�Internal�Revenue�Service in�connection �with �the �2010 �through �2012 �audits�with �no �additional �tax �impact �to �the �Company. �At�December �31, �2020, �U.S. �state �tax �returns�were �no �longer subject�to�tax�examination�for�years�prior�to�2014.�The�tax�years�remaining�open�for�income�tax�audits�in�the�United�Kingdom�are�2019�and�2020,�while�the�tax years�open�for�audit�in�Australia�are�2016�through�2020. 112 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) Leases 15. ���� ����The�Company�has�non-cancelable�operating�lease�arrangements�for�its�office�space�and�equipment�that�expire�at�various�dates�through�2035.�In�addition,�the Company�rents�office�equipment�under�agreements�that�may�be�canceled�anytime. ����The�following�table�presents�supplemental�balance�sheet�information�related�to�our�operating�leases: �(In�thousands) Assets Operating�lease�ROU�assets Liabilities Current�operating�lease�liabilities Non-current�operating�lease�liabilities Total�lease�liabilities Balance�Sheet�Location December�31,�2020 December�31,�2019 Other�assets Other�current�liabilities Other�liabilities $ $ 85,034� $ 16,445� 82,969� 99,414� $ 68,351� 13,176� 67,910� 81,086� ����The�following�table�presents�the�weighted�average�remaining�lease�term�and�discount�rate: Operating�leases Weighted�average�remaining�term�(in�years) Weighted�average�discount�rate ����Maturities�of�our�operating�lease�liabilities�are�as�follows: December�31,�2020 December�31,�2019 10.2 4.5� % 8.5 4.6� % �(In�thousands) 2021 2022 2023 2024 2025 Thereafter Total�lease�payments Less:�Imputed�interest Total�lease�obligations Less:�Current�portion�of�lease�obligations Long-term�lease�obligations December�31,�2020 20,384� 16,668� 12,484� 9,752� 7,583� 57,180� 124,051� (24,637) 99,414� 16,445� 82,969� $ $ $ $ Leases�with�an�initial�term�of�twelve�months�or�less�are�not�recorded�on�the�consolidated�balance�sheet.�Short-term�lease�payments�are�recognized�on�a straight-line�basis �and�variable �short-term �lease�payments �are �recognized�in �the�period �in �which�the �obligation�is �incurred. �We�recognized �$18.2�million, �$18.3 million,�and�$15.7�million�of�operating�lease�expense�during�2020,�2019�and�2018,�respectively,�which�includes�these�immaterial�short-term�leases�and�variable lease�costs�as�well�as�lease�expense�related�to�equipment�and�vehicles.�These�amounts�are�classified�as�general�and�administrative�expenses�on�our�consolidated statements�of�income. ����The�following�table�presents�supplemental�cash�flow�and�other�information�related�to�our�leases: (In�thousands) Cash�paid�for�amounts�included�in�the�measurement�of�lease�liabilities: Operating�cash�flows�from�operating�leases Right-of-use�assets�obtained�in�exchange�for�lease�liabilities: Operating�leases (a) December�31,�2020 December�31,�2019 $ $ 14,511� 32,469� $ $ 16,314� 11,001� (a)� Includes�non-cash�transactions�resulting�in�adjustments�to�the�lease�liability�or�ROU�asset�due�to�modification,�impairment�or�other�reassessment�events. 113 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) 16. Financing�and�Other�Debt ����The�following�table�summarizes�the�Company’s�total�outstanding�debt�by�type: Year�ended�December�31, 2019 2020 873,777� 1,442,368� 2,316,145� 400,000� 310,000� 85,945� —� 20,000� —� 3,132,090� $ 923,707� 1,457,048� 2,380,755� 400,000� —� 104,261� 50,000� 34,998� 2,660� 2,972,674� Year�ended�December�31, 2019 2020 170,556� (17,826) 152,730� 2,961,534� (87,421) 2,874,113� 51,628� 818,372� $ $ $ $ $ $ 256,529� (7,998) 248,531� 2,716,145� (29,632) 2,686,513� 51,314� 768,686� $ $ $ $ $ $ $ (In�thousands) ���Tranche�A�term�loan ���Tranche�B�term�loan Term�loans�under�2016�Credit�Agreement Notes�outstanding Convertible�Notes�outstanding Securitized�debt Participation�debt Borrowed�federal�funds WEX�Latin�America�debt 1 1 1 Total�gross�debt 1� See�Note�19,�Fair�Value,�for�more�information�regarding�the�Company’s�2016�Credit�Agreement,�Notes�and�Convertible�Notes. ����The�following�table�summarizes�the�Company’s�total�outstanding�debt�by�balance�sheet�classification: (In�thousands) Current�portion�of�gross�debt Less:�Unamortized�debt�issuance�costs/debt�discount Short-term�debt,�net Long-term�portion�of�gross�debt Less:�Unamortized�debt�issuance�costs/debt�discount Long-term�debt,�net Supplemental�information�under�2016�Credit�Agreement: Letters�of�credit Remaining�borrowing�capacity�on�revolving�credit�facility 1 2 1� Collateral�for�lease�agreements,�virtual�card�and�fuel�payment�processing�activity�at�the�Company’s�foreign�subsidiaries. 2� Contingent�on�maintaining�compliance�with�the�financial�covenants�as�defined�in�the�Company’s�2016�Credit�Agreement. 114 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) 2016�Credit�Agreement On�July�1,�2016,�the�Company�entered�into�a�credit�agreement�by�and�among�the�Company�and�certain�of�its�subsidiaries�from�time�to�time�party�thereto, as�borrowers,�WEX�Card�Holding�Australia�Pty�Ltd.,�as�specified�designated�borrower,�Bank�of�America,�N.A.�as�administrative�agent,�swing�line�lender�and�letter of�credit�issuer�and�the�lenders�from�time�to�time�party�thereto�(the�“2016�Credit�Agreement”).�As�of�December�31,�2020,�the�2016�Credit�Agreement,�as�amended through�that�date,�provided�for�a�senior�secured�tranche�A�term�loan�facility�in�an�original�principal�amount�of�$1,030.0�million�(the�“Tranche�A�Term�Loan”),�a senior�secured�tranche�B�term�loan�facility�in�an�original�principal�amount�of�$1,485.0�million�(the�“Tranche�B�Term�Loan”�and�together�with�the�Tranche�A�Term Loan,�the�“Term�Loans”),�and�an�$870.0�million�secured�revolving�credit�facility�(the�“Revolving�Credit�Facility”),�with�a�$250.0�million�sublimit�for�letters�of credit �and �$20.0 �million �sublimit �for �swingline �loans. �As �of �December �31, �2020, �the �Company �had �an �outstanding �principal �amount �of �$873.8 �million �on �the Tranche �A �Term �Loan, �an �outstanding �principal �amount �of �$1.4 �billion �on �the �Tranche �B �Term �Loan �and �outstanding �letters �of �credit �of �$51.6 �million �drawn against�the�Revolving�Credit�Facility. As�of�December�31,�2020,�the�Revolving�Credit�Facility�and�the�Term�Loans�bear�interest�at�variable�rates�determined�by�using�(a)�a�variable�reference rate,�selected�by�the�Company,�if�applicable,�from�a�prescribed�set�of�variable�reference�rates�including�(x)�the�Eurocurrency�Rate�(as�defined�in�the�2016�Credit Agreement),�or�(y)�the�highest�of�(1)�the�federal�funds�effective�rate�plus�0.50%,�(2)�the�rate�of�interest�in�effect�for�such�day�as�publicly�announced�from�time�to time�by�Bank�of�America,�N.A.�as�its �“prime�rate”,�and�(3)�the�Eurocurrency�Rate�plus�1.00%�(the�“Base�Rate”),�plus�(b)�an�applicable�margin.�The�applicable margin�with�respect�to�the�Revolving�Credit�Facility�and�Tranche�A�Term�Loan,�is�determined�based�on�the�Company’s�Consolidated�Leverage�Ratio�(as�defined�in the�2016�Credit�Agreement).�The�applicable�margin�with�respect�to�the�Tranche�B�Term�Loan�is�equal�to�1.25�percent�for�loans�accruing�interest�at�the�Base�Rate and�2.25�percent�for�loans�accruing�interest�at�the�Eurocurrency�Rate.�Starting�in�June�2020,�revolving�credit�facility�borrowings�were�subject�to�a�75�basis�point LIBOR�floor. As�of�December�31,�2020�and�December�31,�2019,�amounts�outstanding�under�the�2016�Credit�Agreement�bore�a�weighted�average�effective�interest�rate of�2.3�percent�and�4.0�percent�per�annum,�respectively.�The�Company�maintains�interest�rate�swap�agreements�to�manage�the�interest�rate�risk�associated�with�its outstanding �variable-interest �rate �borrowings �under �the �2016 �Credit �Agreement. �See �Note �12, �Derivative �Instruments, �for �further �discussion. �In �addition, �the Company�has �agreed �to�pay �a�quarterly �commitment�fee�at�a�rate�per�annum�ranging�from�0.30%�to�0.50%�of�the�daily�unused�portion�of�the�Revolving�Credit Facility�(which�was�0.40%�at�December�31,�2020)�determined�based�on�the�Consolidated�Leverage�Ratio. The�Revolving�Credit�Facility�and�the�Tranche�A�Term�Loan�mature,�and�the�commitments�under�the�Revolving�Credit�Facility�will�terminate,�on�July�1, 2023. �The �Tranche �B �Term �Loan �matures �on �May �17, �2026. �The �Tranche �A �Term �Loan �and �the �Tranche �B �Term �Loan �require, �prior �to �maturity, �scheduled quarterly �payments �of �$12.5 �million �and �$3.7 �million, �respectively. �The �2016 �Credit �Agreement �also �requires �the �Term�Loans �to �be �prepaid �with �the �net �cash proceeds �from �certain �debt �incurrences �or �issuances �and �asset �dispositions, �subject �to �certain �exceptions, �thresholds �and �reinvestment �rights. �The �2016 �Credit Agreement�also�requires�the�Tranche�B�Term�Loan�to�be�annually�prepaid�with�a�variable�percentage�of�the�Company's�Excess�Cash�Flow�(as�defined�in�the�2016 Credit �Agreement), �ranging�from�zero%�to �50%�determined �based�on�the �Company's �Consolidated�Leverage �Ratio.�As �of�December �31,�2020, �this�prepayment percentage�was�25%.�The�Company�may�voluntarily�prepay�outstanding�loans�from�time�to�time,�subject�to�certain�conditions,�without�premium�or�penalty�other than�customary�“breakage”�costs. The�obligations�of�the�borrowers�under�the�2016�Credit�Agreement�are�guaranteed�by�the�Company�and�certain�direct�and�indirect�wholly-owned�domestic subsidiaries �of �the �Company�and �the �obligations�of �foreign �borrowers �under�the �Revolving �Credit�Facility �are �guaranteed �by�certain �direct �and�indirect �foreign subsidiaries�of�the�Company,�subject�to�certain�exceptions.�Under�the�2016�Credit�Agreement,�the�Company�has�granted�a�security�interest�in�substantially�all�of the�assets�of�the�Company�and�the�guarantors,�subject�to�certain�exceptions�including,�without�limitation,�the�assets�of�WEX�Bank�and�certain�foreign�subsidiaries. The �2016�Credit �Agreement,�as�amended, �contains�customary �representations�and �warranties,�as �well�as�affirmative �and�negative �covenants,�as �further described�under�the�following�“Debt�Covenants”�heading. See�Note�26,�Supplementary�Regulatory�Capital�Disclosure,�for�further�discussion. Notes�Outstanding ����As�of�December�31,�2020�and�2019,�the�Company�had�$400.0�million�of�4.75�percent�fixed-rate�senior�notes�(the�“Notes”)�outstanding,�which�will�mature�on February�1,�2023.�Interest�is�payable�semiannually�in�arrears�on�February�1�and�August�1�of�each�year.�The�Company�may�redeem�the�Notes�with�no�premium�due upon�redemption.�As�discussed�in�Note�28, 115 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) Subsequent�Events,�the�Company�delivered�a�notice�of�redemption�to�the�holders�of�the�Notes,�calling�for�redemption�on�March�15,�2021. ��� �The�Notes�are �guaranteed�on �a�senior�secured �basis�by �each�of �the�Company’s�restricted �subsidiaries �and�each�of �the�Company’s �regulated�subsidiaries �that guaranteed�the�Company’s�obligations�under�the�2016�Credit�Agreement.�WEX�Bank,�is�not�a�guarantor�and�is�not�subject�to�many�of�the�restrictive�covenants�in the�indenture�governing�the�Notes.�The�Notes�and�guarantees�described�above�are�general�senior�secured�obligations�ranking�equally�with�the�Company’s�existing and�future�senior�debt,�senior�in�right�of�payment�to�all�of�the�Company’s�subordinated�debt,�and�effectively�equal�in�lien�priority�to�the�Company’s�2016�Credit Agreement.�In�addition,�the�Notes�and�the�guarantees�are�structurally�subordinated�to�all�liabilities�of�the�Company’s�subsidiaries�that�are�not�guarantors,�including WEX�Bank. Convertible�Notes Pursuant�to�a�purchase�agreement�dated�June�29,�2020,�on�July�1,�2020,�the�Company�closed�on�a�private�placement�with�an�affiliate�of�Warburg�Pincus LLC�(together�with�its�affiliate,�“Warburg�Pincus”),�pursuant�to�which�the�Company�issued�$310.0�million�in�aggregate�principal�amount�of�the�Convertible�Notes due�2027�(the�“Convertible�Notes”)�and�577,254�shares�of�the�Company's�common�stock�for�an�aggregate�purchase�price�of�$389.2�million,�of�which�$90.0�million constituted�the�purchase�price�for�the�shares,�reflecting�a�purchase�price�of�$155.91�per�share. The �issuance �of �the �Convertible �Notes �provided �the �Company �with �net �proceeds �of �approximately �$299.2 �million �after �original �issue �discount. �The Convertible�Notes�have�a�seven-year�term�and�mature�on�July�15,�2027,�unless�earlier�converted,�repurchased�or�redeemed.�Interest�on�the�Convertible �Notes�is calculated�at�a�fixed�rate�of�6.5%�per�annum,�payable�semi-annually�in�arrears�on�January�15�and�July�15�of�each�year,�with�the�first�interest�payment�due�January 15,�2021.�At�the�Company's�option,�interest�is�either�payable�in�cash,�through�accretion�to�the�principal�amount�of�the�Convertible�Notes,�or�a�combination�of�cash and�accretion. The�Convertible�Notes�may�be�converted�at�the�option�of�the�holders�at�any�time�prior�to�maturity,�or�earlier�redemption�or�repurchase�of�the�Convertible Notes,�based�upon�an�initial�conversion�price�of�$200.00�per�share�of�common�stock.�The�Company�may�settle�conversions�of�Convertible�Notes,�at�its�election,�in cash, �shares �of �the �Company’s �common �stock, �or �a �combination �thereof. �The �initial �conversion �price �is �subject �to �adjustments �customary �for �convertible �debt securities�and�a�weighted�average�adjustment�in�the�event�of�issuances�of�equity�and�equity�linked�securities�by�the�Company�at�prices�below�the�then�applicable conversion �price �for �the �Convertible �Notes �or �the �then �market �price �of �the �Company’s �common �stock, �subject �to �certain �exceptions, �including �exceptions �with respect�to�underwritten�offerings,�Rule�144A�offerings,�private�placements�at�discounts�not�exceeding�a�specified�amount,�issuances�as�acquisition�consideration and�equity�compensation�related�issuances. The �Company �will �have �the �right, �at �any �time �after �July �1, �2023, �to �redeem �the �Convertible �Notes �in �whole �or �in �part �if �the �closing �price �of �WEX's common�stock�is�at�least�200%�of�the�conversion�price�of�the�Convertible�Notes�for�20�trading�days�(whether�or�not�consecutive)�out�of�any�30�consecutive�trading day�period�prior�to�the�time�the�Company�delivers�a�redemption�notice,�(including�at�least�one�of�the�five�trading�days�immediately�preceding�the�last�day�of�such 30�trading�day�period),�subject�to�the�right�of�holders�of�the�Convertible�Notes�to�convert�its�Convertible�Notes�prior�to�the�redemption�date. In �the �event �of �certain �fundamental �change �transactions,�including �certain �change �of �control �transactions �and �delisting �events�involving �the �Company, holders�of�the�Convertible�Notes�will�have�the�right�to�require�the�Company�to�repurchase�its�Convertible�Notes�at�105%�of�the�principal�amount�of�the�Convertible Notes,�plus�the�present�value�of�future�interest�payments�through�the�date�of�maturity.�No�such�repurchase�occurred�during�the�year�ended�December�31,�2020. The �$389.2�million�of�proceeds�from�this �private�placement�was�allocated �on�a�relative�fair�value�basis, �with�$94.0�million�allocated�to�the �sale�of�the Company's�common�stock�and�$295.2�million�to�the�Convertible�Notes.�As�the�Convertible�Notes�permit�the�Company�to�settle�the�conversion�in�cash,�pursuant�to ASC �470-20, �the �proceeds �attributed �to �the �Convertible �Notes �are �allocated �between �a �liability �and �equity �component. �The �carrying �amount �of �the �liability component�of�the�Convertible�Notes�was�calculated�by�measuring�the�fair�value�of�a�hypothetical�debt�instrument�with�a�similar�tenor�without�a�conversion�feature. The �fair �value �was �determined �utilizing �a �combination �of �a �binomial �lattice-based �model �and �a �discounted �cash �flow �model �that �includes �assumptions �such �as implied �credit �spread, �expected �volatility, �and �the �risk-free �rate �for �notes �with �a �similar �term. �The �carrying �amount �of �the �equity �component �representing �the conversion�option�was�determined�by�deducting�the�fair�value�of�the�liability�component�from�the�total�proceeds�allocated�to�the�Convertible�Notes. Applicable�transaction�costs�of�$4.0�million�have�been�allocated�between�the�Convertible�Notes�and�shares�of�the�Company's�common�stock�sold�in�the transaction�based�on�relative�fair�value�and�further�allocated�between�the�liability�and 116 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) equity �component�of�the�Convertible�Notes�consistent�with�the�initial �allocation�resulting�in�$2.5�million�classified �as�debt �issuance�costs�capitalized�as�a�direct reduction�to�the�face�value�of�the�Convertible�Notes�and�$1.5�million�deducted�from�the�amounts�recorded�within�stockholders'�equity.�The�debt�discount�and�debt issuance �costs �will �be �amortized �to �interest �expense �using �the �effective �interest �rate �method �over �the �seven-year �contractual �life �of �the �Convertible �Notes. �The effective�interest�rate�on�the�liability�component�of�the�Convertible�Notes�was�11.2%�at�the�date�of�loan�origination. Based �on�this,�the�Convertible �Notes�were�recorded �at�a�debt�discount �with�an�initial �carrying�value�of�$237.5 �million,�with�the �residual�$54.7�million recognized�within�additional�paid-in�capital�on�the�Company's�consolidated�balance�sheet.�This�equity�component�will�not�be�remeasured�as�long�as�it�continues�to meet�the�conditions�for�equity�classification.�Based�on�the�closing�price�of�the�Company’s�common�stock�as�of�December�31,�2020,�the�"if-converted"�value�of�the Convertible�Notes�exceeds�its�principal�amount�by�$5.5�million. The�Convertible�Notes�consist�of�the�following: (In�thousands) Principal Less:�Unamortized�discounts Less:�Unamortized�issuance�cost 1 Net�carrying�amount�of�Convertible�Notes 2 Equity�component December�31,�2020 310,000� (66,755) (2,358) 240,887� 54,689� $ $ $ 1 �Recorded�within�long-term�debt,�net�on�our�consolidated�balance�sheet. Represents �the�proceeds �allocated�to�the �conversion�option, �or�debt�discount, �recorded�within �additional�paid-in�capital�on�the �consolidated�balance �sheet.�Additional�paid-in �capital�on �the 2� consolidated�balance�sheet�is�further�reduced�by�$0.6�million�of�issuance�costs�and�$13.6�million�in�taxes�associated�with�the�equity�component. The�following�table�sets�forth�total�interest�expense�recognized�for�the�Convertible�Notes: (In�thousands) Interest�on�6.5%�coupon Amortization�of�debt�discount�and�debt�issuance�costs Debt�Issuance�Costs���� Year�Ended�December�31,�2020 10,019� 3,414� 13,433� $ $ During�the�year�ended�December�31,�2020,�the�Company�completed�four�amendments�(the�Eighth,�Ninth,�Tenth�and�Eleventh�Amendments)�to�the�2016 Credit�Agreement,�largely�in�connection�with�its�acquisition�of�eNett�and�Optal.�The�Eighth�Amendment�was�superseded�by�the�Ninth�Amendment�(other�than�with respect �to �the �consent �fees �payable �in �connection �with �the �Eighth �Amendment) �and �the �Eleventh �Amendment �modified �terms �that �were �only �applicable �if �the Company�was�required�to�finance�the�acquisition�of�eNett�and�Optal.�However,�the�Ninth�Amendment,�among�other�things,�amended�certain�provisions�of�the�2016 Credit�Agreement�relating�to�financial�maintenance�covenants�and�pricing�terms�and�the�Tenth�Amendment�increased�the�commitments�under�the�Revolving�Credit Facility �by �$50.0 �million. �The �Company �accounted �for �the �Ninth, �Tenth �and �Eleventh �Amendments �as �debt �modifications. �As �part �of �these �transactions, �the Company�incurred�and�expensed�an�insignificant�amount�of�third�party�costs,�which�are�classified�within�general�and�administrative�expenses�in�our�consolidated statements �of �operations. �In �association �with �the �Ninth �Amendment, �the �Company �incurred �and �capitalized �$4.3 �million �of �lender �fees. �Consent �fees�incurred pursuant�to�the�Eighth�Amendment�and�payable�upon�a�consummation�of�the�eNett�and�Optal�acquisition�of�$2.9�million�were�capitalized�during�December�2020. ����During�the�year�ended�December�31,�2019,�the�Company�entered�into�the�Fifth,�Sixth�and�Seventh�Amendments�to�the�2016�Credit�Agreement.�The�Company accounted�for�the�Fifth�Amendment�to�the�2016�Credit�Agreement�as�a�debt�modification.�The�Company�accounted�for�the�Sixth�Amendment�to�the�2016�Credit Agreement,�which�was�completed�in�2019,�as�both�a�debt�modification�and�a�partial�debt�extinguishment,�and�consequently�recorded�a�loss�on�extinguishment�of debt�of�$1.3�million�related�to�the�write-off�of�unamortized�debt�issuance�costs�during�2019.�The�Company�incurred�and�expensed�$10.6�million�of�third�party�costs associated�with�the�Fifth�and�Sixth�Amendments,�which�are�classified�within�general�and�administrative�expenses�in�the�consolidated�statements�of�income�during 2019.�We�expensed�as�incurred�an�insignificant�amount�of�costs�resulting�from�the�Seventh�Amendment�to�the�2016�Credit�Agreement.�During�2019,�the�Company also 117 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) incurred �and �capitalized �lender �costs �of �$3.4 �million �associated �with �the �Fifth �Amendment �and �a �debt �discount �of �$11.0 �million �associated �with �the �Sixth Amendment. ����During�the�year�ended�December�31,�2018,�the�Company�entered�into�the�Third�and�Fourth�Amendments�to�the�2016�Credit�Agreement.�The�Third�Amendment was�accounted�for�as�both�a�debt�modification�and�partial�debt�extinguishment,�which�caused�us�to�record�a�loss�on�extinguishment�of�debt�of�$1.1�million�related to�the�write-off�of�unamortized�debt�issuance�costs,�while�the�Fourth�Amendment�was�accounted�for�as�a�debt�modification.�The�Company�incurred�general�and administrative�expenses�of�$3.8�million�related�to�third-party�costs�associated�with�the�Third�and�Fourth�Amendments.�The�loss�on�extinguishment�and�third-party costs �are �reflected �as �financing �interest �expense �and �general �and �administrative �expenses, �respectively. �In �addition, �the �Company �incurred �and �capitalized �$5.8 million�of�new�debt�issuance�costs�related�to�the�Third�and�Fourth�Amendments. ����Debt�issuance�costs�incurred�and�capitalized�in�conjunction�with�the�2016�Credit�Agreement�and�its�amendments�are�being�amortized�into�interest�expense�over the�remaining�term�of�the�Term�Loans�and�Revolving�Credit�Facility,�as�applicable,�using�the�effective�interest�method. Debt�Covenants � � � �The �2016 �Credit �Agreement �and �the �indenture �governing �the �Notes �contain �various �affirmative �and �negative �covenants �that, �subject �to �certain �customary exceptions,�limit�the�Company�and�its�subsidiaries’�including,�in�certain�limited�circumstances,�WEX�Bank�and�the�Company’s�other�regulated�subsidiaries,�ability to,�among�other�things�(i)�incur�additional�debt,�(ii)�pay�dividends�or�make�other�distributions�on,�redeem�or�repurchase�capital�stock,�or�make�investments�or�other restricted �payments,�(iii)�enter �into�transactions�with�affiliates, �(iv)�dispose�of�assets �or�issue�stock�of�restricted �subsidiaries�or�regulated�subsidiaries, �(v)�create liens �on �assets, �or �(vi) �effect �a �consolidation �or �merger �or �sell �all, �or �substantially �all, �of �the �Company’s �assets. �Additionally, �the �indenture �governing �the Convertible�Notes�contains�customary�negative�and�affirmative�covenants�that,�subject�to�certain�customary�exceptions,�limit�the�Company�and�its�subsidiaries',�but excluding �WEX �Bank �and �the �Company's �other �regulated �subsidiaries, �ability �to, �among �other �things, �incur �additional �debt. �These �covenants �are �subject �to important�exceptions�and�qualifications.�At�any�time�that�the�Notes�are�rated�investment�grade,�which�is�not�currently�the�case,�and�subject�to�certain�conditions, certain �covenants �will �be �suspended �with �respect �to �the �Notes. �WEX �Bank �and �the �Company’s �other �regulated �subsidiaries �will �not �be �subject �to �some �of �the restrictive �covenants �in �the �Indenture �that �place �limitations �on �the �Company �and �its �restricted �subsidiaries’ �actions, �and �where �WEX �Bank�and �the �Company’s regulated �subsidiaries �are �subject �to �covenants, �there �are �significant �exceptions �and �limitations �on �the �application �of �those �covenants �to �WEX �Bank �and �the Company’s�regulated�subsidiaries. The �2016 �Credit �Agreement �also �requires, �solely �for �the �benefit �of �the �lenders �of �the �Tranche �A �Term �Loan �and �lenders �under �the �Revolving �Credit Facility,�that�the�Company�maintain�at�the�end�of�each�fiscal�quarter�the�following�financial�ratios: • • a�Consolidated�Interest�Coverage�(as�defined�in�the�2016�Credit�Agreement)�of�no�less�than�2.75�to�1.00�at�December�31,�2020�and�through�March�31, 2021,�after�which�the�ratio�reverts�back�to�no�less�than�3.00�to�1.00;�and a �Consolidated �Leverage�Ratio �(as�defined �in �the�2016 �Credit�Agreement) �of�no �more �than�7.50 �to�1.00 �through�March �31,�2021, �7.00�to �1.00�for �the quarter�ending�June�30,�2021,�6.50�to�1.00�for�the�quarter�ending�September�30,�2021,�6.00�to�1.00�for�the�quarters�ending�December�31,�2021�through September�30,�2022,�and�5.00�to�1.00�thereafter. Australian�Securitization�Facility � �� �The �Company �has �a �securitized �debt �agreement �with �MUFG �Bank �Ltd., �which �expires �in �April �2021. �Under �the �terms �of �the �agreement, �each �month, �on �a revolving �basis, �the �Company �sells �certain �of �its �Australian �receivables �to �the �Company’s �Australian �Securitization �Subsidiary. �The �Australian �Securitization Subsidiary,�in�turn,�uses�the�receivables�as�collateral�to�issue�asset-backed�commercial�paper�(“securitized�debt”)�for�approximately�85�percent�of�the�securitized receivables.�The�amount�collected�on�the�securitized�receivables�is�restricted�to�pay�the�securitized�debt�and�is�not�available�for�general�corporate�purposes. ����The�Company�pays�a�variable�interest�rate�on�the�outstanding�balance�of�the�securitized�debt,�based�on�the�Australian�Bank�Bill�Rate�plus�an�applicable�margin. The�interest�rate�was�0.97�percent�and�1.80�percent�as�of�December�31,�2020�and�2019,�respectively.�The�Company�had�securitized�debt�under�this�facility�of�$62.6 million�and�$78.6�million�as�of�December�31,�2020�and�2019,�respectively,�recorded�in�short-term�debt,�net. 118 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) European�Securitization�Facility ����The�Company�maintains �a�five-year�securitized �debt �agreement�with�MUFG�Bank�Ltd., �which�expires�in�April �2021.�Under�the�terms�of �the�agreement,�the Company�sells�certain �of�its�receivables �from �selected �European �countries �to�its�European�Securitization �Subsidiary.�The�European�Securitization�Subsidiary,�in turn,�uses�the�receivables�as�collateral�to�issue�securitized�debt.�The�amount�collected�on�the�securitized�receivables�is�restricted�to�pay�the�securitized�debt�and�is not�available�for�general�corporate�purposes.�The�amount�of�receivables�to�be�securitized�under�this�agreement�is�determined�by�management�on�a�monthly�basis. The�interest�rate�was�0.98�percent�and�0.63�percent�as�of�December�31,�2020�and�2019,�respectively.�The�Company�had�securitized�debt�under�this�facility�of�$23.4 million�and�$25.7�million�as�of�December�31,�2020�and�2019,�respectively,�recorded�in�short-term�debt,�net. Participation�Debt ����From�time�to�time,�WEX�Bank�enters�into�participation�agreements�with�third-party�banks�to�fund�customers’�balances�that�exceed�WEX�Bank’s�lending�limit�to individual�customers.�Associated�unsecured�borrowings�generally�carry�a�variable�interest�rate�of�1�month�to�3�month�LIBOR�plus�a�margin�of�225�basis�points.����� ����The�following�table�provides�the�amounts�outstanding�under�the�participation�debt�agreements�in�place: December�31,�2020 December�31,�2019 (In�thousands) Participation�debt Average�interest�rate�on�participation�debt�outstanding Amounts 1 Available $ 60,000� Amounts�Outstanding —� Not�applicable 1 2 �Amounts�available�includes�up�to�$60�million�under�an�agreement�that�terminates�on�December�31,�2021. �Amounts�outstanding�are�recorded�in�short-term�debt,�net. Borrowed�Federal�Funds Remaining Funding�Capacity 60,000� Amounts Available Amounts�Outstanding 2 Remaining Funding Capacity $ 80,000� 50,000� $ 30,000� 4.17� % WEX �Bank �borrows �from �uncommitted �federal �funds �lines �to �supplement �the �financing �of �the �Company's �accounts �receivable. �Federal �funds �lines �of credit �were �$376.0 �million �and �$355.0 �million, �respectively, �as �of �December �31, �2020 �and �2019. �There �were �$20.0 �million �and �$35.0 �million �of �outstanding borrowings�as�of�December�31,�2020�and�2019,�respectively.�The�average�interest�rate�on�borrowed�federal�funds�was�1.01�percent�and�2.36�percent�for�the�years ended�December�31,�2020�and�2019,�respectively. WEX�Latin�America�Debt ����WEX�Latin�America�debt�was�comprised�of�credit�facilities�and�loan�arrangements�related�to�its�accounts�receivable,�which�had�a�35.04�percent�interest�rate�as of�December�31,�2019.�The�Company�sold�WEX�Latin�America�on�September�30,�2020�and�no�longer�has�this�debt�obligation. Other ����As�of�December�31,�2020,�WEX�Bank�pledged�$249.8�million�of�fleet�receivables�held�by�WEX�Bank�to�the�Federal�Reserve�Bank�as�collateral�for�potential borrowings,�through �the�Federal�Reserve�Bank�Discount�Window.�Amounts�that�can�be�borrowed�are�based�on�the�amount�of�collateral�pledged�and�were�$188.4 million �as �of �December �31, �2020.�WEX �Bank �had �no�borrowings �outstanding �on �this �line�of �credit �through �the �Federal �Reserve�Bank �Discount �Window �as�of December�31,�2020�and�December�31,�2019. 119 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) Debt�Commitments ����The�table �below�summarizes�the�Company’s�annual�principal�payments�on�its�total�debt�for�each�of�the�next�five�years: (1) 2021 2022 2023 2024 2025 $ $ $ $ $ 170,556� 64,611� 1,188,598� 14,681� 14,681� (1)� Table�is�based�on�contractual�maturities�and,�therefore,�unadjusted�for�the�Company's�intention�to�early�redeem�its�Notes�during�March�2021,�as�discussed�further�in�Note�28, Subsequent�Events. 17. Tax�Receivable�Agreement � � � �As�a �consequence �of �the �Company’s�separation �from �its �former �parent �company �in�2005, �the �tax �basis�of �the �Company’s �net �tangible �and�intangible �assets increased,�reducing�the�amount�of�tax�that�the�Company�would�pay�in�the�future�to�the�extent�the�Company�generated�taxable�income�in�sufficient�amounts.�The Company�is�contractually�obligated�to�remit�a�portion�of�any�such�cash�savings�to�a�third�party.�The�estimated�amounts�of�future�payments�owed�were�$2.0�million at�December�31,�2020�and�$3.7�million�at�December�31,�2019,�which�are�included�within�other�current�liabilities�on�the�consolidated�balances�sheets�based�on�the timing �of �payment. �There �has �been �a �reassessment �of �the �estimate �for �each �period �presented. �For �the �years �ended �December �31, �2020, �2019 �and �2018, �this reassessment�resulted�in�an�insignificant�change�in�the�net�future�benefits�and�non-operating�expense.�In�addition,�the�liability�decreased�due�to�payments�of�$1.3 million�and�$8.9�million�made�during�the�years�ended�December�31,�2020�and�2019,�respectively. 18. Employee�Benefit�Plans ����The�Company�sponsors�a�401(k)�retirement�and�savings�plan�for�U.S.�employees.�Eligible�employees�may�participate�in�the�plan�immediately.�The�Company’s employees�who�are�at�least�18�years�of�age�and�have�completed�one�year�of�service�are�eligible�f����or�Company�matching�contributions�in�the�plan.�The�Company matches �100 �percent �of �each �employee’s �contributions �up �to �a �maximum �of �6 �percent �of �each �employee’s �eligible �compensation. �All �contributions �vest immediately.�WEX�has�the�right�to�discontinue�the�plan�at�any�time.�Contributions�to�the�plan�are�voluntary.�The�Company�contributed�$13.7�million,�$10.0�million and�$8.0�million�in�matching�funds�to�the�plan�for�the�years�ended�December�31,�2020,�2019�and�2018,�respectively. � � � �The �Company �also �sponsors �deferred �compensation �plans �for �certain �employees �designated �by �the �Company. �Participants �may �elect �to �defer �receipt �of designated�percentages�or�amounts�of�their�compensation.�The�Company�maintains�a�grantor’s�trust�to�hold�the�assets�under�these�plans.�The�related�obligations totaled �$9.6 �million �and �$8.0 �million �at �December �31, �2020 �and �2019, �respectively, �and �are �included �in �other �current �liabilities �and �other �liabilities �on �the consolidated�balance�sheets.�The�assets�are�recorded�at�fair�value,�with�any�changes�recorded�to�earnings,�and�are�included�in�prepaid�expenses�and�other�current assets�and�other�assets�on�the�consolidated�balance�sheets.�Refer�to�Note�19,�Fair�Value,�for�further�information. ����The�Company�has�defined�benefit�pension�plans�in�several�foreign�countries.�The�total�net�unfunded�status�for�the�Company’s�foreign�defined�benefit�pension plans �was �$6.3 �million �and �$5.9 �million �as �of �December �31, �2020 �and �2019, �respectively. �These �obligations �are �recorded �in �other �current �liabilities, �accrued expenses�and�other�liabilities�in�the�consolidated�balance�sheets.�The�Company�measures�these�plan�obligations�at�fair�value�on�an�annual�basis,�with�any�changes recorded�to�earnings.�The�aggregate�cost�for�these�plans�was�insignificant�to�the�consolidated�financial�statements�for�all�periods�presented. 120 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) 19. Fair�Value Assets�and�Liabilities�Measured�at�Fair�Value�on�a�Recurring�Basis ����The�following�table�presents�the�Company’s�financial�instruments�that�are�measured�at�fair�value�on�a�recurring�basis: (In�thousands) 1 Financial�Assets: Money�market�mutual�funds Investment�securities Municipal�bonds Asset-backed�securities Mortgage-backed�securities Pooled�investment�fund�measured�at�net�asset�value Fixed-income�mutual�fund 2 Total�investment�securities Executive�deferred�compensation�plan�trust Interest�rate�swaps 4 3 Liabilities: Interest�rate�swaps 5 1� The�fair�value�is�recorded�in�cash�and�cash�equivalents. Fair�Value�Hierarchy December�31, 2020 2019 1 2 2 2 1 1 2 2 $ $ $ $ $ $ 335,449� 197� 210� 138� 9,000� 27,728� 37,273� 9,586� —� $ $ $ $ $ 223,217� 302� 247� 174� 5,000� 24,737� 30,460� 7,965� 2,395� 44,938� $ 19,764� 2� The�fair�value�of�this�security�is�measured�at�NAV�as�a�practical�expedient�and�has�not�been�classified�within�the�fair�value�hierarchy.�The�amounts�presented�in�this�table�are�intended�to�permit reconciliation�of�the�fair�value�hierarchy�to�the�amounts�presented�in�the�consolidated�balance�sheets. 3� The�fair�value�is�recorded�as�current�or�long-term�based�on�the�timing�of�the�Company's�executive�deferred�compensation�plan�payment�obligations.�At�December�31,�2020,�$0.9�million�and $8.7 �million�in �fair �value �is �recorded �within �prepaid �expenses �and �other �current �assets �and�other �assets, �respectively. �At �December �31, �2019, �$0.9 �million �and �$7.0 �million �in �fair �value �is recorded�within�prepaid�expenses�and�other�current�assets�and�other�assets,�respectively. 4 �The�fair�value�is�recorded�as�current�or�long-term �depending �on�the�timing�of�expected �discounted �cash�flows.�At�December�31,�2019,�$2.4�million�of�fair�value�is�recorded�within�prepaid expenses�and�other�current�assets. 5� The�fair�value�is�recorded�as�current�or�long-term�depending�on�the�timing�of�expected�discounted�cash�flows.�At�December�31,�2020,�$22.0�million�and�$22.9�million�of�fair�value�is�recorded within �other �current �liabilities �and �other �liabilities, �respectively. �At �December �31, �2019, �$6.7 �million �and �$13.1 �million �of �fair �value �is �recorded �within �other �current �liabilities �and �other liabilities,�respectively. Money�Market�Mutual�Funds ����A�portion�of�the�Company’s�cash�and�cash�equivalents�are�invested�in�money�market�mutual�funds�that�primarily�consist�of�short-term�government�securities, which�are�classified�as�Level�1�in�the�fair�value�hierarchy�because�they�are�valued�using�quoted�market�prices�in�an�active�market. Investment�Securities ����When�available,�the�Company�uses�quoted�market�prices�to�determine�the�fair�value�of�investment�securities;�such�inputs�are�classified�as�Level�1�of�the�fair- value�hierarchy.�These�securities�primarily�consist�of�an�open-ended�mutual�fund,�which�is�invested�in�fixed-income�securities�and�is�held�in�order�to�satisfy�the regulatory�requirements�of�WEX�Bank.�For�mortgage-backed�and�asset-backed�debt�securities�and�municipal�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�valued�using�Level�2�inputs. Pooled�Investment�Fund (In�thousands) Fair�Value Unfunded�Commitments Redemption�Frequency Redemption�Notice�Period Pooled�investment�fund,�as�of�December�31,�2020 $ 9,000� —� Monthly 30�days 121 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) ����The�pooled�investment�fund�is�a�Community�Reinvestment�Act-eligible�investment�fund,�which�seeks�to�provide�bank�investors�with�current�income�consistent with�the �returns �available�in �adjustable-rate �government �guaranteed �financial �products �by �investing�in �Community �Development �loans�guaranteed �by �the�Small Business�Administration.�The�fund�maintains�individual�capital�accounts�for�each�investor,�which�reflect�each�individual�investor’s�share�of�the�NAV�of�the�fund. Executive�Deferred�Compensation�Plan�Trust ����The�investments�held�in�the�executive�deferred�compensation�plan�trust�are�classified�as�Level�1�in�the�fair�value�hierarchy�because�the�fair�value�is�determined using�quoted�prices�for�identical�instruments�in�active�markets. Interest�Rate�Swaps ����The�Company�determines�the�fair�value�of�its�interest�rate�swaps�based�on�the�discounted�cash�flows�of�the�difference�between�the�projected�fixed�payments�on the�swaps�and�the�implied�floating�payments�using�the�current�LIBOR�curve,�which�are�Level�2�inputs�of�the�fair�value�hierarchy. Assets�and�Liabilities�Measured�at�Fair�Value�on�a�Nonrecurring�Basis � � � �The �Company �recorded �a �goodwill �impairment �charge �of �$53.4 �million �during �the �year �ended �December �31, �2020 �to �write �down �the �carrying �value �of �the reporting �unit�to�fair�value�using�Level �3�inputs�as�of�the�annual�goodwill�impairment �test�date�of�October�1,�2020.�See�Note �9,�Goodwill�and�Other�Intangible Assets,�for�a�description�of�the�valuation�techniques�and�inputs�used�for�the�fair�value�measurement.�See�Note�24,�Impairment�Charges,�for�assets�and�liabilities measured�at�fair�value�on�a�non-recurring�basis�for�the�years�ended�December�31,�2020�and�2018�and�the�related�impairment�charges�recorded. The�Company�had�no�other�assets�and�liabilities�measured�on�a�non-recurring�basis�during�the�years�ended�December�31,�2020�and�2019. Assets�and�Liabilities�Measured�at�Carrying�Value,�for�which�Fair�Value�is�Disclosed Notes�Outstanding � � � �The �Company �determines �the �fair �value �of �the �Notes �based �on �market �rates �for �the �issuance �of �our �debt, �which �are �classified �as �Level �2 �in �the �fair �value hierarchy.�As�of�both�December�31,�2020�and�2019,�the�carrying�value�of�the�Notes�approximated�fair�value. 2016�Credit�Agreement ����The�Company�determines�the�fair�value�of�the�amount�outstanding�under�its�2016�Credit�Agreement�based�on�the�market�rates�for�the�issuance�of�the�Company’s debt,�which�are�Level�2�inputs�in�the�fair�value�hierarchy.�As�of�December�31,�2020�and�2019,�the�carrying�value�of�the�2016�Credit�Agreement,�including�both�the tranche�A�and�tranche�B�term�loans,�approximated�fair�value. Convertible�Notes The �Company �determines �the �fair �value �of �the �Convertible �Notes �outstanding �using �our �stock �price �and �volatility, �the �conversion �premium �on �the Convertible�Notes�and�effective�interest�rates�for�similarly�rated�credit�issuances,�all�of�which�are�Level�2�inputs�in�the�fair�value�hierarchy.�As�of�December�31, 2020,�the�fair�value�of�our�convertible�notes�is�$405.6�million. Other�Assets�and�Liabilities ����The�Company's�financial�instruments,�other�than�those�presented�above,�include�cash,�cash�equivalents,�restricted�cash,�accounts�receivable,�accounts�payable, accrued�expenses�and�other�liabilities.�The�carrying�values�of�such�assets�and�liabilities�approximate�their�respective�fair�values�due�to�their�short-term�nature.�The carrying �values �of �certificates �of �deposit, �interest-bearing �brokered �money �market �deposits, �securitized �debt, �participation �debt �and �borrowed �federal �funds approximate �their �respective �fair �values �as �the �interest �rates �on �these �financial �instruments �are �variable �market-based �rates. �All �other �financial �instruments �are reflected�at�fair�value�on�the�consolidated�balance�sheets. 122 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) 20. Redeemable�Non-Controlling�Interest � � ��On �March �5,�2019, �the �Company�acquired �Discovery �Benefits,�an �employee �benefits �administrator. �The�seller �of �Discovery�Benefits �obtained �a �4.9�percent equity�interest�in�the�newly�formed�parent�company�of�WEX�Health�and�Discovery�Benefits�(the�“U.S.�Health�business”).�The�seller’s�4.9�percent�non-controlling interest�in�the�U.S.�Health�business�was�initially�established�at�both�carrying�value�and�fair�value.�On�the�date�of�acquisition,�the�excess�of�the�fair�value�of�the�4.9 percent�equity�interest�in�WEX�Health�over�its�carrying�value�was�recognized�as�an�equity�transaction,�resulting�in�a�$41.4�million�increase�to�additional�paid-in capital. �Remeasurement �of �the �equity �interest �to �fair �value �during �the �first �quarter �of �2019 �resulted �in �an �increase �to �redeemable �non-controlling �interest �of $41.4�million�and�an�offsetting�decrease�to�retained�earnings�that�did�not�impact�earnings�per�share. ����The�agreement�provides�the�seller�with�a�put�right�and�the�Company�with�a�call�right�for�the�equity�interest,�which�can�be�exercised�no�earlier�than�seven�years following �the �date �of �acquisition. �Upon �exercise �of �the �put �or �call �right, �the �purchase �price �is �calculated �based �on �a �revenue �multiple �of �peer �companies �(as described�in�the�operating�agreement�for�the�U.S.�Health�business)�applied�to�trailing�twelve�month�revenues�of�the�U.S.�Health�business.�The�put�option�makes�the non-controlling�interest�redeemable�and,�therefore,�the�non-controlling�interest�is�classified�as�temporary�equity�outside�of�stockholders’�equity. The�Company�calculates�the�redemption�value�of�the�non-controlling�interest�on�a�quarterly�basis�using�revenue�multiples�as�determined�in�accordance with�the�operating�agreement�for�the�U.S.�Health�business�and�described�above.�The�redeemable�non-controlling�interest�is�reported�at�the�higher�of�its�redemption value �or �the �non-controlling �interest �holder’s �proportionate �share �of �the �U.S. �Health �business’ �net �carrying �value. �Any �resulting �change �in �the �value �of �the redeemable�non-controlling�interest�will�be�offset�against�retained�earnings�and�impact�earnings�per�share. ����The�following�table�presents�the�changes�in�the�Company’s�redeemable�non-controlling�interest: �(In�thousands) Balance,�beginning�of�year Acquisition�of�Discovery�Benefits�at�fair�value Establishing�redeemable�non-controlling�interest�for�WEX�Health�at�carrying�value Adjustment�to�redeemable�non-controlling�interest�to�reflect�WEX�Health�at�fair�value Net�income�(loss)�attributable�to�redeemable�non-controlling�interest Change�in�value�of�redeemable�non-controlling�interest Balance,�end�of�year 21. Commitments�and�Contingencies Litigation Year�Ended�December�31, 2020 2019 156,879� $ —� —� —� 652� (40,312) 117,219� $ —� 25,757� 32,843� 41,400� (436) 57,315� 156,879� $ $ ����The�Company�is�subject�to�legal�proceedings�and�claims�in�the�ordinary�course�of�business.�As�of�the�date�of�this�filing,�the�current�estimate�of�a�reasonably possible �loss �contingency �from �all �legal �proceedings �is �not �material �to �the �Company’s �consolidated �financial �position, �results �of �operations, �cash �flows �or liquidity.���� Extension�of�Credit�to�Customers � � � �We �have �entered �into �commitments �to �extend �credit �in �the �ordinary �course �of �business. �We �had �$6.6 �billion �of �unused �commitments �to �extend �credit �at December �31, �2020, �as �part �of �established �customer �agreements. �These �amounts �may �increase �or �decrease �during �2021 �as �we �increase �or �decrease �credit �to customers,�subject�to�appropriate�credit�reviews,�as�part�of�our�lending�product�agreements.�Many�of�these�commitments�are�not�expected�to�be�utilized.�We�can adjust�most�of�our�customers’�credit�lines�at�our�discretion�at�any�time.�Therefore,�we�do�not�believe�total�unused�credit�available�to�customers�and�customers�of strategic�relationships�represents�future�cash�requirements. The �unfunded �portion �of �an �extension �of �credit �to �customers �fluctuates �as �the �Company �increases �or �decreases �customer �credit �limits, �subject �to appropriate �credit �reviews. �Given �that �the �Company �can �generally �adjust �its �customers’ �credit �lines �at �its �discretion �at �any �time, �the �unfunded �portion �of �loan commitments�to�customers�is�unconditionally�cancellable�and�thus�the�Company�has�not�established�a�liability�for�expected�credit�losses�on�those�commitments. 123 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) Unfunded�Commitment ����As�a�member�bank,�we�have�committed�to�funding�a�maximum�of�$8.0�million�of�loans�to�a�nonprofit,�community�development�financial�institution�to�facilitate their�offering�of�flexible�financing�for�affordable,�quality�housing�to�assist�Utah’s�low�and�moderate-income�residents.�As�of�December�31,�2020,�the�Company�has funded�$2.3�million�of�its�commitment,�which�has�been�included�on�the�consolidated�balance�sheet�within�accounts�receivable.�The�Company’s�remaining�unused commitment�as�of�December�31,�2020�is�$5.7�million. Minimum�Volume�and�Spend�Commitments ����Two�of�the�Company’s�subsidiaries�are�required�to�purchase�a�minimum�amount�of�fuel�from�suppliers�on�an�annual�basis�through�2024.�Upon�failing�to�meet these�minimum�volume�commitments,�a�penalty�is�assessed�as�defined�under�the�contracts.�The�Company�incurred�$3.6�million�of�shortfall�penalties�under�these contracts�during�the�year�ended�December�31,�2020.�If�the�Company�does�not�purchase�any�fuel�under�these�commitments�after�December�31,�2020,�it�would�incur penalties�totaling�$49.6�million�through�2024.�The�Company�considers�the�associated�risk�of�loss�to�be�remote�based�on�current�operations. � � � �The �Company �is �subject �to �minimum �annual �spend �commitments �as �part �of �negotiated �contracts�for �certain �IT �and �non-IT �related �services �through �2023. Minimum�spend�commitments�under�these�contracts�as�of�December�31,�2020�total�$15.7�million,�with�commitments�of�$8.3�million�in�2021,�$6.7�million�in�2022 and�$0.7�million�in�2023. 22. Dividend�Restrictions ����The�Company�has�certain�restrictions�on�the�dividends�it�may�pay,�including�those�under�the�2016�Credit�Agreement.�The�2016�Credit�Agreement�does�allow�us to�make�certain�restricted�payments�(including�dividends)�if�we�are�able�to�demonstrate�pro�forma�compliance�with�a�consolidated�leverage�ratio,�as�defined�in�the 2016�Credit�Agreement,�of�no�more�than�2.50�to�1.00�for�the�most�recent�period�of�four�fiscal�quarters�after�execution�of�a�restricted�payment.�Additionally,�as�long as�the�Company�would�be�in�compliance�with�its�interest�charge�coverage�ratio�and�the�lower�of�a�consolidated�leverage�ratio�of�5.50�to�1.00�and�its�maximum permitted�consolidated�leverage�ratio�for�such�period�under�the�2016�Credit�Agreement�after�giving�pro�forma�effect�to�such�restricted�payment,�the�Company�may pay �$50 �million �per �annum �for �restricted �payments, �including �dividends, �of �which �100% �of �unused �amounts �may �be �carried �over �into �subsequent �years. �The Company�has�not�declared�any�dividends�on�its�common�stock�since�it�commenced�trading�on�the�NYSE�on�February�16,�2005. ����Dividends�paid�by�WEX�Bank�have�provided�a�substantial�part�of�the�Company’s�operating�funds�and�for�the�foreseeable�future�it�is�anticipated�that�dividends paid�by�WEX�Bank�will�continue�to�be�a�source�of�operating�funds�to�the�Company.�Capital�adequacy�requirements�serve�to�limit�the�amount�of�dividends�that�may be�paid�by�WEX�Bank.�WEX�Bank�is�chartered�under�the�laws�of�the�State�of�Utah�and�the�FDIC�insures�its�deposits.�Under�Utah�law,�WEX�Bank�may�only�pay�a dividend�out�of�net�profits�after�it�has�(i)�provided�for�all�expenses,�losses,�interest�and�taxes�accrued�or�due�from�WEX�Bank�and�(ii)�transferred�to�a�surplus�fund 10�percent�of�its�net�profits�before�dividends�for�the�period�covered�by�the�dividend,�until�the�surplus�reaches�100�percent�of�its�capital�stock.�For�purposes�of�these Utah�dividend�limitations,�WEX�Bank’s�capital�stock�is�$5.3�million�and�its�capital�surplus�exceeds�100�percent�of�capital�stock. ����Under�FDIC�regulations,�WEX�Bank�may�not�pay�any�dividend�if,�following�the�payment�of�the�dividend,�WEX�Bank�would�be�“undercapitalized,”�as�defined under�the�Federal�Deposit�Insurance�Act�and�applicable�regulations.�The�FDIC�also�has�the�authority�to�prohibit�WEX�Bank�from�engaging�in�business�practices that�the�FDIC�considers�to�be�unsafe�or�unsound,�which,�depending�on�the�financial�condition�of�WEX�Bank,�could�include�the�payment�of�dividends. ����WEX�Bank�complied�with�the�aforementioned�dividend�restrictions�for�each�of�the�years�ended�December�31,�2020,�2019�and�2018. 23. Stock-Based�Compensation ����On�May�9,�2019,�our�stockholders�approved�the�WEX�Inc.�2019�Equity�and�Incentive�Plan�(the�“Plan”),�which�replaced�our�2010�Equity�and�Incentive�Plan�(the “Prior�Plan”).�Upon�the�expiration�of�the�Prior�Plan�on�May�20,�2020,�all�then�outstanding�awards�will�remain�in�effect,�but�no�additional�awards�may�be�made under�the�Prior�Plan.�The�Plan�permits�the�grant�of�stock�options,�stock�appreciation�rights,�restricted�stock,�restricted�stock�units�and�other�stock-based�or�cash- based�awards�to�non-employee�directors,�officers,�employees,�advisors�or�consultants.�The�Plans�permit�the�Company�to�grant�a�total 124 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) number�of�shares�which�is�the�sum�of;�(i)�3.7�million�shares�of�common�stock;�plus�(ii)�such�additional�number�of�shares�of�common�stock�(up�to�1.5�million)�as�is equal�to�the�number�of�shares�of�common�stock�subject�to�awards�granted�under�the�Prior�Plan.�There�were�3.6�million�shares�of�common�stock�available�for�grant for�future�equity�compensation�awards�under�the�Plan�at�December�31,�2020. ��� �As�of �December �31,�2020, �the�Company �had�four �stock-based�compensation �award �types,�which �are�described �below.�The �compensation �cost�that �has�been recorded �as �an�expense �for�these �programs�totals �$63.9�million, �$45.6�million �and �$33.9�million �for�2020, �2019�and �2018,�respectively. �In�connection �with�the Noventis�acquisition, �the�Company�recognized�an�additional�$5.5�million�of�compensation�cost�for�2019.�Refer�to�Note�4,�Acquisitions,�for�further�information. The�associated�tax�benefit�related�to�these�costs�was�$11.5�million,�$9.9�million�and�$8.0�million,�for�2020,�2019�and�2018,�respectively. Restricted�Stock�Units ����The�Company�periodically�grants�RSUs,�a�right�to�receive�a�specific�number�of�shares�of�the�Company’s�common�stock�at�a�specified�date,�to�non-employee directors �and �certain �employees. �RSUs �granted �to �non-employee �directors �vest �12 �months �from �the �date �of �grant, �or �upon �termination �of �board �service �if �the director �elects �to�defer �receipt. �RSUs �issued �to �certain �employees �generally �vest �evenly �over �up �to �three �years �and �provide�for �accelerated �vesting �if �there �is �a change�of�control�(as�defined�in�the�Plan).�The�fair�value�of�each�RSU�award�is�based�on�the�closing�market�price�of�the�Company’s�stock�on�the�day�of�grant�as reported�by�the�NYSE. ����The�following�is�a�summary�of�RSU�activity�during�the�year�ended�December�31,�2020: (In�thousands�except�per�share�data) Unvested�at�January�1,�2020 Granted Vested,�including�17�shares�withheld�for�tax Forfeited Unvested�at�December�31,�2020 1 Units Weighted-Average� Grant-Date� Fair�Value 260� 309� (74) (23) 472� $ $ 181.23� 119.78� 160.30� 150.11� 145.77� 1 �The �Company �withholds �shares �of �common �stock �to �pay �the �minimum �required �statutory �taxes �due �upon �RSU �vesting. �Cash �is �then �remitted �by �the �Company �to �the �appropriate �taxing authorities. ��� �As�of �December �31, �2020,�there�was �$42.2�million �of�total �unrecognized �compensation�cost �related�to �RSUs.�That �cost�is �expected �to �be�recognized �over�a weighted-average�period�of�1.2�years.�The�total�grant-date�fair�value�of�RSUs�granted�was�$37.0�million,�$34.0�million�and�$16.8�million�during�2020,�2019�and 2018,�respectively.�The�total�fair�value�of�RSUs�that�vested�during�2020,�2019�and�2018�was�$11.9�million,�$7.6�million�and�$9.2�million,�respectively. Performance-Based�Restricted�Stock�Units The�Company�periodically�grants�PBRSUs�to�employees.�A�PBRSU�is�a�right�to�receive�stock�based�on�the�achievement�of�both�performance�goals�and continued�employment�during�the�vesting�period.�In�a�PBRSU,�the�number�of�shares�earned�varies�based�upon�meeting�certain�performance�goals.�PBRSU�awards generally�have�performance�goals�spanning�one�to�three�years,�depending�on�the�nature�of�the�performance�goal.�The�fair�value�of�each�PBRSU�award�is�based�on the�closing�market�price�of�the�Company’s�stock�on�the�grant�date�as�reported�by�the�NYSE. Market-Based�Restricted�Stock�Units�(TSR�awards) Given �the �economic �uncertainty �and �business �disruption �created �by �the �COVID-19 �pandemic, �effective �June �23, �2020, �the �Company's �Compensation Committee�approved�certain�modifications�to�performance-based�restricted�stock�units�previously�granted�on�March�16,�2020�and�March�20,�2019.�Such�changes included�replacing�Company�performance�metrics�with�TSR�metrics�for�the�March�16,�2020�awards,�and�for�the�March�20,�2019�awards,�adding�a�relative�TSR modifier�to�scale�the�payment�up�or�down�by�+/-�15�percent.�Additionally,�the�Company�granted�certain�employees�new�TSR�awards�on�June�24,�2020. Attainment�of�the�Company's�TSR�awards�is�tied�to�WEX's�TSR�relative�to�the�S&P�400�from�the�time�of�modification�(for�awards�modified�on�June�23, 2020)�or�grant�date�(for�awards�granted�on�June�24,�2020).�Given�that�these�are�market-based�performance�awards,�the�fair�value�is�calculated�by�the�Monte�Carlo simulation�valuation�model. 125 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) The�key�inputs�for�the�fair�values�and�other�relevant�information�by�grant�date�are�outlined�below: Grant�date 6/24/2020 6/24/2020 3/16/2020 3/20/2019 Grantee(s) Number�of�grantees�affected Modification�date Risk-free�rate 1 Stock�price Volatility Performance�period Shares�at�target 2 Fair�value�per�share Non-CEO 134 N/A 0.21% $160.14 47.72% June�24,�2020�–� June�23,�2023 110,467 CEO 1 N/A 0.21% $160.14 47.72% June�24,�2020�–� June�23,�2023 28,101 All 332 6/23/2020 0.20% $173.15 51.32% June�23,�2020�–�December 31,�2022 199,870 All 215 6/23/2020 0.18% $173.15 62.29% June�23,�2020�–�December 31,�2021 86,845 $264.17 $240.55 $280.93 $188.21 Total�incremental�compensation�cost 3 $11.5�million $2.3�million $21.8�million $1.3�million 1� At�the�date�of�grant�or�modification�date,�whichever�is�applicable. 2� At�the�date�of�grant�or�modification�date,�whichever�is�applicable.�The�CEO's�June�24,�2020�award�has�a�one-year�post-vesting�holding�period. 3 �For�the�Company's�awards�that�were�modified�on�June�23,�2020,�the�final�attainment�for�recipients�other�than�executive�officers�will�be�based�on�the�greater�of�the�payout�under�the�original awards�performance�metrics�or�the�modified�metrics�as�described�above.�As�a�result,�the�Company�is�required�to�assess�which�payout�is�more�likely�and�adjust�the�expense�accordingly.�If�the original�awards'�performance�metrics�are�expected�to�result�in�a�higher�number�of�shares�vesting,�then�the�expense�recorded�will�be�based�on�awards�expected�to�vest�at�the�grant-date�stock�price. Alternatively,�if�the�modified�metrics�are�expected�to�result�in�a�higher�number�of�shares�vesting,�then�the�expense�recorded�will�be�based�on�the�fair�value�calculated�using�the�Monte�Carlo simulation�valuation�model.�As�of�December�31,�2020,�the�expense�associated�with�the�awards�in�the�table�above�is�calculated�using�the�Monte�Carlo�modification-date�fair�value. ����The�following�is�a�summary�of�TSR�awards�and�PBRSU�activity�during�the�year�ended�December�31,�2020: TSR�awards�and�PBRSUs (In�thousands�except�per�share�data) Unvested�at�January�1,�2020 Granted Forfeited Vested,�including�52�shares�withheld�for�tax Performance�adjustment Unvested�at�December�31,�2020 2 1 Shares Weighted-Average� Grant-Date� Fair�Value 449� 343� (21) (203) 14� 582� $ $ 140.58� 170.71� 150.40� 107.77� 81.21� 170.05� 1 �The �Company�withholds �shares �of�common �stock�to �pay�the�minimum �required�statutory �taxes�due�upon �PBRSU�vesting. �Cash�is�then �remitted�by �the�Company �to �the�appropriate �taxing authorities. 2� Reflects�adjustments�to�the�number�of�shares�of�PBRSUs�expected�to�vest�based�on�the�change�in�performance�attainment�during�the�year�ended�December�31,�2020. As �of �December�31, �2020,�there �was �$74.1�million �of�unrecognized �compensation �cost�related �to �the�TSR �awards �and�PBRSUs �that�is �expected�to �be recognized �over �a �weighted-average �period �of �2.0 �years. �The �total �grant-date �fair �value �of �PBRSUs �and �TSRs �granted �during �2020, �2019 �and �2018 �was �$58.5 million,�$19.0�million�and�$18.3�million,�respectively.�The�total�grant-date�fair�value�of�PBRSUs�that�vested�during�2020,�2019�and�2018�was�$21.7�million,�$9.3 million�and�$12.0�million,�respectively. Stock�Options Market�Performance-Based�Stock�Options ����In�May�2017,�the�Company�granted�market�performance-based�stock�options�with�a�contractual�term�of�ten�years�to�certain�members�of�senior�management.�The options�contain�a�market�condition�that�requires�the�closing�price�of�the�Company’s�stock�to�meet�or�exceed�certain�price�thresholds�for�twenty�consecutive�trading days�(“Stock�Price�Hurdle”)�in�order 126 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) for�shares�to�vest.�The�options�also�contain�a�service�condition�that�requires�the�award�recipients�to�be�continually�employed�from�the�grant�date�until�such�date�that the�Stock�Price�Hurdle�is�satisfied�in�order�for�shares�to�vest.�The�Stock�Price�Hurdle�began�operating�in�May�2020,�on�the�third�anniversary�of�the�grant�date.�As�of December�31,�2020,�75�percent�of�the�shares�had�vested�as�a�result�of�the�Company's�stock�exceeding�the�applicable�Stock�Price�Hurdle.�The�Stock�Price�Hurdle condition�ends�five�years�from�the�date�of�grant,�and�therefore�the�remaining�25�percent�of�awards�may�still�vest. ����The�grant�date�fair�value�of�these�options�was�estimated�on�the�date�of�the�grant�using�a�Monte-Carlo�simulation�model�used�to�simulate�a�distribution�of�future stock�price �paths�based�on�historical�volatility�levels.�The�Company�expensed�the�total�grant�date�fair�value �of�these�options�on�a�graded�basis�over�the�derived service�period�of�approximately�three�years. ����The�table�below�summarizes�the�assumptions�used�to�calculate�the�fair�value:���� Exercise�price Expected�stock�price�volatility Risk-free�interest�rate Weighted�average�fair�value�of�market�performance-based�stock�options�granted Service-Based�Stock�Options $ $ 99.69� 31.14�% 2.18�% 28.69� ����The�Company�periodically�grants�stock�options�to�certain�officers�and�employees�under�the�Plan,�which�generally�become�exercisable�over�three�years�(with approximately�33�percent�of�the�total�grant�vesting�each�year�on�the�anniversary�of�the�grant�date)�and�expire�10�years�from�the�date�of�grant.�All�service-based stock�option�grants�provide�for�an�option�exercise�price�equal�to�the�closing�market�value�of�the�common�stock�on�the�date�of�grant�as�reported�by�the�NYSE. ����Based�on�the�Company’s�lack�of�historical�option�exercise�experience�and�granting�of�stock�options�with�“plain�vanilla”�characteristics,�the�Company�uses�the simplified �method �to �estimate �the �expected �term �of �its �employee �stock �options. �The �fair �value �of �each �option �award �is �estimated �on �the �grant �date �using �the following�assumptions�and�a�Black-Scholes-Merton�option-pricing�model.�The�expected�term�assumption�as�it�relates�to�the�valuation�of�the�options�represents�the period �of �time �that �options �granted �are �expected �to �be �outstanding. �The �Company �estimates �expected �stock �price �volatility �based �on �historical �volatility �of �the Company’s�common�stock�over�a�period�matching�the�expected�term�of�the�options�granted.�The�option-pricing�model�also�includes�a�risk-free�interest�rate�for�the period�matching�the�expected�term�of�the�option�and�is�based�on�the�U.S.�Treasury�yield�curve�in�effect�at�the�time�of�the�grant.�We�have�never�paid�nor�do�we expect�to�pay�any�cash�dividends�on�our�common�stock;�therefore,�we�assume�that�no�dividends�will�be�paid�over�the�expected�terms�of�option�awards.� ����The�table�below�summarizes�the�assumptions�used�to�calculate�the�fair�value�by�year�of�grant: Weighted�average�grant�date�fair�value Weighted�average�expected�term�(in�years) Weighted�average�exercise�price Expected�stock�price�volatility Risk-free�interest�rate $ $ 2020 2019 2018 $ $ 35.13� 6 109.66� 32.37�% 0.58�% $ $ 58.28� 6 184.81� 27.21�% 2.37�% 51.27� 6 158.23� 27.35�% 2.69�% 127 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) ����The�following�is�a�summary�of�all�stock�option�activity�during�the�year�ended�December�31,�2020:� Stock�Options (In�thousands,�except�per�share�data) Outstanding�at�January�1,�2020 Granted Exercised Forfeited�or�expired Outstanding�at�December�31,�2020 Exercisable�on�December�31,�2020 Vested�and�expected�to�vest�at�December�31,�2020 Shares Weighted-Average Exercise�Price Weighted-Average Remaining�Contractual Term�(in�years) Aggregate�Intrinsic Value 892� 262� (96) (15) 1,043� 559� 476� $ $ $ $ 115.82� 109.66� 96.55� 138.52� 115.72� 110.49� 121.90� 7.2 $ 6.4 $ 8.2 $ 91,603� 52,036� 38,844� ����As �of�December�31, �2020,�there �was�$9.6�million �of�total �unrecognized �compensation �cost�related�to �options.�That �cost�is�expected �to�be�recognized �over�a weighted-average�period�of�1.1�years.�The�total�intrinsic�value�of�options�exercised�during�the�years�ended�December�31,�2020,�2019�and�2018�was�$8.7�million, $5.7�million�and�$1.9�million,�respectively.�The�total�grant-date�fair�value�of�options�granted�during�2020,�2019�and�2018�was�$9.3�million,�$7.2�million,�and�$5.2 million,�respectively. Deferred�Stock�Units ����Non-employee�directors�may�elect�to�defer�their�cash�fees�and�RSUs�in�the�form�of�DSUs.�The�Company�grants�fully�vested�DSUs�to�non-employee�directors. These�awards�are�distributed�as�common�stock�200�days�immediately�following�the�date�upon�which�such�director’s�service�as�a�member�of�the�Company’s�Board of�Directors�terminates�for�any�reason.�There�were�approximately�54�thousand�and�63�thousand�DSUs�outstanding�as�of�December�31,�2020�and�2019,�respectively. DSU�activity�is�included�in�the�RSU�table�above.�Unvested�DSUs�as�of�December�31,�2020�and�2019�were�not�material. 24. Impairment�Charges ����During�2020,�the�Company�recorded�a�$53.4�million�non-cash�goodwill�impairment�charge�related�to�the�WEX�Fleet�Europe�reporting�unit�(the�2019�Go�Fuel Card �acquisition). �See �Note �9, �Goodwill �and �Other �Intangible �Assets, �for �further �information. �The �Company �did �not �record �any �impairment �charges �during �its annual �goodwill�assessment�completed�in �the�fourth�quarter�of�2019.�In�the �fourth�quarter�of�2018,�a�goodwill �impairment�charge�of�$3.2�million �was�recorded related�to�the�Brazil�fleet�reporting�unit.�Management�also�impaired�$2.4�million�of�computer�software�in�2018,�which�was�determined�to�provide�no�future�benefit. 25. Segment�Information � � � �The �Company �determines �its �operating �segments �and �reports �segment �information �in �accordance �with �how �the �Company’s �chief �operating �decision �maker (“CODM”)�allocates�resources�and�assesses�performance.�The�Company’s�CODM�is�its�Chief�Executive�Officer.�The�operating�segments�are�aggregated�into�the three�reportable�segments�described�below.���� • • • Fleet�Solutions�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. Travel�and�Corporate�Solutions�focuses�on�the�complex�payment�environment�of�B2B�payments,�providing�customers�with�payment�processing�solutions for�their�corporate�payment�and�transaction�monitoring�needs. Health �and �Employee �Benefit �Solutions� provides �healthcare �payment �products �and �SaaS �consumer �directed �platforms. �Prior �to �the �sale �of �WEX �Latin America,�this�operating�segment�additionally�provided�payroll�related�benefits�to�customers. 128 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) ����The�following�tables�present�the�Company’s�reportable�segment�revenues: (In�thousands) Payment�processing�revenue Account�servicing�revenue Finance�fee�revenue Other�revenue Total�revenues Interest�income (In�thousands) Payment�processing�revenue Account�servicing�revenue Finance�fee�revenue Other�revenue Total�revenues Interest�income (In�thousands) Payment�processing�revenue Account�servicing�revenue Finance�fee�revenue Other�revenue Total�revenues Interest�income ���� Fleet�Solutions Travel�and�Corporate Solutions Health�and�Employee Benefit�Solutions Total Year�Ended�December�31,�2020 404,843� 153,823� 197,307� 162,337� 918,310� $ $ 229,144� 41,927� 1,079� 5,690� 277,840� 4,326� $ 272� $ $ $ 64,904� 253,706� 137� 44,972� 363,719� 1,252� Year�Ended�December�31,�2019 Fleet�Solutions Travel�and� Corporate�Solutions Health�and� Employee�Benefit Solutions 457,244� 164,735� 245,082� 171,334� 1,038,395� $ $ 303,385� 43,293� 2,086� 19,062� 367,826� $ $ 64,963� 205,524� 150� 46,833� 317,470� $ $ $ $ $ 698,891� 449,456� 198,523� 212,999� 1,559,869� 5,850� Total 825,592� 413,552� 247,318� 237,229� 1,723,691� 6,249� $ 1,521� $ 1,534� $ 9,304� Fleet�Solutions Travel�and� Corporate�Solutions Health�and� Employee�Benefit Solutions Total Year�Ended�December�31,�2018 464,980� 162,662� 190,528� 156,970� 975,140� 3,503� $ $ $ 203,289� 37,262� 1,391� 61,402� 303,344� 958� $ $ $ 55,722� 108,172� 16,708� 33,553� 214,155� 11,706� $ $ $ 723,991� 308,096� 208,627� 251,925� 1,492,639� 16,167� $ $ $ $ $ $ $ $ $ No�one�customer�accounted�for�more�than�10�percent�of�the�total�consolidated�revenue�in�2020,�2019�or�2018.���� ����The�CODM�evaluates�the�financial�performance�of�each�segment�using�segment�adjusted�operating�income,�which�excludes:�(i)�unallocated�corporate�expenses; (ii)�acquisition�and�divestiture�related�items�(including�acquisition-related�intangible�amortization);�(iii)�legal�settlement;�(iv)�impairment�charges;�(v)�loss�on�sale of �subsidiary; �(vi) �debt �restructuring �costs; �(vii) �stock-based �compensation; �and �(viii) �other �costs. �Additionally, �we �do �not �allocate �foreign �currency �gains �and losses, �financing �interest �expense, �unrealized �and �realized �gains �and �losses �on �financial �instruments �and �non-cash �adjustments �related �to �the �tax �receivable agreement�to�our�operating�segments. 129 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) ����The�following�table�reconciles�total�segment�adjusted�operating�income�to�(loss)�income�before�income�taxes: �� (In�thousands) Segment�adjusted�operating�income Fleet�Solutions Travel�and�Corporate�Solutions Health�and�Employee�Benefit�Solutions Total�segment�adjusted�operating�income Reconciliation: Total�segment�adjusted�operating�income Less: Unallocated�corporate�expenses Acquisition-related�intangible�amortization Other�acquisition�and�divestiture�related�items Legal�settlement Impairment�charges Loss�on�sale�of�subsidiary Debt�restructuring�costs Stock-based�compensation Other�costs Operating�(loss)�income Financing�interest�expense Net�foreign�currency�loss Non-cash�adjustments�related�to�tax�receivable�agreement Net�unrealized�(loss)�gain�on�financial�instruments (Loss)�income�before�income�taxes ����Assets�are�not�allocated�to�the�segments�for�internal�reporting�purposes. Geographic�Data ����Revenue�by�principal�geographic�area,�based�on�the�country�in�which�the�sale�originated,�was�as�follows: �� (In�thousands) United�States Other�international 1 Total�revenues 2020 Year�ended�December�31, 2019 2018 383,502� 62,096� 96,769� 542,367� $ $ 485,539� 168,786� 80,283� 734,608� $ $ 459,646� 135,379� 44,931� 639,956� 542,367� $ 734,608� $ 639,956� 62,938� 171,144� 57,787� 162,500� 53,378� 46,362� 535� 65,841� 13,555� (91,673) $ (157,080) (25,783) 491� (27,036) (301,081) $ 67,982� 159,431� 37,675� —� —� —� 11,062� 47,511� 25,106� 385,841� (134,677) (926) 932� (34,654) 216,516� $ $ 58,095� 138,186� 4,143� —� 5,649� —� 4,425� 35,103� 13,717� 380,638� (105,023) (38,800) (775) 2,579� 238,619� 2020 Year�ended�December�31, 2019 1,401,144� 158,725� 1,559,869� $ $ 1,535,985� 187,706� 1,723,691� $ $ 2018 1,287,405� 205,234� 1,492,639� $ $ $ $ $ $ $ 1 �No�single�country�within�made�up�more�than�5�percent�of�total�revenues�for�any�of�the�years�presented. ����Net�property,�equipment�and�capitalized�software�is�subject�to�geographic�risks�because�it�is�generally�difficult �to�move�and�relatively�illiquid.�Net�property, equipment�and�capitalized�software�by�principal�geographic�area�was�as�follows: (In�thousands) United�States 1 International Net�property,�equipment�and�capitalized�software 2020 Year�ended�December�31, 2019 2018 $ $ 176,348� 11,992� 188,340� $ $ 200,101� 12,374� 212,475� $ $ 176,111� 11,757� 187,868� 1 �No�single�country�within�made�up�more�than�5�percent�of�total�net�property,�equipment�and�capitalized�software�for�any�of�the�years�presented. 130 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) 26. Supplementary�Regulatory�Capital�Disclosure ����The�Company’s�subsidiary,�WEX�Bank�is�subject�to�various�regulatory�capital�requirements�administered�by�the�FDIC�and�the�Utah�Department�of�Financial Institutions.�Under�capital�adequacy�guidelines�and�the�regulatory�framework�for�prompt�corrective�action,�WEX�Bank�must�meet�specific�capital�guidelines�that involve �quantitative �measures �of �WEX �Bank’s �assets, �liabilities �and �certain �off-balance �sheet �items. �WEX �Bank’s �capital �amounts �and �classification �are �also subject�to�qualitative�judgments�by�the�regulators�about�components,�risk�weightings�and�other�factors.�Failure�to�meet�minimum�capital�requirements�can�initiate certain�mandatory�and�possible�additional�discretionary�actions�by�regulators�that,�if�undertaken,�could�limit�business�activities�and�have�a�material�effect�on�the Company's�business,�results�of�operations�and�financial�condition. � � � �Quantitative �measures �established �by �regulation �to �ensure �capital �adequacy �require �WEX �Bank �to �maintain �minimum �amounts �and �ratios �as �defined �in �the regulations.�As�of�December�31,�2020,�the�most�recent�FDIC�exam�report�categorized�WEX�Bank�as�“well�capitalized”�under�the�regulatory�framework�for�prompt corrective�action.�There�are�no�conditions�or�events�subsequent�to�that�examination�report�that�management�believes�have�changed�WEX�Bank’s�capital�rating. ����The�following�table�presents�WEX�Bank’s�actual�and�regulatory�minimum�capital�amounts�and�ratios: � � � � � Actual�Amount Ratio Minimum�for Capital�Adequacy Purposes�Amount Ratio Minimum�to�Be Well�Capitalized Under�Prompt Corrective�Action Provisions�Amount Ratio $ $ $ $ $ $ $ $ 299,136� 287,570� 287,570� 287,570� 329,276� 314,466� 314,466� 314,466� 15.04�% $ 12.71�% $ 14.46�% $ 14.46�% $ 13.54� % $ 10.88� % $ 12.93� % $ 12.93� % $ 159,148� 90,514� 89,521� 119,361� 194,566� 115,583� 109,443� 145,925� 8.00�% $ 4.00�% $ 4.50�% $ 6.00�% $ 8.00� % $ 4.00� % $ 4.50� % $ 6.00� % $ 198,935� 113,143� 129,308� 159,148� 243,208� 144,479� 158,085� 194,566� 10.00�% 5.00�% 6.50�% 8.00�% 10.00� % 5.00� % 6.50� % 8.00� % (In�thousands) December�31,�2020 Total�Capital�to�risk-weighted�assets Tier�1�Capital�to�average�assets Common�equity�to�risk-weighted�assets Tier�1�Capital�to�risk-weighted�assets December�31,�2019 Total�Capital�to�risk-weighted�assets Tier�1�Capital�to�average�assets Common�equity�to�risk-weighted�assets Tier�1�Capital�to�risk-weighted�assets 27. Related�Party�Transaction Bell�Bank�Revolving�Credit�Agreement���� The �seller �of�Discovery �Benefits, �Bell�Bank, �holds�a �4.9 �percent �equity �interest �in�the �Company's �U.S.�Health �business �and�is �a�revolving �loan �lender under�the�Company's�2016�Credit�Agreement.�As�of�December�31,�2020�and�2019,�there�were�no�amounts�outstanding,�with�available�capacity�of�$50.0�million. Warburg�Pincus�Convertible�Notes On�July�1,�2020,�the�Company�closed�on�a�private�placement�with�an�affiliate�of�funds�managed�by�Warburg�Pincus�LLC,�pursuant�to�which�the�Company issued�convertible�senior�unsecured�notes�due�in�2027�in�an�aggregate�principal�amount�of�$310�million�and�577,254�shares�of�common�stock,�with�gross�proceeds in�respect�of�the�common�stock�of�$90�million.�After�giving�effect�to�the�purchase�of�the�common�stock�and�convertible�notes,�on�an�as-converted�basis,�Warburg Pincus�owned�approximately �4.7%�of �the�Company's �outstanding�common �stock�on �the�closing�date �of�the �private�placement. �Refer�to�Note �16,�Financing �and Other�Debt,�for�more�information�regarding�the�convertible�senior�notes. A�member�of�the�Company’s�board�of�directors�(“related�person”),�is�a�managing�director�at�Warburg�Pincus�LLC.�The�Company�has�a�written�policy regarding�entering�certain�transactions�in�which�any�member�of�the�board�of�directors�has�a�direct�or�indirect�material�interest.�Pursuant�to�this�policy,�the�private placement�was�approved�by�the�Corporate�Governance�Committee�of�the�Company’s�board�of�directors,�after�it�had�reviewed�and�considered�all�relevant�facts�and circumstances,�including,�but�not�limited�to,�whether�the�transaction�was�entered�into�on�terms�no�less�favorable�to�the�Company�than�terms 131 WEX�INC. NOTES�TO�CONSOLIDATED�FINANCIAL�STATEMENTS�(continued) that �could �have �been �reached �with �an �unrelated �third �party �and �the �interest �of �the �related �person �in �the �transaction. �Following �approval �by �the �Corporate Governance�Committee�of�the�board�of�directors,�the�private�placement�was�approved�by�the�disinterested�members�of�the�Company’s�board�of�directors. 28. Subsequent�Events HSA�Purchase�Agreement On�February�11,�2021,�the�Company�entered�into�an�asset�purchase�agreement�with�Bell�Bank�to�acquire�certain�HSA�assets,�including�the�custodial�rights for�certain�HSAs�from�Bell�Bank's�HealthcareBank�division,�the�custodian�bank�for�customers�of�the�U.S.�Health�business.�We�believe�the�acquisition�will�allow the�Company�to�better�capture�the�economics�from�those�HSAs,�leverage�our�investments�to�provide�customers�with�market-leading�HSA�solutions,�and�align�with our�growth�strategy.�The�transaction�is�expected�to�close�in�the�second�quarter�of�2021,�subject�to�regulatory�approvals�and�other�customary�closing�conditions. Pursuant �to �the �purchase �agreement, �the �Company �will �pay �Bell �Bank �initial �cash �consideration �of �approximately �$200 �million, �and �two �additional deferred�cash�payments�of�$25�million�in�July�2023�and�January�2024,�contingent�upon�closing�of�the�transaction.�The�agreement�also�includes�potential�additional consideration�payable,�over�the�ten�years�subsequent�to�the�closing�date,�that�is�contingent�on,�and�calculated�based�on,�any�future�increases�in�the�Federal�Funds rate. �Potential �additional �consideration �may �not �exceed �$225 �million �in �the �aggregate �over �the �ten �year �period �and �will �not �adversely �impact �the �Company’s adjusted�net�income�or�financial�position�as�net�revenues�earned�on�the�acquired�HSA�assets�will�increase�in�the�event�the�Federal�Funds�rate�increases�in�the�future. Notes�Redemption�Notice On�February�11,�2021,�the�Company�provided�irrevocable�notice�to�The�Bank�of�New�York�Mellon�Trust�Company,�N.A.,�the�trustee�for�the�Notes,�of�its intent �to �redeem �its �outstanding �$400 �million �4.75% �Senior �Secured �Notes �due �February �1, �2023 �on �March �15, �2021. �The �redemption �price �of �the �Notes �is $400�million�plus�accrued�and�unpaid�interest�through�the�proposed�redemption�date.�The�redemption�is�expected�to�be�funded�from�cash. 132 ITEM�9.�CHANGES�IN�AND�DISAGREEMENTS�WITH�ACCOUNTANTS�ON�ACCOUNTING�AND�FINANCIAL�DISCLOSURE Not�applicable.� ITEM�9A.�CONTROLS�AND�PROCEDURES Evaluation�of�Disclosure�Controls�and�Procedures ����Our�management,�under�the�supervision�and�with�the�participation�of�the�principal�executive�officer�and�principal�financial�officer�of�WEX�Inc.,�evaluated�the effectiveness �of �the �Company’s �disclosure �controls �and �procedures �as �of �December �31, �2020. �“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,�or�the�Exchange�Act,�is�recorded,�processed,�summarized�and�reported�within�the�time�periods�specified�in�the�SEC’s�rules�and forms.�Disclosure�controls�and�procedures�include,�without�limitation,�controls�and�procedures�designed�to�ensure�that�information�required�to�be�disclosed�by�a company �in �the �reports �it �files �or �submits �under �the �Exchange �Act, �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�WEX�Inc.�concluded�that�the�Company’s�disclosure�controls�and�procedures�were�effective�as�of�December�31, 2020. Management’s�Annual�Report�on�Internal�Control�Over�Financial�Reporting � � � �WEX �Inc.’s �management �is �responsible �for �establishing �and �maintaining �adequate �internal �control �over �financial �reporting. �Internal �control �over �financial reporting �is �defined �in �Rule �13a-15(f) �promulgated �under �the �Exchange �Act �as �a �process �designed �to �provide �reasonable �assurance �regarding �the �reliability �of financial �reporting �and �the �preparation �of �financial �statements �for �external �purposes �in �accordance �with �accounting �principles �generally �accepted�in �the �United States�of�America.�Internal�control�over�financial�reporting�includes�maintaining�records�that�in�reasonable�detail�accurately�and�fairly�reflect�our�transactions�and disposition�of�assets;�providing�reasonable�assurance�that�transactions�are�recorded�as�necessary�for�preparation�of�our�financial�statements;�providing�reasonable assurance�that�receipts�and�expenditures�are�made�only�in�accordance�with�management�and�Board�authorizations;�and�providing�reasonable�assurance�regarding prevention�or�timely�detection�of�unauthorized�acquisition,�use�or�disposition�of�our�assets�that�could�have�a�material�effect�on�our�financial�statements.�Because�of its�inherent�limitations,�internal�control�over�financial�reporting�is�not�intended�to�provide�absolute�assurance�that�a�misstatement�of�our�financial�statements�would be�prevented�or�detected.�Also,�projections�of�any�evaluation�of�effectiveness�to�future�periods�are�subject�to�the�risk�that�controls�may�become�inadequate�because of�changes�in�conditions�or�that�the�degree�of�compliance�with�policies�or�procedures�may�deteriorate. ����Under�the�supervision�of�and�with�the�participation�of�management,�including�the�principal�executive�officer�and�principal�financial�and�accounting�officer,�an evaluation�was�conducted�of�the�effectiveness�of�our�internal�control�over�financial�reporting�based�on�the�framework�in�Internal�Control�-�Integrated�Framework (2013)�issued�by�The�Committee�of�Sponsoring�Organizations�of�the�Treadway�Commission.�Based�on�management’s�evaluation�under�the�framework�in�Internal Control�-�Integrated�Framework�(2013),�management�concluded�that�WEX�Inc.’s�internal�control�over�financial�reporting�was�effective�as�of�December�31,�2020. � � � �The �Company �acquired �eNett �and �Optal �on �December �15, �2020. �Management �excluded �these �businesses �from �its �assessment �of �the �effectiveness �of �the Company’s �internal�control �over�financial �reporting�as�of �December�31, �2020.�These�exclusions �were�in�accordance �with�Securities �and�Exchange�Commission guidance �that �an �assessment �of �a �recently �acquired �business’s �internal �control �over �financial �reporting �may �be �omitted �from �management’s �report �on �internal control�over�financial�reporting�in�the�year�of�acquisition�of�the�business.�These�businesses�represented,�in�aggregate,�9.5%�of�the�Company’s�total�consolidated assets�and�less�than�1%�of�total�consolidated�revenues,�as�of�and�for�the�year�ended�December�31,�2020. � � � �The �effectiveness �of �our �internal �control �over �financial �reporting �as �of �December �31, �2020, �has �been �audited �by �Deloitte �& �Touche �LLP, �an �independent registered�public�accounting�firm,�as�stated�in�their�report,�which�is�included�herein. Changes�in�Internal�Control�Over�Financial�Reporting ����There�has�been�no�change�in�our�internal�control�over�financial�reporting�during�the�fiscal�quarter�ended�December�31,�2020�that�has�materially�affected,�or�is reasonably �likely �to �materially �affect, �our �internal �control �over �financial �reporting. �We �have �not �experienced �any �material �impact �to �our �internal �control �over financial�reporting�despite�the�fact�that�most�of�our 133 employees�are�working�remotely�due�to�the�COVID-19�pandemic.�We�are�continually�monitoring�and�assessing�the�COVID-19�situation�on�our�internal�control�to minimize�the�impact�on�their�design�and�operating�effectiveness. 134 REPORT�OF�INDEPENDENT�REGISTERED�PUBLIC�ACCOUNTING�FIRM To�the�Shareholders�and�the�Board�of�Directors�of�WEX�Inc. Opinion�on�Internal�Control�over�Financial�Reporting We�have�audited�the�internal�control�over�financial�reporting�of�WEX�Inc.�and�subsidiaries�(the�“Company”)�as�of�December�31,�2020,�based�on�criteria established�in�Internal�Control�—�Integrated�Framework�(2013)�issued�by�the�Committee�of�Sponsoring�Organizations�of�the�Treadway�Commission�(COSO).�In our�opinion,�the�Company�maintained,�in�all�material�respects,�effective�internal�control�over�financial�reporting�as�of�December�31,�2020,�based�on�criteria established�in�Internal�Control�—�Integrated�Framework�(2013)�issued�by�COSO. We�have�also�audited,�in�accordance�with�the�standards�of�the�Public�Company�Accounting�Oversight�Board�(United�States)�(PCAOB),�the�consolidated�financial statements�as�of�and�for�the�year�ended�December�31,�2020,�of�the�Company�and�our�report�dated�March�1,�2021,�expressed�an�unqualified�opinion�on�those financial�statements. As�described�in�Management’s�Annual�Report�on�Internal�Control�Over�Financial�Reporting,�management�excluded�from�its�assessment�the�internal�control�over financial�reporting�at�eNett�and�Optal,�which�were�acquired�on�December�15,�2020,�and�whose�financial�statements�constitute�9.5%�of�total�assets�and�less�than�1% of�total�revenues�of�the�consolidated�financial�statements�amounts�as�of�and�for�the�year�ended�December�31,�2020.�Accordingly,�our�audit�did�not�include�the internal�control�over�financial�reporting�at�eNett�and�Optal. Basis�for�Opinion The�Company’s�management�is�responsible�for�maintaining�effective�internal�control�over�financial�reporting�and�for�its�assessment�of�the�effectiveness�of�internal control�over�financial�reporting,�included�in�the�accompanying�Management’s�Annual�Report�on�Internal�Control�Over�Financial�Reporting�appearing�at�Item�9A. Our�responsibility�is�to�express�an�opinion�on�the�Company’s�internal�control�over�financial�reporting�based�on�our�audit.�We�are�a�public�accounting�firm registered�with�the�PCAOB�and�are�required�to�be�independent�with�respect�to�the�Company�in�accordance�with�the�U.S.�federal�securities�laws�and�the�applicable rules�and�regulations�of�the�Securities�and�Exchange�Commission�and�the�PCAOB. We�conducted�our�audit�in�accordance�with�the�standards�of�the�PCAOB.�Those�standards�require�that�we�plan�and�perform�the�audit�to�obtain�reasonable�assurance about�whether�effective�internal�control�over�financial�reporting�was�maintained�in�all�material�respects.�Our�audit�included�obtaining�an�understanding�of�internal control�over�financial�reporting,�assessing�the�risk�that�a�material�weakness�exists,�testing�and�evaluating�the�design�and�operating�effectiveness�of�internal�control based�on�the�assessed�risk,�and�performing�such�other�procedures�as�we�considered�necessary�in�the�circumstances.�We�believe�that�our�audit�provides�a�reasonable basis�for�our�opinion. Definition�and�Limitations�of�Internal�Control�over�Financial�Reporting A�company’s�internal�control�over�financial�reporting�is�a�process�designed�to�provide�reasonable�assurance�regarding�the�reliability�of�financial�reporting�and�the preparation�of�financial�statements�for�external�purposes�in�accordance�with�generally�accepted�accounting�principles.�A�company’s�internal�control�over�financial reporting�includes�those�policies�and�procedures�that�(1)�pertain�to�the�maintenance�of�records�that,�in�reasonable�detail,�accurately�and�fairly�reflect�the transactions�and�dispositions�of�the�assets�of�the�company;�(2)�provide�reasonable�assurance�that�transactions�are�recorded�as�necessary�to�permit�preparation�of financial�statements�in�accordance�with�generally�accepted�accounting�principles,�and�that�receipts�and�expenditures�of�the�company�are�being�made�only�in accordance�with�authorizations�of�management�and�directors�of�the�company;�and�(3)�provide�reasonable�assurance�regarding�prevention�or�timely�detection�of unauthorized�acquisition,�use,�or�disposition�of�the�company’s�assets�that�could�have�a�material�effect�on�the�financial�statements. Because�of�its�inherent�limitations,�internal�control�over�financial�reporting�may�not�prevent�or�detect�misstatements.�Also,�projections�of�any�evaluation�of effectiveness�to�future�periods�are�subject�to�the�risk�that�controls�may�become�inadequate�because�of�changes�in�conditions,�or�that�the�degree�of�compliance�with the�policies�or�procedures�may�deteriorate. /s/�Deloitte�&�Touche�LLP Boston,�Massachusetts March�1,�2021 135 ITEM�9B.�OTHER�INFORMATION Not�applicable. PART�III ITEM�10.�DIRECTORS,�EXECUTIVE�OFFICERS�AND�CORPORATE�GOVERNANCE See �the �information �in �the �Company’s �definitive �proxy �statement �to �be �delivered �to �stockholders �in �connection �with �the �2021 �Annual �Meeting �of Stockholders�(the�“2021�Proxy�Statement”)�set�forth�under�the�captions�“Governance”�and�the�related�subsections�including�“The�Board�of�Directors”,�“Executive Officers,”�and�“Delinquent�Section�16(a)�Reports,”�if�applicable,�which�information�is�incorporated�herein�by�reference. Website�Availability�of�Corporate�Governance�and�Other�Documents The �following �documents �are �available �on �the �Corporate �Governance �page �of �the �investor �relations �section �of �the �Company’s �website, www.wexinc.com:�(1)�WEX�Code�of�Business�Conduct�and�Ethics,�which�covers�all�employees,�officers�and�our�board�of�directors,�(2)�the�Company’s�Corporate Governance �Guidelines �and �(3) �key �Board �Committee �charters, �including �charters �for �the �Audit, �Corporate �Governance �and �Compensation �Committees. Stockholders �also �may �obtain �printed �copies �of �these �documents �by �submitting �a �written �request �to �Investor �Relations, �WEX �Inc., �97 �Darling �Avenue, �South Portland, �Maine �04106. �The �Company �intends �to �post �on �its �website, �www.wexinc.com, �all �disclosures �that �are �required �by �law �or �NYSE �listing �standards concerning�any�amendments�to,�or�waivers�from,�the�Code�of�Business�Conduct�and�Ethics. ITEM�11.�EXECUTIVE�COMPENSATION See�the�information�in�the�2021�Proxy�Statement�set�forth�under�the�captions�“Executive�Compensation”�and�the�related�subsections�and�“Governance”�and related �subsections �including �“Director �Compensation” �and �“Compensation �Committee �Interlocks �and �Insider �Participation”, �which �information �is �incorporated herein�by�reference. ITEM�12.�SECURITY�OWNERSHIP�OF�CERTAIN�BENEFICIAL�OWNERS�AND�MANAGEMENT�AND�RELATED�STOCKHOLDER�MATTERS See �the �information �in �the �2021 �Proxy �Statement �set �forth �under �the �caption �“Information �About �Stock �Ownership” �and �related �subsections �including “Securities�Authorized�for�Issuance�Under�Equity�Compensation�Plans”�and�“Principal�Stockholders”,�which�information�is�incorporated�herein�by�reference. ITEM�13.�CERTAIN�RELATIONSHIPS�AND�RELATED�TRANSACTIONS,�AND�DIRECTOR�INDEPENDENCE See�the�information�in�the�2021�Proxy�Statement�set�forth�under�the�caption�“Governance”�and�related�subsections�including�“Director�Independence”�and “Certain�Relationships�and�Related�Transactions,”�which�information�is�incorporated�herein�by�reference. ITEM�14.�PRINCIPAL�ACCOUNTING�FEES�AND�SERVICES See�the�information�in�the�2021�Proxy�Statement�set�forth�under �the�caption�“Auditor�Selection�and�Fees,”�which�information�is�incorporated �herein�by reference. 136 PART�IV ITEM�15.�EXHIBITS�AND�FINANCIAL�STATEMENT�SCHEDULES The�following�documents�are�filed�as�part�of�this�report: 1.�Financial�Statements�(see�Index�to�Consolidated�Financial�Statements�on�page�73). 2.�Financial�statement�schedules�have�been�omitted�since�they�are�either�not�required�or�not�applicable�or�the�information�is�otherwise�included herein. 3.�The�exhibit�index�attached�to�this�Annual�Report�on�Form�10–K�is�hereby�incorporated�by�reference. ITEM�16.�FORM�10–K�SUMMARY None. � Exhibit��No. �� EXHIBIT�INDEX Description 2.1 2.2 �� �� �� �� 3.1 3.2 3.3 4.1 4.2 4.3 4.4 4.5 Unit�Purchase�Agreement,�dated�October�18,�2015,�by�and�among�WEX�Inc.,�Mustang�HoldCo�1�LLC,�Warburg�Pincus�Private�Equity�(E&P)�XI�-�B,�L.P., Warburg�Pincus�Private�Equity�XI‑C,�L.P.,�WP�XI�Partners,�L.P.,�Warburg�Pincus�Private�Equity�XI‑B,�L.P.,�WP�Mustang�Co‑Invest‑B,�L.P.,�WP�Mustang Co‑Invest‑C�L.P.,�Warburg�Pincus�XI�(E&P)�Partners‑B,�L.P.,�Warburg�Pincus�(E&P)�XI,�L.P.,�WP�Mustang�Topco�LLC�and�Warburg�Pincus�Private Equity�XI�(Lexington),�LLC�(incorporated�by�reference�to�Exhibit�2.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�October�19,�2015,�File�No. 001-32426) Share�Purchase�Agreement,�dated�January�24,�2020,�by�and�among�WEX�Inc.,�eNett�International�(Jersey)�Limited,�a�Jersey�limited�company,�Optal�Limited, a�private�company�limited�by�shares�incorporated�in�England�and�Wales,�Travelport�Limited,�a�Bermuda�exempted�company,�Toro�Private�Holdings�I,�Ltd.,�a private�company�limited�by�shares�incorporated�in�England�and�Wales,�Optal�Limited,�in�its�capacity�as�trustee�of�the�PSP�Group�DESOP�Discretionary�Trust established�by�way�of�discretionary�trust�deed�dated�28�October�2008,�as�amended�from�time�to�time,�and�the�other�shareholders�of�eNett�and�Optal�set�forth therein�(incorporated�herein�by�reference�to�Exhibit�No.�2.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�January�24,�2020,�File�No.�001-32426) 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) Certificate�of�Ownership�and�Merger�merging�WEX�Transitory�Corporation�with�and�into�Wright�Express�Corporation�(incorporated�by�reference�to�Exhibit No.�3.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�October�30,�2012,�File�No.�001-32426) Amended�and�Restated�By-Laws�of�WEX�Inc.,�as�amended�and�restated�as�of�April�16,�2019�(incorporated�by�reference�to�Exhibit�3.1�to�our�Current�Report on�Form�8-K�filed�with�the�SEC�on�April�22,�2019,�File�No.�001-32426) Indenture,�dated�as�of�January�30,�2013,�among�WEX�Inc.,�the�Guarantors�named�therein,�and�The�Bank�of�New�York�Mellon�Trust�Company,�N.A. (incorporated�by�reference�to�Exhibit�No.�4.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�February�1,�2013,�File�No.�001-32426) Supplemental�Indenture,�dated�as�of�July�1,�2016�to�the�Indenture,�dated�as�of�January�30,�2013�among�WEX�Inc.,�the�additional�subsidiary�guarantors thereto�and�The�Bank�of�New�York�Mellon�Trust�Company,�N.A.�(incorporated�by�reference�to�Exhibit�No.�4.1�to�our�Current�Report�on�Form�8-K�filed�with the�SEC�on�July�1,�2016,�File�No.�001-32426) U.S.�Security�Agreement,�made�by�WEX�Inc.,�and�the�certain�of�its�subsidiaries,�as�pledgors,�assignors�and�debtors�dated�as�of�July�1,�2016,�in�favor�of�Bank of�America,�as�collateral�agent�for�the�Lenders�(incorporated�by�reference�to�Exhibit�No.�4.2�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�1, 2016,�File�No.�001-32426) Description�of�WEX�Inc.’s�Securities�Registered�under�Section�12�of�the�Exchange�Act�(incorporated�by�reference�to�Exhibit�4.4�to�our�Annual�Report�on Form�10-K�filed�with�the�SEC�on�February�28,�2020,�File�No.�001-32426) Indenture,�dated�as�of�July�1,�2020,�by�and�between�WEX�Inc.�and�The�Bank�of�New�York�Mellon�Trust�Company,�N.A.,�as�trustee�(incorporated�by reference�to�Exhibit�4.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�1,�2020,�File�No.�001-32426) 137 4.6 10.1 10.2 10.3 10.4 10.5 10.6 �� �� �� �� �� 10.7 10.8 10.9 10.10 10.11 10.12 10.13 10.14 10.15 Form�of�6.50%�Convertible�Senior�Notes�due�2027�(included�in�Exhibit�4.1)�(incorporated�by�reference�to�Exhibit�4.2�to�our�Current�Report�on�Form�8-K�filed with�the�SEC�on�July�1,�2020,�File�No.�001-32426) Form�of�director�indemnification�agreement�(incorporated�by�reference�to�Exhibit�No.�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�June�8, 2009,�File�No.�001-32426) Tax�Receivable�Agreement,�dated�as�of�February�22,�2005,�by�and�between�Cendant�Corporation�and�Wright�Express�Corporation�(incorporated�by�reference�to Exhibit�No.�10.3�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�March�1,�2005,�File�No.�001-32426) Tax�Receivable�Prepayment�Agreement�dated�June�26,�2009�by�and�between�Wright�Express�Corporation�and�Realogy�Corporation�(incorporated�by�reference to�Exhibit�No.�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�2,�2009,�File�No.�001-32426) Ratification�Agreement�dated�June�26,�2009�by�and�among�Wright�Express�Corporation,�Realogy�Corporation,�Wyndham�Worldwide�Corporation�and�Avis Budget�Group,�Inc.�(incorporated�by�reference�to�Exhibit�No.�10.2�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�2,�2009,�File�No.�001-32426) Guarantee,�dated�as�of�June�26,�2009,�by�Apollo�Investment�Fund�VI,�L.P.,�Apollo�Overseas�Partners�VI,�L.P.,�Apollo�Overseas�Partners�(Delaware)�VI,�L.P., Apollo�Overseas�Partners�(Delaware892)�VI,�L.P.�and�Apollo�Overseas�Partners�(Germany)�VI,�L.P.�in�favor�of�Wright�Express�Corporation�(incorporated�by reference�to�Exhibit�No.�10.3�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the�SEC�on�July�30,�2009,�File�No.�001-324426) Investors�Rights�Agreement,�dated�as�of�July�1,�2016,�by�and�among�WEX�Inc.,�Mustang�HoldCo�1�LLC,�Warburg�Pincus�Private�Equity�(E&P)�XI‑�B,�L.P., Warburg�Pincus�Private�Equity�XI�–�C,�L.P.,�WP�XI�Partners,�L.P.,�Warburg�Pincus�Private�Equity�XI�–�B,�L.P.,�WP�Mustang�Co-Invest�–�B�L.P.,�WP�Mustang Co-Invest�–�C�L.P.,�Warburg�Pincus�XI�(E&P)�Partners�–�B,�L.P.,�Warburg�Pincus�(E&P)�XI,�L.P.,�WP�(Lexington)�Holdings�II,�L.P.,�Warburg�Pincus�Private Equity�(Lexington)�XI�–�A,�L.P.,�Warburg�Pincus�XI�(Lexington)�Partners�–�A�,�L.P.,�WP�Mustang�Co-Invest�LLC�and�the�other�investors�party�thereto (incorporated�by�reference�to�Exhibit�No.�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�1,�2016,�File�No.�001-32426) Credit�Agreement�among�WEX�Inc.,�certain�of�its�subsidiaries�as�borrowers,�WEX�Card�Holding�Australia�Pty�Ltd.,�as�designated�borrower,�Bank�of�America, N.A.,�as�Administrative�Agent,�Swing�Line�Lender�and�L/C�Issuer,�and�the�other�lenders�party�thereto�(incorporated�by�reference�to�Exhibit�No.�10.2�to�our Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�1,�2016,�File�No.�001-32426) First�Amendment�to�Credit�Agreement�dated�July�3,�2017,�between�WEX�Inc.,�Wright�Express�International�Holdings�Limited,�WEX�Card�Holdings�Australia Pty�Ltd.�and�Bank�of�America�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�3,�2017,�File�No.�001- 32426) Second�Amendment�to�Credit�Agreement�dated�October�30,�2017,�between�WEX�Inc.,�Wright�Express�International�Holdings�Limited,�WEX�Card�Holdings Australia�Pty�Ltd.,�Bank�of�America�and�Santander�Bank,�N.A.�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the SEC�on�November�3,�2017,�File�No.�001-32426) Third �Amendment �to �Credit �Agreement �dated �January �17, �2018, �between �WEX �Inc., �Wright �Express �International �Holdings �Limited, �WEX �Card �Holdings Australia�Pty�Ltd.,�Bank�of�America�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�January�18,�2018,�File No.�001-32426) Fourth�Amendment�to �Credit �Agreement �dated�August �24, �2018, �between�WEX �Inc., �Wright �Express�International �Holdings �Limited, �WEX �Card�Holdings Australia�Pty�Ltd.,�Bank�of�America�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�August�24,�2018,�File No.�001-32426) Fifth�Amendment�to�Credit�Agreement�dated�January�18,�2019,�between�WEX�Inc.,�Wright�Express�International�Holdings�Limited,�WEX�Card�Holdings Australia�Pty�Ltd.,�Bank�of�America�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�January�22,�2019,�File No.�001-32426) Sixth�Amendment�to�Credit�Agreement�dated�as�of�May�17,�2019,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�identified�therein,�the�lenders�party thereto�and�Bank�of�America,�N.A.,�as�administrative�agent�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC on�May�20,�2019,�File�No.�001-32426) Seventh�Amendment�to�Credit�Agreement�dated�as�of�November�19,�2019,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�identified�therein,�Bell Bank,�as�the�incremental�revolving�loan�lender,�and�Bank�of�America,�N.A.,�as�administrative�agent�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current Report�on�Form�8-K�filed�with�the�SEC�on�November�25,�2019,�File�No.�001-32426) Eighth�Amendment�to�Credit�Agreement�dated�February�10,�2020,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�identified�therein,�Bank�of�America, N.A.,�as�administrative�agent,�and�the�lenders�party�thereto�(incorporated�by�reference�to�Exhibit�10.2�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on February�13,�2020,�File�No.�001-32426) 138 †10.16 �� †10.17 Wright�Express�Corporation�Amended�2010�Equity�and�Incentive�Plan�(incorporated�by�reference�to�Exhibit�No.�99.1�to�our�Current�Report�on�Form�8-K�filed with�the�SEC�on�May�21,�2010,�File�No.�001-32426) WEX�Inc.�2019�Equity�and�Incentive�Plan�(incorporated�by�reference�to�Exhibit�No.�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�May�15, 2019,�File�No.�001-32426) †�10.18 Form�of�WEX�Inc.�Restricted�Stock�Unit�Agreement�under�the�WEX�Inc.�2019�Equity�and�Incentive�Plan�(incorporated�by�reference�to�Exhibit�No.�10.18�to our�Annual�Report�on�Form�10-k�filed�with�the�SEC�on�February�28,�2020,�File�No.�001-324426) †�10.19 Form�of�WEX�Inc.�Performance-Based�Restricted�Stock�Unit�Agreement�under�the�WEX�Inc.�2019�Equity�and�Incentive�Plan�(incorporated�by�reference�to Exhibit�No.�10.19�to�our�Annual�Report�on�Form�10-K�filed�with�the�SEC�on�February�28,�2020,�File�No.�001-324426) †�10.20 Form�of�WEX�Inc.�Nonqualified�Stock�Option�Agreement�under�the�WEX�Inc.�2019�Equity�and�Incentive�Plan�(incorporated�by�reference�to�Exhibit�No. 10.20�to�our�Annual�Report�on�Form�10-K�filed�with�the�SEC�on�February�28,�2020,�File�No.�001-324426) †10.21 �� †10.22 †�10.23 †�10.24 †�10.25 †�10.26 †�10.27 †�10.28 †�10.29 †�10.30 †�10.31 †���10.32 �†�10.33 �� �� �� �� �� �� �� �� �� Wright�Express�Corporation�Amended�and�Restated�Non-Employee�Directors�Deferred�Compensation�Plan�(incorporated�by�reference�to�Exhibit�No.�10.2�to our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�January�7,�2009,�File�No.�001-32426) 2014�Form�of�Annual�Restricted�Stock�Unit�Agreement�(incorporated�by�reference�to�Exhibit�10.3�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the�SEC on�April�30,�2014,�File�No.�001-32426) Form�of�2014�Growth�Grant�-�Performance-Based�Restricted�Stock�Unit�Agreement�(incorporated�by�reference�to�Exhibit�10.4�to�our�Quarterly�Report�on Form�10-Q�filed�with�the�SEC�on�April�30,�2014,�File�No.�001-32426) 2015�Section�162(m)�Performance�Incentive�Plan�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�May 21,�2015,�File�No.�001-32426) WEX�Inc.�Executive�Severance�Pay�and�Change�in�Control�Plan�dated�March�5,�2018�(incorporated�by�reference�to�Exhibit�No.�10.18�to�our�Annual�Report�on Form�10-K�filed�with�the�SEC�on�March�18,�2019,�File�No.�001-32426) Form�of�Employment�Agreement�for�David�Maxsimic�and�Melissa�Smith�(incorporated�by�reference�to�Exhibit�No.�10.6�to�our�Current�Report�on�Form�8-K filed�with�the�SEC�on�January�7,�2009,�File�No.�001-32426) Form�of�Employment�Agreement�for�Robert�Cornett,�Hilary�Rapkin�and�Jamie�Morin�(incorporated�by�reference�to�Exhibit�No.�10.7�to�our�Current�Report�on Form�8-K�filed�with�the�SEC�on�January�7,�2009,�File�No.�001-32426) Form�of�Long�Term�Incentive�Program�Award�Agreement�under�the�Amended�and�Restated�Wright�Express�Corporation�2005�Equity�and�Incentive�Plan (incorporated�by�reference�to�Exhibit�No.�99.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�April�6,�2006,�File�No.�001-32426) Form�of�Non-Employee�Director�Long�Term�Incentive�Program�Award�Agreement�under�the�Amended�and�Restated�Wright�Express�Corporation�2005�Equity and�Incentive�Plan�(for�grants�received�prior�to�December�31,�2006)�(incorporated�by�reference�to�Exhibit�10.3�to�our�Quarterly�Report�on�Form�10-Q�filed with�the�SEC�on�August�5,�2008,�File�No.�001-32426) Form�of�Wright�Express�Corporation�Long�Term�Incentive�Program�2010�Growth�Grant�Stock�Non-Statutory�Stock�Option�Award�Agreement�under�the Amended�and�Restated�Wright�Express�Corporation�2005�Equity�and�Incentive�Plan�(incorporated�by�reference�to�Exhibit�No.�10.5�to�our�Quarterly�Report�on Form�10-Q�filed�with�the�SEC�on�April�30,�2010,�File�No.�001-32426) Form�of�Wright�Express�Corporation�Option�Agreement�under�the�Wright�Express�Corporation�2010�Equity�and�Incentive�Plan�(incorporated�by�reference�to Exhibit�No.�10.29�to�our�Annual�Report�on�Form�10-K�filed�with�the�SEC�on�February�28,�2011,�File�No.�001-32426) 2015�Form�of�WEX�Inc.�Long�Term�Incentive�Program�Non-Statutory�Stock�Option�Award�Agreement�(incorporated�by�reference�to�Exhibit�10.1�to�our Quarterly�Report�on�Form�10-Q�filed�with�the�SEC�on�May�1,�2015,�File�No.�001-32426) Form�of�Wright�Express�Corporation�Non-Employee�Director�Compensation�Plan�Award�Agreement�under�the�Wright�Express�Corporation�2010�Equity�and Incentive�Plan�(incorporated�by�reference�to�Exhibit�No.�10.31�to�our�Annual�Report�on�Form�10-K�filed�with�the�SEC�on�February�28,�2011,�File�No.�001- 32426) 139 �†�10.34 �†�10.35 �†�10.36 †�10.37 †�10.38 †�10.39 †�10.40 †�10.41 10.42� 10.43� 10.44� 10.45� 10.46� 10.47� 10.48� †�10.49 †�10.50 10.51� Offer�Letter�dated�November�3,�2015�between�WEX�Inc.�and�Mr.�Simon�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed with�the�SEC�on�November�5,�2015,�File�No.�001-32426) Severance�and�Restricted�Covenant�Agreement�between�Roberto�Simon�and�WEX�Inc.,�dated�March�3,�2016�(incorporated�by�reference�to�Exhibit�10.1�to�our Quarterly�Report�on�Form�10-Q�filed�with�the�SEC�on�April�28,�2016,�File�No.�001-32426) Form�of�Non�Employee�Director�Compensation�Plan�effective�September�21,�2016�(incorporated�by�reference�to�Exhibit�10.1�to�our�Quarterly�Report�on�Form 10-Q�filed�with�the�SEC�on�August�9,�2017,�File�No.�001-32426) Form�of�Non�Employee�Director�Compensation�Plan�effective�October�1,�2017�(incorporated�by�reference�to�Exhibit�10.1�to�our�Quarterly�Report�on�Form�10- Q�filed�with�the�SEC�on�November�8,�2017,�File�No.�001-32426) Employment�Agreement�for�Scott�Phillips�dated�October�16,�2015�(incorporated�by�reference�to�Exhibit�10.29�to�our�Annual�Report�on�Form�10-K�filed�with the�SEC�on�March�1,�2018,�File�No.�001-32426) Noncompetition,�Nonsolicitation,�Confidentiality,�and�Inventions�Agreement�for�Scott�Phillips�dated�October�16,�2015�(incorporated�by�reference�to�Exhibit 10.30�to�our�Annual�Report�on�Form�10-K�filed�with�the�SEC�on�March�1,�2018,�File�No.�001-32426) First�Amendment�to�Employment�Agreement�for�Scott�Phillips�dated�November�1,�2017�(incorporated�by�reference�to�Exhibit�10.31�to�our�Annual�Report�on Form�10-K�filed�with�the�SEC�on�March�1,�2018,�File�No.�001-32426) First�Amendment�to�Noncompetition,�Nonsolicitation,�Confidentiality,�and�Inventions�Agreement�for�Scott�Phillips�dated�November�1,�2017�(incorporated�by reference�to�Exhibit�10.32�to�our�Annual�Report�on�Form�10-K�filed�with�the�SEC�on�March�1,�2018,�File�No.�001-32426) Southern�Cross�WEX�2015-1�Trust�-�Receivables�Acquisition�and�Servicing�Agreement�(incorporated�by�reference�to�Exhibit�10.1�to�our�Quarterly�Report�on Form�10-Q�filed�with�the�SEC�on�July�31,�2015,�File�No.�001-32426) Southern�Cross�WEX�2015-1�Trust�-�Guarantee�and�Indemnity�(incorporated�by�reference�to�Exhibit�10.2�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the SEC�on�July�31,�2015,�File�No.�001-32426) Southern�Cross�WEX�2015-1�Trust�General�Security�Agreement�(incorporated�by�reference�to�Exhibit�10.3�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the SEC�on�July�31,�2015,�File�No.�001-32426) Southern�Cross�WEX�2015-1�Trust�Class�A�Facility�Deed�(incorporated�by�reference�to�Exhibit�10.4�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the�SEC on�July�31,�2015,�File�No.�001-32426) Southern�Cross�WEX�2015-1�Trust�Class�B�Facility�Deed�(incorporated�by�reference�to�Exhibit�10.5�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the�SEC on�July�31,�2015,�File�No.�001-32426) Commitment�Letter,�dated�as�of�October�18,�2015,�by�and�among�WEX�Inc.,�Bank�of�America,�N.A.,�Merrill�Lynch,�Pierce,�Fenner�&�Smith�Incorporated, SunTrust�Bank,�SunTrust�Robinson�Humphrey�and�MUFG�Union�Bank,�N.A�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K filed�with�the�SEC�on�October�19,�2015,�File�No.�001-32426) Consent�and�Amendment�Under�Credit�Agreement,�dated�as�of�February�27,�2019,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�identified�therein,�the lenders�party�thereto�and�Bank�of�America,�N.A.,�as�administrative�agent�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed with�the�SEC�on�March�1,�2019,�File�No.�001-32426). Form�of�Non-Employee�Director�Compensation�Plan�(incorporated�by�reference�to�Exhibit�10.1�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the�SEC�on November�8,�2019,�File�No.�001-32426) Form�of�Non-Employee�Director�Equity�Ownership�Guideline�(incorporated�by�reference�to�Exhibit�10.2�to�our�Quarterly�Report�on�Form�10-Q�filed�with�the SEC�on�November�8,�2019,�File�No.�001-32426) Commitment�Letter,�dated�as�of�January�24,�2020,�by�and�among�WEX�Inc.,�Bank�of�America,�N.A.,�and�BofA�Securities,�Inc.�(incorporated�by�reference�to Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�January�24,�2020,�File�No.�001-32426) 140 10.52� 10.53 10.54 10.55 10.56 10.57 10.58 10.59 10.60 10.61 10.62 10.63 Amended�and�Restated�Commitment�Letter,�dated�as�of�February�10,�2020,�by�and�among�WEX�Inc.,�Bank�of�America,�N.A.,�BofA�Securities,�Inc.,�Citizens Bank,�N.A.,�MUFG�Bank,�Ltd.,�SunTrust�Robinson�Humphrey,�Inc.,�Truist�Bank,�Wells�Fargo�Securities,�LLC,�Wells�Fargo�Bank,�N.A.,�Bank�of�Montreal, BMO�Capital�Markets�Corp.,�Santander�Bank,�N.A.,�KeyBank�National�Association,�KeyBanc�Capital�Markets�Inc.,�Regions�Capital�Markets,�a�division�of Regions�Bank,�Deutsche�Bank�AG�Cayman�Islands�Branch,�Deutsche�Bank�AG�New�York�Branch,�Deutsche�Bank�Securities�Inc.�and�Fifth�Third�Bank, National�Association�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�February�13,�2020,�File�No.�001- 32426) Second�Amended�and�Restated�Commitment�Letter,�dated�as�of�June�26,�2020,�by�and�among�WEX�Inc.,�Bank�of�America,�N.A.,�BofA�Securities,�Inc., Citizens�Bank,�N.A.,�MUFG�Bank,�Ltd.,�Sun�Trust�Robinson�Humphrey,�Inc.,�Truist�Bank,�Wells�Fargo�Securities,�LLC,�Wells�Fargo�Bank,�N.A.,�Bank�of Montreal,�BMO�Capital�Markets�Corp.,�Santander�Bank,�N.A.,�KeyBank�National�Association,�KeyBanc�Capital�Markets�Inc.,�Regions�Capital�Markets,�a division�of�Regions�Bank,�Deutsche�Bank�AG�Cayman�Islands�Branch,�Deutsche�Bank�AG�New�York�Branch,�Deutsche�Bank�Securities�Inc.�and�Fifth�Third Bank,�National�Association�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�June�29,�2020,�File�No.�001- 32426) Third�Amended�and�Restated�Commitment�Letter,�dated�as�of�August�20,�2020,�by�and�among�WEX�Inc.,�Bank�of�America,�N.A.,�BofA�Securities,�Inc., Citizens�Bank,�N.A.,�MUFG�Bank,�Ltd.,�Truist�Securities,�Inc.,�Truist�Bank,�Wells�Fargo�Securities,�LLC,�Wells�Fargo�Bank,�N.A.,�Bank�of�Montreal,�BMO Capital�Markets�Corp.,�Santander�Bank,�N.A.,�KeyBank�National�Association,�KeyBanc�Capital�Markets�Inc.,�Regions�Capital�Markets,�a�division�of�Regions Bank,�Deutsche�Bank�AG�Cayman�Islands�Branch,�Deutsche�Bank�AG�New�York�Branch,�Deutsche�Bank�Securities�Inc.�and�Fifth�Third�Bank,�National Association�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�August�21,�2020,�File�No.�001-32426) Ninth�Amendment�to�Credit�Agreement,�dated�as�of�June�26,�2020,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�identified�therein,�Bank�of�America, N.A.,�as�administrative�agent,�and�the�lenders�party�thereto�(incorporated�by�reference�to�Exhibit�10.2�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on June�29,�2010,�File�No.�001-32426) Tenth�Amendment�to�Credit�Agreement,�dated�as�of�July�29,�2020,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�Tenth�Amendment�to�Credit Agreement,�dated�as�of�July�29,�2020,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�identified�therein,�Mizuho�Bank,�Ltd.,�as�the�incremental revolving�loan�lender,�and�Bank�of�America,�N.A.,�as�administrative�agent�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed with�the�SEC�on�August�3,�2020,�File�No.�001-32426)�therein,�Mizuho�Bank,�Ltd.,�as�the�incremental�revolving�loan�lender,�and�Bank�of�America,�N.A.,�as administrative�agent�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�August�3,�2020,�File�No.�001-32426) Eleventh�Amendment�to�Credit�Agreement,�dated�as�of�August�20,�2020,�by�and�among�WEX�Inc.,�the�subsidiaries�of�WEX�Inc.�identified�therein,�Bank�of America,�N.A.,�as�administrative�agent,�and�the�lenders�party�thereto�(incorporated�by�reference�to�Exhibit�10.2�to�our�Current�Report�on�Form�8-K�filed�with the�SEC�on�August�21,�2020,�File�No.�001-32426) WEX�Inc.�Common�Stock�and�6.50%�Convertible�Senior�Notes�Due�2027�Purchase�Agreement,�dated�as�of�June�29,�2020,�by�and�between�WEX�Inc.�and�WP Bronco�Holdings,�LLC�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�1,�2020,�File�No.�001-32426) Registration�Rights�Agreement,�dated�as�of�July�1,�2020,�by�and�between�WEX�Inc.�and�WP�Bronco�Holdings,�LLC�(incorporated�by�reference�to�Exhibit�10.2 to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on�July�1,�2020,�File�No.�001-32426) Form�of�Letter�to�Holders�of�a�Performance-Based�Restricted�Stock�Unit�Agreement�(2020�Grant)�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current Report�on�Form�8-K�filed�with�the�SEC�on�June�29,�2020,�File�No.�001-32426) Form�of�Letter�to�Holders�of�a�Performance-Based�Restricted�Stock�Unit�Agreement�(2019�Grant)�(incorporated�by�reference�to�Exhibit�10.2�to�our�Current Report�on�Form�8-K�filed�with�the�SEC�on�June�29,�2020,�File�No.�001-32426) Form�of�June�2020�Performance�Share�Unit�Agreement�(incorporated�by�reference�to�Exhibit�10.3�to�our�Current�Report�on�Form�8-K�filed�with�the�SEC�on June�29,�2020,�File�No.�001-32426) Deed�of�Settlement,�made�as�of�December�15,�2020,�between�the�parties�listed�in�Schedule�A�thereto,�the�parties�listed�in�Schedule�B�thereto,�WEX�Inc.,�eNett International�(Jersey)�Limited,�Optal�Limited,�Toro�Private�Holdings�I,�Ltd.�and�Optal�Limited,�in�its�capacity�as�trustee�of�the�PSP�Group�Employee�Share Trust,�and�including�the�Amended�Purchase�Agreement�attached�as�Schedule�D�thereto�(incorporated�by�reference�to�Exhibit�10.1�to�our�Current�Report�on Form�8-K�filed�with�the�SEC�on�December�15,�2020,�File�No.�001-32426). †�*�10.64 Offer�Letter�dated�September�9,�2019�between�WEX�Inc.�and�Mr.�Deshaies. †�*�10.65 Offer�Letter�dated�November�6,�2015�between�WEX�Inc.�and�Mr.�Dearborn. *���21.1 �� Subsidiaries�of�the�registrant *���23.1 �� Consent�of�Independent�Registered�Accounting�Firm�–�Deloitte�&�Touche�LLP 141 *���31.1 �� Certification�of�Chief�Executive�Officer�of�WEX�INC.�pursuant�to�Rule�13a-14(a)�promulgated�under�the�Securities�Exchange�Act�of�1934,�as�amended *���31.2 �� Certification�of�Chief�Financial�Officer�of�WEX�INC.�pursuant�to�Rule�13a-14(a)�promulgated�under�the�Securities�Exchange�Act�of�1934,�as�amended *���32.1 *���32.2 �� �� Certification�of�Chief�Executive�Officer�of�WEX�INC.�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 Certification�of�Chief�Financial�Officer�of�WEX�INC.�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 �� Inline�XBRL�Instance�Document *���101.SCH �� Inline�XBRL�Taxonomy�Extension�Schema�Document *���101.CAL �� Inline�XBRL�Taxonomy�Calculation�Linkbase�Document *���101.LAB �� Inline�XBRL�Taxonomy�Label�Linkbase�Document *���101.PRE �� Inline�XBRL�Taxonomy�Presentation�Linkbase�Document *���101.DEF �� Inline�XBRL�Taxonomy�Extension�Definition�Linkbase�Document *�104 Cover�Page�Interactive�Data�File�(formatted�as�Inline�XBRL�with�applicable�taxonomy�extension�information�contained�in�Exhibits�101) * † Filed�with�this�report. Denotes�a�management�contract�or�compensatory�plan�or�arrangement�required�to�be�filed�as�an�exhibit�pursuant�to�Item�15(b)�of�this�Form�10-K. Pursuant�to�the�requirements�of�Section�13�or�15(d)�of�the�Securities�Exchange�Act�of�1934,�the�Registrant�has�duly�caused�this�report�to�be�signed�on�its�behalf�by the�undersigned,�thereunto�duly�authorized. � SIGNATURES � March�1,�2021 WEX�INC. � By: /s/��Roberto�Simon������������������������������������������������� Roberto�Simon Chief�Financial�Officer�(principal�financial�officer�and�principal accounting�officer) 142 Pursuant�to�the�requirements�of�the�Securities�Exchange�Act�of�1934,�this�Report�has�been�signed�below�by�the�following�persons�on�behalf�of�the�Registrant�and�in the�capacities�and�on�the�dates�indicated. March�1,�2021 March�1,�2021 March�1,�2021 March�1,�2021 March�1,�2021 March�1,�2021 March�1,�2021 March�1,�2021 March�1,�2021 March�1,�2021 March�1,�2021 /s/��Melissa�D.�Smith Melissa�D.�Smith President,�Chief�Executive�Officer�and�Chair (principal�executive�officer) /s/��Roberto�Simon Roberto�Simon Chief�Financial�Officer (principal�financial�and�accounting�officer) /s/��Jack�A.�VanWoerkom Jack�A.�VanWoerkom Vice�Chairman�and�Lead�Director /s/�John�E.�Bachman John�E.�Bachman Director /s/��Daniel�Callahan Daniel�Callahan Director /s/��Shikhar�Ghosh Shikhar�Ghosh Director /s/��James�Groch James�Groch Director /s/��James�C.�Neary James�C.�Neary Director /s/�Stephen�Smith Stephen�Smith Director /s/��Susan�Sobbott Susan�Sobbott Director /s/��Regina�O.�Sommer Regina�O.�Sommer Director �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� 143 DIRECTORS MELISSA D. SMITH Chair and Chief Executive Officer, WEX JACK VANWOERKOM Vice Chairman and Lead Director, WEX Former Executive Vice President and General Counsel, The Home Depot JOHN (JEB) E. BACHMAN Former Partner, PwC DANIEL (DON) CALLAHAN Former Global Head of Operations and Technology, Citigroup SHIKHAR GHOSH Professor, Harvard Business School JAMES (JIM) GROCH Former Global Group President and Chief Investment Officer, CBRE Group, Inc CORPORATE HEADQUARTERS WEX 1 Hancock Street Portland, ME 04101 (207) 773-8171 Email: newsroom@wexinc.com www.wexinc.com TRANSFER AGENT American Stock Transfer and Trust Company, LLC 6201 15th Avenue Brooklyn, NY 11219 (800) 937-5449 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte & Touche LLP 200 Berkeley Street Boston, MA 02116-5022 (617) 437-2000 JAMES NEARY Managing Director, Warburg Pincus JOEL (JAY) DEARBORN President, Corporate Payments STEPHEN (STEVE) SMITH President and Chief Executive Officer, L.L.Bean ROBERT DESHAIES President, Health SUSAN SOBBOTT Former President of Global Commercial Services, American Express REGINA O. SOMMER Financial and Business Consultant EXECUTIVE OFFICERS MELISSA D. SMITH Chair and Chief Executive Officer DAVID COOPER Chief Technology Officer ANN (ANNIE) DREW Chief Risk and Compliance Officer SCOTT PHILLIPS President, Global Fleet HILARY A. RAPKIN Chief Legal Officer ROBERTO SIMON Chief Financial Officer MELANIE TINTO Chief Human Resources Officer ATTORNEYS Wilmer Cutler Pickering Hale and Dorr LLP 60 State Street Boston, MA 02109 (617) 526-6000 STOCKHOLDERS’ MEETING Date: June 4, 2021 Time: 8:00 a.m. ET Location: Virtual meeting details to be provided in Notice and Proxy Statement TICKER SYMBOL NYSE: WEX INVESTOR RELATIONS Steve Elder Senior Vice President, Global Investor Relations (207) 523-7769 Steve.Elder@wexinc.com FORM 10-K A copy of the Company’s Form 10-K, filed with the Securities and Exchange Commission, is available without charge upon written request to: WEX Investor Relations, 1 Hancock Street Portland, ME 04101; by calling (866) 230-1633; or by emailing investors@wexinc.com. P W E R I N G THROUGH PAYMENTS 1 hanc ock str eet / por tla nd, ma ine 04101 / (207) 773.8171 newsroom@wexinc.com / www.wexinc.com 2 0 2 0 A N N U A L R E P O R T

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