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WEX
Annual Report 2020

WEX · NYSE Technology
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Ticker WEX
Exchange NYSE
Sector Technology
Industry Software - Infrastructure
Employees 5001-10,000
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FY2020 Annual Report · WEX
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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

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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.

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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

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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

��

��

��

��

��

��

��

��

��

��

��

��

��

��

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��

��

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��

��

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