WEX (WEX) 10-Q 2008 Q3 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended                            September 30, 2008

OR

o 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

WRIGHT EXPRESS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	01-0526993
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
97 Darling Avenue
South Portland, Maine	04106
(Address of principal executive offices)	(Zip Code)

(207) 773-8171

(Registrant’s telephone number, including area code)

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.

Yes þ     No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o  Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o     No þ

There were 38,758,592 shares of the registrant’s common stock outstanding as of October 31, 2008.

TABLE OF CONTENTS

	Page
PART I-FINANCIAL INFORMATION
Item 1.     Financial Statements.	- 3 -
Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations.	- 15 -
Item 3.     Quantitative and Qualitative Disclosures About Market Risk.	- 22 -
Item 4.     Controls and Procedures.	- 22 -
PART II-OTHER INFORMATION
Item 1.     Legal Proceedings.	- 23 -
Item 1A.  Risk Factors.	- 23 -
Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds.	- 23 -
Item 6.     Exhibits.	- 24 -
SIGNATURE	- 25 -
Ex-31.1 Certification of CEO
Ex-31.2 Certification of CFO
Ex-32.1 Certification of CEO
Ex-32.2 Certification of CFO

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 Quarterly Report contains forward-looking statements. Any statements that are not statements of historical facts may be deemed to be forward-looking statements. When used in this Quarterly Report, the words “may,” “will,” “could,” “anticipate,” “plan,” “continue,” “project,” “intend,” “estimate,” “believe,” “expect” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. These 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 the performance by us 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 Quarterly Report, in press releases and in oral statements made by our authorized officers:  fuel price volatility; counterparty credit risk; financial loss if we determine it necessary to unwind our derivative instrument positions prior to the expiration of the contracts; our failure to maintain or renew key agreements; failure to expand our technological capabilities and service offerings as rapidly as our competitors; the actions of regulatory bodies, including bank regulators; risks related to the undertaking of or consummation of corporate transactions; as well as other risks and uncertainties as identified in Part II, Item  1A of this Quarterly Report and in Item 1A of our Annual Report for the year ended December 31, 2007, filed on Form 10-K with the Securities and Exchange Commission on February 28, 2008. Our forward-looking statements and these factors do not reflect the potential future impact of any merger, acquisition or disposition. The forward-looking statements speak only as of the date of the initial filing of this Quarterly Report and undue reliance should not be placed on these statements.

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PART I

Item 1. Financial Statements.

WRIGHT EXPRESS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)

	September 30,			December 31,
	2008			2007
	(unaudited)
Assets
Cash and cash equivalents	$	58,409		$	43,019
Accounts receivable (less reserve for credit losses of $16,413 in 2008 and $9,466 in 2007)		1,372,668			1,070,273
Income taxes receivable		912			3,320
Available-for-sale securities		12,760			9,494
Property, equipment and capitalized software (net of accumulated depreciation of $54,098 in 2008 and $43,384 in 2007)		46,643			45,537
Deferred income taxes, net		277,312			283,092
Goodwill		315,154			294,365
Other intangible assets, net		41,421			20,932
Other assets		19,831			15,044
Total assets	$	2,145,110		$	1,785,076
Liabilities and Stockholders’ Equity
Accounts payable	$	599,123		$	363,189
Accrued expenses		33,309			35,310
Deposits		665,739			599,089
Borrowed federal funds		31,480			8,175
Revolving line-of-credit facility		212,200			199,400
Fuel price derivatives, at fair value		36,946			41,598
Other liabilities		3,202			4,544
Amounts due to Avis under tax receivable agreement		315,010			319,512
Preferred stock; 10,000 shares authorized:
Series A non-voting convertible, redeemable preferred stock; 0.1 shares issued and outstanding		10,000			10,000
Total liabilities		1,907,009			1,580,817
Commitments and contingencies (Note 10)
Stockholders’ Equity
Common stock $0.01 par value; 175,000 shares authorized, 40,948 in 2008 and 40,798 in 2007 shares issued; 38,741 in 2008 and 39,625 in 2007 shares outstanding		409			408
Additional paid-in capital		100,615			98,174
Retained earnings		207,328			144,839
Other comprehensive (loss) income, net of tax:
Net unrealized loss on available-for-sale securities		(91	)		(49	)
Net unrealized loss on interest rate swaps		(1,050	)		(1,417	)
Net foreign currency translation adjustment		(8	)		15
Accumulated other comprehensive loss		(1,149	)		(1,451	)
Less treasury stock at cost, 2,207 shares in 2008 and 1,173 shares in 2007		(69,102	)		(37,711	)
Total stockholders’ equity		238,101			204,259
Total liabilities and stockholders’ equity	$	2,145,110		$	1,785,076

See notes to condensed consolidated financial statements.

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WRIGHT EXPRESS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2008			2007			2008			2007
Revenues
Payment processing revenue	$	83,685		$	66,987		$	241,205		$	188,154
Transaction processing revenue		5,326			3,684			14,561			10,811
Account servicing revenue		7,645			6,915			22,656			19,423
Finance fees		8,109			7,230			23,179			19,362
Other		3,766			2,836			11,114			7,697
Total revenues		108,531			87,652			312,715			245,447
Expenses
Salary and other personnel		14,604			16,222			50,038			48,050
Service fees		4,923			3,677			15,629			10,788
Provision for credit losses		9,325			3,300			30,544			12,606
Technology leasing and support		2,100			2,015			6,478			6,617
Occupancy and equipment		1,933			1,483			5,783			4,579
Depreciation and amortization		5,216			3,922			14,642			10,562
Operating interest expense		9,581			9,158			27,667			25,025
Other		6,447			4,873			19,516			14,668
Total operating expenses		54,129			44,650			170,297			132,895
Operating income		54,402			43,002			142,418			112,552
Financing interest expense		(3,006	)		(3,179	)		(9,123	)		(9,310	)
Loss on extinguishment of debt		—			—			—			(1,572	)
Net realized and unrealized gain (loss) on fuel price derivatives		66,034			(4,701	)		(31,876	)		(25,030	)
(Increase) decrease in amount due to Avis under tax receivable agreement		(9,159	)		—			(9,159	)		78,904
Income before income taxes		108,271			35,122			92,260			155,544
Income taxes		35,927			12,859			29,771			108,590
Net income		72,344			22,263			62,489			46,954
Changes in available-for-sale securities, net of tax effect of $10 and $(24) in 2008 and $34 and $(14) in 2007		19			62			(42	)		(25	)
Changes in interest rate swaps, net of tax effect of $277 and $210 in 2008 and $(431) and $(593) in 2007		495			(622	)		367			(856	)
Foreign currency translation		(15	)		13			(23	)		13
Comprehensive income	$	72,843		$	21,716		$	62,791		$	46,086
Earnings per share:
Basic	$	1.86		$	0.56		$	1.60		$	1.17
Diluted	$	1.82		$	0.55		$	1.57		$	1.15
Weighted average common shares outstanding:
Basic		38,831			39,990			38,999			40,121
Diluted		39,730			41,060			39,920			41,232

See notes to condensed consolidated financial statements.

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WRIGHT EXPRESS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

	Nine months ended
	September 30,
	2008			2007
Cash flows from operating activities
Net income	$	62,489		$	46,954
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Net unrealized (gain) loss on fuel price derivatives		(4,652	)		14,251
Stock-based compensation		3,914			3,150
Depreciation and amortization		14,950			11,204
Loss on extinguishment of debt		—			1,572
Deferred taxes		5,594			97,213
Provision for credit losses		30,544			12,606
Loss on disposal of property and equipment		66			—
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		(293,517	)		(274,779	)
Other assets		(3,192	)		(3,299	)
Accounts payable		193,593			121,852
Accrued expenses		(1,621	)		5,214
Income taxes		2,057			(1,226	)
Other liabilities		(1,356	)		348
Amounts due to Avis under tax receivable agreement		(4,502	)		(94,397	)
Net cash provided by (used for) operating activities		4,367			(59,337	)
Cash flows from investing activities
Purchases of property and equipment		(12,339	)		(12,477	)
Purchases of available-for-sale securities		(4,259	)		(1,031	)
Maturities of available-for-sale securities		927			830
Purchase of trade name		(44	)		—
Acquisitions, net of cash acquired		(41,526	)		(40,428	)
Net cash used for investing activities		(57,241	)		(53,106	)
Cash flows from financing activities
Excess tax benefits from equity instrument share-based payment arrangements		140			1,713
Payments in lieu of issuing shares of common stock		(2,076	)		(1,180	)
Proceeds from stock option exercises		415			3,065
Net increase in deposits		66,650			161,265
Net increase (decrease) in borrowed federal funds		23,305			(65,396	)
Net borrowings on revolving line-of-credit facility		12,800			206,700
Loan origination fees paid for revolving line-of-credit facility		(1,556	)		(998	)
Net repayments on 2005 revolving line-of-credit facility		—			(20,000	)
Repayments on term loan		—			(131,000	)
Repayments of acquired debt		—			(374	)
Purchase of shares of treasury stock		(31,391	)		(30,424	)
Net cash provided by financing activities		68,287			123,371
Effect of exchange rates on cash and cash equivalents		(23	)		13
Net change in cash and cash equivalents		15,390			10,941
Cash and cash equivalents, beginning of period		43,019			35,060
Cash and cash equivalents, end of period	$	58,409		$	46,001
Supplemental cash flow information
Interest paid	$	34,890		$	31,226
Income taxes paid	$	22,222		$	10,646
Significant non-cash transactions:
Capitalized software licensing agreement	$	—		$	2,872

See notes to condensed consolidated financial statements.

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WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
(unaudited)

1. Basis of Presentation

          The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to consolidated financial statements included in the Annual Report on Form 10-K of Wright Express Corporation for the year ended December 31, 2007. When used in these notes, the term “Company” means Wright Express Corporation and all entities included in the consolidated financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine-month periods ended September 30, 2008, are not necessarily indicative of the results that may be expected for the year ending December 31, 2008.

     Recently Adopted Accounting Standards

          The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 157,Fair Value Measurements, as of January 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement requires, among other things, the Company’s valuation techniques used to measure fair value to maximize the use of observable inputs and minimize the use of unobservable inputs. This change resulted in no impact to January 1, 2008, retained earnings.

          In conjunction with the adoption of SFAS No. 157, the Company adopted SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities, as of January 1, 2008. SFAS No. 159 provides an option for most financial assets and liabilities to be reported at fair value on an instrument-by-instrument basis with changes in fair value reported in earnings. After initial adoption, the election is made at the acquisition of a financial asset, financial liability, or a firm commitment and it may not be revoked. The Company has not elected to report certain financial instruments and other items at fair value as permitted by the SFAS No. 159 transition provisions. The adoption of this Statement therefore had no impact to January 1, 2008, retained earnings.

     New Accounting Pronouncements

          In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statements. SFAS No. 160 amends Accounting Research Bulletin No. 51,Consolidated Financial Statements, to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 is effective for the Company on January 1, 2009. Currently, the Company has no noncontrolling interests in any of its subsidiaries.

          Also in December 2007, the FASB issued SFAS No. 141(R),Business Combinations. SFAS No. 141(R) requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date. It requires acquisition-related costs and restructuring costs that the acquirer expects but is not obligated to incur to be recognized separately from the acquisition. SFAS No. 141(R) modifies the criteria for the recognition of contingencies as of the acquisition date. It also provides guidance on subsequent accounting for acquired contingencies. SFAS No. 141(R) is effective for business acquisitions for which the acquisition date is on or after January 1, 2009, the first day of the Company’s annual reporting period beginning after December 15, 2008. The Company may not apply it before that date.

          In March 2008, the FASB issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133. SFAS No. 161 requires enhanced disclosures about an entity’s derivative and hedging activities. Under this Statement, entities are required to disclose how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities,and its related interpretations, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company is evaluating the impact, if any, the adoption of SFAS No. 161 will have on its financial statement disclosures.

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WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)

2. Acquisitions

          Acquisition of TelaPoint, Inc.  In August 2007, the Company acquired the stock of TelaPoint, Inc. (“TelaPoint”) for approximately $40,000 cash. The Company purchased TelaPoint in order to take advantage of its browser-based supply chain software solutions for bulk petroleum distributors and retailers.

          Acquisition of Pacific Pride Services, Inc.  In February 2008, the Company acquired certain assets of Pacific Pride Services, Inc. (“Pacific Pride”) for approximately $32,000 cash. Pacific Pride’s franchise network encompasses more than three-hundred thirty independent fuel franchisees who issue their own Pacific Pride commercial fueling cards to fleet customers. These cards provide access to fuel at more than one thousand Pacific Pride and strategic partner locations in the U.S. and Canada. The Company has allocated the purchase price of the acquisition based upon the preliminary fair values of the assets acquired and liabilities assumed. In connection with the fair valuing of the assets acquired and liabilities assumed, management performed assessments of intangible assets using customary valuation procedures and techniques. The purchase price and related allocations for the Pacific Pride acquisition have not been finalized.

          The following is a reconciliation of the cost of the assets acquired from Pacific Pride and the ultimate allocation to goodwill:

Consideration paid (including acquisition costs and net of cash acquired)	$	31,540
Less:
Accounts receivable		39,396
Accounts payable		(42,341	)
Other tangible assets, net		148
Software(a)		300
Non-compete agreement(b)		100
Customer relationships(c)		13,400
Trademarks and trade names(d)		1,400
Recorded goodwill	$	19,137

^(a)      Weighted average life – 2.0 years.

^(b)      Weighted average life – 1.0 year.

^(c)      Weighted average life – 4.9 years.

^(d)      Indefinite-lived intangible asset.

          The weighted average life of the combined definite-lived intangible assets is 4.8 years.

          Acquisition of Financial Automation Limited.  In August 2008, the Company acquired certain assets of Financial Automation Limited (“FAL”) for approximately $9,250 cash. FAL is a New Zealand-based provider of fuel card processing software solutions. The Company has allocated the purchase price of the acquisition based upon the fair values of the assets acquired and liabilities assumed. In connection with the fair valuing of the assets acquired and liabilities assumed, management performed assessments of intangible assets using customary valuation procedures and techniques. The purchase price and related allocations for the FAL acquisition have not been finalized.

- 7 -

WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)

          The following is a reconciliation of the cost of the assets acquired from FAL and the ultimate allocation to goodwill:

Consideration paid (including acquisition costs and net of cash acquired)	$	9,986
Less:
Tangible assets, net		85
Software(a)		7,100
Customer relationships(b)		1,500
Recorded goodwill	$	1,301

^(a)      Weighted average life – 4.6 years.

^(b)      Weighted average life – 4.7 years.

          The weighted average life of the combined definite-lived intangible assets is 4.6 years.

          The operations for each of these acquisitions are reported within the results of the Company’s fleet segment from the acquisition date.

          No pro forma information has been included in these financial statements as the results of operations of TelaPoint, Pacific Pride and FAL for the three and nine month periods ended September 30, 2007, were not material to the Company’s reported revenues, net income or earnings per share.

3. Goodwill and Other Intangible Assets

          The changes in goodwill during the period January 1 to September 30, 2008 were as follows:

	Fleet		MasterCard
	Segment		Segment		Total
Goodwill, beginning of period	$	284,652	$	9,713	$	294,365
Adjustment to allocation of purchase price for TelaPoint acquisition		351		—		351
Acquisition of Pacific Pride		19,137		—		19,137
Acquisition of FAL		1,301		—		1,301
Goodwill, end of period	$	305,441	$	9,713	$	315,154

During the period January 1 to September 30, 2008, no goodwill was written off due to impairment.

- 8 -

WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)

          The changes in intangible assets during the period January 1 to September 30, 2008 were as follows:

	Net Carrying							Net Carrying
	Amount,							Amount,
	Beginning of							End of
	Period		Acquisitions		Amortization			Period
Definite-lived intangible assets
Software	$	8,755	$	7,400	$	(615	)	$	15,540
Non-compete agreement		—		100		(58	)		42
Customer relationships		9,156		14,900		(2,682	)		21,374
Indefinite-lived intangible assets
Trademarks and trade names		3,021		1,444		—			4,465
Total	$	20,932	$	23,844	$	(3,355	)	$	41,421

          The Company expects amortization expense related to the definite-lived intangible assets above as follows:  $1,407 for October 1, 2008 through December 31, 2008; $5,088 for 2009; $5,278 for 2010; $4,917 for 2011; $4,100 for 2012; and $3,472 for 2013.

          Other intangible assets consist of the following:

	September 30, 2008							December 31, 2007
	Gross							Gross
	Carrying		Accumulated			Net Carrying		Carrying		Accumulated			Net Carrying
	Amount		Amortization			Amount		Amount		Amortization			Amount
Definite-lived intangible assets
Software	$	16,400	$	(860	)	$	15,540	$	9,000	$	(245	)	$	8,755
Non-compete agreement		100		(58	)		42		—		—			—
Customer relationships		24,900		(3,526	)		21,374		10,000		(844	)		9,156
	$	41,400	$	(4,444	)		36,956	$	19,000	$	(1,089	)		17,911
Indefinite-lived intangible assets
Trademarks and trade names							4,465							3,021
Total						$	41,421						$	20,932

4. Borrowed Federal Funds

          The Company has federal funds lines-of-credit totaling $140,000 at September 30, 2008, and $160,000 at December 30, 2007. The average rate on the outstanding borrowings under lines-of-credit was 2.15 percent at September 30, 2008, and 4.38 percent at December 30, 2007.

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WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)

5. Earnings per Common Share

          The following is a reconciliation of the income and share data used in the basic and diluted earnings per share computations for the three and nine months ended September 30, 2008 and 2007:

	Three months ended				Nine months ended
	September 30,				September 30,
	2008		2007		2008		2007
Income available for common stockholders — Basic	$	72,344	$	22,263	$	62,489	$	46,954
Convertible, redeemable preferred stock		110		177		368		521
Income available for common stockholders — Diluted	$	72,454	$	22,440	$	62,857	$	47,475
Weighted average common shares outstanding — Basic		38,831		39,990		38,999		40,121
Unvested restricted stock units		417		543		434		550
Stock options		38		83		43		117
Convertible, redeemable preferred stock		444		444		444		444
Weighted average common shares outstanding — Diluted		39,730		41,060		39,920		41,232

6. Fair Value

          Effective January 1, 2008, the Company adopted SFAS No. 157. This standard establishes a consistent framework for measuring fair value and expands disclosure requirements about fair value measurements. SFAS No. 157, among other things, requires the Company to maximize the use of observable inputs when measuring fair value. The Company recorded no change to January 1, 2008, retained earnings as a result of adopting SFAS No. 157.

          The Company holds mortgage-backed securities, fixed income and equity securities, derivatives and certain other financial instruments which 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. The Company carries certain of its liabilities at fair value, including its derivative liabilities. In determining the fair value of the Company’s obligations, various factors are considered including:  closing exchange or over-the-counter market price quotations; time value and volatility factors underlying options and derivatives; price activity for equivalent instruments; the Company’s own-credit standing; and counterparty credit risk.

          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.

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WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)

          The following table presents the Company’s assets and liabilities that are measured at fair value and the related hierarchy levels:

			Fair Value Measurements
			at Reporting Date Using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
	September 30,		Identical Assets		Inputs		Inputs
	2008		(Level 1)		(Level 2)		(Level 3)
Assets:
Mortgage-backed securities	$	4,329	$	—	$	4,329	$	—
Asset-backed securities		4,099		—		4,099		—
Municipal bonds		391		—		391		—
Equity securities		3,941		3,941		—		—
Total available-for-sale securities	$	12,760	$	3,941	$	8,819	$	—
Executive deferred compensation plan trust(a)	$	1,708	$	1,708	$	—	$	—
Liabilities:
July 2007 interest rate swap arrangements with a base rate of 5.20% and an aggregate notional amount of $80,000	$	1,284	$	—	$	1,284	$	—
August 2007 interest rate swap arrangement with a base rate of 4.73% and a notional amount of $25,000		353		—		353		—
Total interest rate swap arrangements(b)	$	1,637	$	—	$	1,637	$	—
Fuel price derivatives – diesel	$	16,290	$	—	$	16,290	$	—
Fuel price derivatives – unleaded fuel		20,656		—		20,656		—
Total fuel price derivatives(c)	$	36,946	$	—	$	36,946	$	—

(a)	The fair value of these instruments is recorded in other assets.
(b)	The fair value of these instruments is recorded in accrued expenses.
(c)	The following table presents additional information about the fuel price derivatives:

				Weighted-Average Price(2)
	Percentage(1)			Floor		Ceiling
For the period October 1, 2008 through December 31, 2008		90	%	$	2.50	$	2.56
For the period January 1, 2009 through March 31, 2009		90	%	$	2.58	$	2.64
For the period April 1, 2009 through June 30, 2009		90	%	$	2.67	$	2.73
For the period July 1, 2009 through September 30, 2009		90	%	$	2.86	$	2.92
For the period October 1, 2009 through December 31, 2009		90	%	$	3.02	$	3.08
For the period January 1, 2010 through March 31, 2010		80	%	$	3.25	$	3.31
For the period April 1, 2010 through June 30, 2010		53	%	$	3.34	$	3.40
For the period July 1, 2010 through September 30, 2010		27	%	$	3.60	$	3.66

(1)	Represents the estimated percentage of the Company’s forecasted earnings subject to fuel price variations.
(2)	Weighted-average price is the Company’s estimate of the retail price equivalent of the underlying strike price of the fuel price derivatives.

7. Financing Debt

          On May 29, 2008, the Company entered into an incremental amendment agreement (the “Incremental Amendment Agreement”) of the Company’s existing credit facility (the “Credit Agreement”) to increase the aggregate unsecured revolving line-of-credit from $350,000 to $450,000. The Company incurred $1,556 in loan origination fees in conjunction with entering into the Incremental Amendment Agreement. These fees have been recorded as other assets on the consolidated balance sheet and are being amortized on a straight-line basis over the remaining term of the Credit Agreement. All other provisions of the Credit Agreement remain unchanged.

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WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)

8. Income Taxes

          The reconciliation between the income tax computed by applying the U.S. federal statutory rate and the reported effective tax rate on net income from continuing operations is as follows:

	Nine months ended
	September 30,
	2008			2007
Federal statutory rate		35.0	%		35.0	%
State income taxes, net of federal income tax benefit		2.4	%		1.3	%
Revaluation of deferred tax assets, net		(5.8)	%		33.5	%
Dividend exclusion		0.1	%		0.1	%
Other		0.6	%		(0.1)	%
Effective tax rate		32.3	%		69.8	%

          During the third quarter of 2008, the Company filed its consolidated federal and state tax returns and adjusted its estimated tax rate accordingly. As a result of filing the tax returns, the Company reassessed the blended rates on which its net deferred tax assets would be realized and accordingly reduced its provision for income taxes by $8,734.

          The significant revaluation in 2007 was attributable to the State of Maine enacting a law effective for tax years beginning on or after January 1, 2007, which changed the State’s rules for apportioning income related to the performance of services. The new law effectively reduced taxable income or loss apportioned to the State of Maine. This caused a change to the Company’s apportionment factors and resulted in a significant decrease in the Company’s blended state income tax rate. The lower state income tax rate was applied to the cumulative temporary differences existing between the carrying amounts for financial reporting purposes and the amounts used for income tax purposes. The effect of this lower state income tax rate on the temporary differences decreased the Company’s deferred tax assets which resulted in a charge to the provision for income taxes for the nine months ended September 30, 2007, of $80,879.

9. Tax Receivable Agreement

          As a consequence of the Company’s separation from Avis, the tax basis of the Company’s tangible and intangible assets increased (the “Tax Basis Increase”). The Tax Basis Increase is expected to reduce the amount of tax that the Company may pay in the future to the extent the Company generates taxable income in sufficient amounts in the future. The Company is contractually obligated, pursuant to its Tax Receivable Agreement with Avis, to remit to Avis 85 percent of any such cash savings.

          The 2008 reassessment of the blended tax rates described in Note 8 also resulted in an adjustment in the anticipated amounts due to Avis. The future benefits increased, which increased the associated liability to Avis, resulting in a $9,159 charge to non-operating income for the three and nine months ended September 30, 2008.

          As discussed in Note 8, “Income Taxes,” the Company’s blended state income tax rate decreased in the second quarter of 2007. The lower state income tax rate contributed to a lower overall rate. The lower overall rate decreased the Company’s deferred tax assets and resulted in a charge to the provision for income taxes. The lower overall rate also decreased the expected benefit the Company will realize from the Tax Basis Increase. Accordingly, the related contractual liability to Avis recorded in connection with the Tax Receivable Agreement decreased.

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WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except per share data)
(unaudited)

10. Commitments and Contingencies

     Litigation

          The Company is involved in pending litigation in the usual course of business. In the opinion of management, such litigation will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

11. Segment Information

          The Company operates in two reportable segments, fleet and MasterCard. The fleet segment provides customers with payment and transaction processing services specifically designed for the needs of vehicle fleet customers. During 2008, the Company acquired Pacific Pride and FAL. The operations of these entities have been included in the fleet segment. The MasterCard segment provides customers with a payment processing solution for their corporate purchasing and transaction monitoring needs. The Company’s chief decision maker evaluates the operating results of the Company’s reportable segments based upon revenues and “adjusted net income,” which is defined by the Company as net income adjusted for fair value changes of fuel price derivatives (unrealized gains and losses on fuel price derivatives) and the amortization of acquired intangible assets. These adjustments are reflected net of the tax impact.

          The following table presents the Company’s reportable segment results for the three months ended September 30, 2008 and 2007:

			Operating		Depreciation
	Total		Interest		and				Adjusted Net
	Revenues		Expense		Amortization		Income Taxes		Income
Three months ended September 30, 2008
Fleet	$	101,062	$	8,874	$	5,092	$	4,549	$	20,326
MasterCard		7,469		707		124		877		1,460
Total	$	108,531	$	9,581	$	5,216	$	5,426	$	21,786
Three months ended September 30, 2007
Fleet	$	81,403	$	8,484	$	3,766	$	12,104	$	21,059
MasterCard		6,249		674		156		781		1,255
Total	$	87,652	$	9,158	$	3,922	$	12,885	$	22,314

          The following table presents the Company’s reportable segment results for the nine months ended September 30, 2008 and 2007:

			Operating		Depreciation
	Total		Interest		and				Adjusted Net
	Revenues		Expense		Amortization		Income Taxes		Income
Nine months ended September 30, 2008
Fleet	$	292,064	$	25,513	$	14,100	$	27,366	$	58,420
MasterCard		20,651		2,154		542		1,967		3,210
Total	$	312,715	$	27,667	$	14,642	$	29,333	$	61,630
Nine months ended September 30, 2007
Fleet	$	228,673	$	23,098	$	10,088	$	112,204	$	53,504
MasterCard		16,774		1,927		474		1,662		2,833
Total	$	245,447	$	25,025	$	10,562	$	113,866	$	56,337

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WRIGHT EXPRESS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (concluded)
(in thousands, except per share data)
(unaudited)

          The following table reconciles adjusted net income to net income:

	Three months ended						Nine months ended
	September 30,						September 30,
	2008			2007			2008			2007
Adjusted net income	$	21,786		$	22,314		$	61,630		$	56,337
Unrealized gains (losses) on fuel price derivatives		82,372			331			4,652			(14,251	)
Amortization of acquired intangible assets		(1,313	)		(408	)		(3,355	)		(408	)
Tax impact		(30,501	)		26			(438	)		5,276
Net income	$	72,344		$	22,263		$	62,489		$	46,954

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

We intend for this discussion to provide you with information that will assist you in understanding our financial statements, the changes in key items in those financial statements from year to year, and the primary factors that accounted for those changes, as well as how certain accounting estimates affect our financial statements. The discussion also provides information about the financial results of the two segments of our business to provide a better understanding of how those segments and their results affect our financial condition and results of operations as a whole. This discussion should be read in conjunction with our audited financial statements as of December 31, 2007, the notes accompanying those financial statements as contained in our Annual Report on Form 10-K filed with the SEC on February 28, 2008 and in conjunction with the unaudited condensed consolidated financial statements and notes inItem 1ofPart Iof this report.

Overview

          Wright Express is a leading provider of payment processing and information management services to the vehicle fleet industry. We facilitate and manage transactions for vehicle fleets through our proprietary closed network of major oil companies, fuel retailers and vehicle maintenance providers. We provide fleets with detailed transaction data, analytical tools and purchase control capabilities. Our operations are organized as follows:

• Fleet — The fleet reportable segment provides customers with payment and transaction processing services specifically designed for the needs of the vehicle fleet industry. This segment also provides information management and account services to these fleet customers.

• MasterCard — The MasterCard reportable segment provides customers with a payment processing solution for their corporate purchasing and transaction monitoring needs. The MasterCard products are used by businesses to facilitate purchases of products and perform analysis utilizing our information management capabilities.

Summary

          Below are some key items from the third quarter of 2008:

• Concerns about future economic growth, high oil prices, lower consumer sentiment, and the adverse developments in the credit markets continue to challenge the U.S. economy and credit markets. These challenges had a direct impact on our business as we experienced slower volume growth than anticipated and an increase in credit losses.

• Total fleet transactions processed increased 14 percent from the third quarter of 2007 to 72.5 million. Payment processing transactions increased 4 percent to 55.5 million, and transaction processing transactions increased 73 percent to 16.9 million. The increase in transaction processing transactions is primarily attributable to our acquisition of Pacific Pride during the first quarter of 2008.

• Average expenditure per payment processing transaction increased 37 percent to $80.84 from $59.19 for the same period last year. This increase was predominantly driven by higher average retail fuel prices. The average fuel price per gallon during the three months ended September 30, 2008, was $4.02, a 40 percent increase over the same period last year. Offsetting the impact of higher fuel prices was a 2 percent drop in gallons per transaction as compared to the third quarter of last year.

• Realized losses on our fuel price derivatives were $16.3 million compared to realized losses of $5.0 million for the third quarter of 2007.

• Credit losses in the fleet segment were $9.0 million for the three months ended September 30, 2008, versus $3.3 million for the three months ended September 30, 2007. The current quarter’s provision for credit losses is within management expectations. Our fleet customers overall remain more than 98 percent current.

• Total MasterCard purchase volume grew $160 million to $670 million for the three months ended September 30, 2008, an increase of 31 percent over the same period last year. Growth was primarily driven by spend on single use account cards.

• We repurchased 71,100 shares, for approximately $2.0 million, of our common stock during the third quarter of 2008.

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Results of Operations

     Fleet

          The following table reflects comparative operating results and key operating statistics within our fleet segment:

(in thousands, except per transaction and per gallon data)	Three months ended												Nine months ended
	September 30,						Increase (decrease)						September 30,						Increase (decrease)
	2008			2007			Amount			Percent			2008			2007			Amount			Percent
Revenues
Payment processing revenue	$	76,802		$	61,230		$	15,572			25	%	$	222,094		$	172,613		$	49,481			29	%
Transaction processing revenue		5,326			3,684			1,642			45	%		14,561			10,811			3,750			35	%
Account servicing revenue		7,636			6,898			738			11	%		22,610			19,371			3,239			17	%
Finance fees		8,027			7,119			908			13	%		22,935			19,070			3,865			20	%
Other		3,271			2,472			799			32	%		9,864			6,808			3,056			45	%
Total revenues		101,062			81,403			19,659			24	%		292,064			228,673			63,391			28	%
Total operating expenses		48,997			40,437			8,560			21	%		154,823			120,616			34,207			28	%
Operating income		52,065			40,966			11,099			27	%		137,241			108,057			29,184			27	%
Financing interest expense		(3,006	)		(3,179	)		173			(5	)%		(9,123	)		(9,310	)		187			(2	)%
Loss on extinguishment of debt		—			—			—			—			—			(1,572	)		1,572		NM
Net realized and unrealized losses on fuel price derivatives		66,034			(4,701	)		70,735		NM				(31,876	)		(25,030	)		(6,846	)		27	%
(Increase) decrease in amount due to Avis under tax receivable agreement		(9,159	)		—			(9,159	)	NM				(9,159	)		78,904			(88,063	)		(112	)%
Income (loss) before income taxes		105,934			33,086			72,848			220	%		87,083			151,049			(63,966	)		(42	)%
Income taxes		35,050			12,078			22,972			190	%		27,804			106,928			(79,124	)		(74	)%
Net income (loss)	$	70,884		$	21,008		$	49,876			237	%	$	59,279		$	44,121		$	15,158			34	%
Key operating statistics
Payment processing revenue:
Payment processing transactions		55,519			53,595			1,924			4	%		164,684			157,334			7,350			5	%
Average expenditure per payment processing transaction	$	80.84			59.19			21.65			37	%	$	75.16		$	56.33			18.83			33	%
Average price per gallon of fuel	$	4.02			2.88			1.14			40	%	$	3.75		$	2.76			0.99			36	%
Transaction processing revenue:
Transaction processing transactions		16,943			9,818			7,125			73	%		45,482			29,083			16,399			56	%
Account servicing revenue:
Average number of vehicles serviced(a)		4,463			4,426			37			1	%		4,464			4,364			100			2	%

(a)	Does not include Pacific Pride vehicle information.
NM	Not meaningful.

     Revenues

          Payment processing revenue increased $15.6 million for the three months ended September 30, 2008, compared to the same period last year. The primary components of this increase were a $14.8 million increase in revenue associated with a 40 percent increase in the average price per gallon of fuel and a 4 percent increase in payment processing transactions which resulted in additional revenues of $2.2 million. Offsetting these increases was a 2 percent decrease in gallons per transaction which resulted in lower revenues of $1.5 million.

          Payment processing revenue increased $49.5 million for the nine months ended September 30, 2008, compared to the same period last year. The primary components of this increase were a $44.8 million increase in revenue associated with a 36 percent increase in the average price per gallon of fuel and a 5 percent increase in payment processing transactions which resulted in additional revenues of $8.0 million. Offsetting these increases was a 2 percent decrease in gallons per transaction which resulted in lower revenues of $3.3 million.

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          Our payment processing rates for both the three and nine month periods ended September 30, 2008, as compared to the same periods in 2007, declined as a result of re-negotiated rates with merchants and additional rebates to large customers. These additional rebates are, in part, due to the significant third quarter increase in gas prices that accelerated achievement of rebate targets. Increases in the price per gallon will result in a decrease of our payment processing rate, as approximately 55 percent of our merchant volumes have a fixed component to their price. Changes in rebates will also impact the net payment processing rate.

          Transaction processing revenue increased $1.6 million for the three months ended September 30, 2008, compared to the same period in 2007, and increased $3.8 million for the nine months ended September 30, 2008, as compared to the same period in 2007. These increases in revenue, as well as the increases in transaction processing transactions, are due primarily to the acquisition of Pacific Pride during the first quarter of 2008.

          Account servicing revenue increased $0.7 million for the three months ended September 30, 2008, compared to the same period in 2007, and increased $3.2 million for the nine months ended September 30, 2008, as compared to the same period in 2007. These increases in revenue are primarily due to the acquisition of TelaPoint during the third quarter of 2007.

          Our finance fees have increased $0.9 million for the three months ended September 30, 2008, as compared to the same period in 2007, and increased $3.9 million for the nine months ended September 30, 2008, as compared to the same period in 2007. These increases correlate to the increase in our average accounts receivable balance subject to fees.

     Operating Expenses

          Changes in operating expenses for the three months ended September 30, 2008, as compared to the corresponding period a year ago, include the following:

• Salary and other personnel expenses decreased $1.7 million. Stock-based compensation and short-term incentive programs were adjusted to reverse expense recorded earlier this year. The reversal was based on a revised earnings projection, as of September 30, 2008, that indicated no payments should be made under these plans for the current year. This reduced the third quarter expense, as compared to the prior period in 2007, by approximately $3.0 million. Offsetting this decrease was a $1.0 million increase to general salaries due to headcount and wage increases. The prior year period does not have $0.6 million of expenses related to Pacific Pride, which was acquired in February 2008.

• Service fees increased $0.8 million, primarily as the result of increases in professional services during the third quarter of 2008.

• Credit losses increased $5.7 million. We generally measure our credit loss performance by calculating credit losses as a percentage of total fuel expenditures on payment processing transactions (“Fuel Expenditures”). This metric for credit losses was 20.1 basis points of Fuel Expenditures compared to 10.6 basis points of Fuel Expenditures for the same period last year. The increase was driven by higher charge-offs in our fleet portfolios. Fleet charge-offs, net of recoveries, were $4.3 million higher compared to the same period in 2007. The remaining increase in the provision is primarily the result of higher reserve rates and accounts receivable balances.

• Depreciation and amortization expenses increased $1.3 million. The amortization associated with the intangible assets acquired with the February 2008 purchase of Pacific Pride and the August 2007 purchase of TelaPoint resulted in an increase of $0.8 million for the three months ended September 30, 2008. The remaining increase is due to the addition of capital assets as we enhance our product features and functionality.

• Operating interest expense increased $0.4 million. This increase is primarily attributable to an increase in average operating debt for the current three month period of $166.6 million partially offset by a 119 basis point decrease in the weighted average interest rate. Changes in interest rates and Fuel Expenditures may create volatility in our operating interest expense.

- 17 -

          Changes in operating expenses for the nine months ended September 30, 2008, as compared to the corresponding period a year ago, include the following:

• Salary and other personnel expenses increased $1.7 million. Annual merit increases and additional staff increased general salary expense $2.4 million. The prior year period does not have expenses related to Pacific Pride, which was acquired in February 2008. Salary and other personnel expenses related to Pacific Pride totaled $1.4 million. Offsetting these increases was a reduction of expense related to stock-based compensation and short-term incentive programs. The reversal of previously recognized expense was based on a revised earnings projection, as of September 30, 2008, that indicated no payments should be made under these plans for the current year. This reduced the expense, as compared to the same period in 2007, by approximately $2.1 million.

• Service fees increased $3.6 million. This increase is primarily due to a $2.4 million increase in professional service fees. We incurred higher costs for legal, tax and accounting services. The increase also includes consulting fees related to the investigation of additional market opportunities and costs associated with acquisitions that did not materialize. Pacific Pride added approximately $0.5 million to the increase in expense.

• Credit losses increased $16.9 million. Credit losses were 23.3 basis points of Fuel Expenditures compared to 13.7 basis points of Fuel Expenditures for the same period last year. The increase was driven by higher charge-offs in our fleet portfolios. Fleet charge-offs, net of recoveries, were $11.5 million higher compared to the same period in 2007. The remaining increase in the provision is primarily the result of higher reserve rates and accounts receivable balances.

• Depreciation and amortization expenses increased $4.0 million. The amortization associated with the intangible assets acquired with the February 2008 purchase of Pacific Pride and the August 2007 purchase of TelaPoint resulted in an increase of $2.9 million for the nine months ended September 30, 2008. The remaining increase is due to the addition of capital assets as we enhance our product features and functionality.

• Operating interest expense increased $2.4 million. This increase is primarily attributable to an increase in average operating debt for the current nine month period of $146.4 million partially offset by a 86 basis point decrease in the weighted average interest rate.

          We own fuel-price sensitive derivative instruments that we purchase generally on a quarterly basis to manage the impact of volatility in fuel prices on our cash flows. Historically we have estimated the effect on our forecasted earnings exposure associated with changes in fuel prices and entered into derivative agreements designed to cover 90 percent of this impact. We have reduced this percentage to approximately 80 percent for instruments purchased this year, which start to settle in 2010. The program is designed to address fuel price increases and decreases. Our derivative instruments do not qualify for hedge accounting under Statement of Financial Accounting Standards (“SFAS”) No. 133,Accounting for Derivative Instruments and Hedging Activities. Accordingly, gains and losses on our fuel price-sensitive derivative instruments, whether they are realized or unrealized, affect our current period earnings. The following table illustrates the relationship between our realized and unrealized losses, the estimated collar range and the average fuel price for each period covered:

	Three months ended September 30,						Nine months ended September 30,
(in thousands, except per gallon data)	2008			2007			2008			2007
Realized losses	$	(16,338	)	$	(5,032	)	$	(36,528	)	$	(10,779	)
Unrealized gain (loss)		82,372			331			4,652			(14,251	)
Net realized and unrealized gain (loss) on fuel price derivatives	$	66,034		$	(4,701	)	$	(31,876	)	$	(25,030	)
Collar range:
Floor	$	2.53		$	2.32		$	2.55		$	2.30
Ceiling	$	2.59		$	2.39		$	2.61		$	2.37
Average fuel price	$	4.02		$	2.88		$	3.75		$	2.76

          The difference between the average ceiling price on the derivative instruments and actual average fuel price was greater in the three and nine months of 2008 as compared to the difference in the corresponding periods in 2007. The realized losses and unrealized gains and loss, and related changes from period over period, shown in the table above, were a result of these differences in fuel prices.

          During the third quarter of 2008, we filed our 2007 consolidated federal and all of our 2007 state tax returns and adjusted the tax rate that we apply to our deferred tax assets as they are realized in the future. Specifically, we increased our deferred tax asset and

- 18 -

reduced our provision for income taxes by $8.7 million. The associated effect to the amount due to Avis under the tax receivable agreement was adjusted and resulted in a $9.2 million charge to other income in the third quarter.

          The effective income tax rate for the three and nine months ended September 30, 2007, is not comparable to the same periods in the current year. On June 7, 2007, the State of Maine enacted a law effective for tax years beginning on or after January 1, 2007, which changed the State’s rules for apportioning income related to the performance of services. The new law effectively reduced our overall blended statutory income tax rates, the amount of our deferred tax assets, and the amount of the related contractual liability to Avis. The effect of this lower state income tax rate on our existing deferred tax assets resulted in a charge to the provision for income taxes of $80.9 million during the second quarter of 2007. Under the terms of our Tax Receivable Agreement with Avis, a significant portion of this charge was offset by $78.9 million of non-operating income resulting from decreasing our contractual liability to Avis.

     MasterCard

          The following table reflects comparative operating results and key operating statistics within our MasterCard segment:

(in thousands)	Three months ended										Nine months ended
	September 30,				Increase (decrease)						September 30,				Increase (decrease)
	2008		2007		Amount			Percent			2008		2007		Amount			Percent
Revenues
Payment processing revenue	$	6,883	$	5,757	$	1,126			20	%	$	19,111	$	15,541	$	3,570			23	%
Account servicing revenue		9		17		(8	)		(47	)%		46		52		(6	)		(12	)%
Finance fees		82		111		(29	)		(26	)%		244		292		(48	)		(16	)%
Other		495		364		131			36	%		1,250		889		361			41	%
Total revenues		7,469		6,249		1,220			20	%		20,651		16,774		3,877			23	%
Total operating expenses		5,132		4,213		919			22	%		15,474		12,279		3,195			26	%
Operating income		2,337		2,036		301			15	%		5,177		4,495		682			15	%
Income taxes		877		781		96			12	%		1,967		1,662		305			18	%
Net income	$	1,460	$	1,255	$	205			16	%	$	3,210	$	2,833	$	377			13	%
Key operating statistics
Payment processing revenue:
MasterCard purchase volume	$	670,137		510,585	$	159,552			31	%	$	1,818,679	$	1,360,163	$	458,516			34	%

          Payment processing revenue and the related operating expenses increased due to higher MasterCard purchase volume, primarily driven by new business from our single use account card. Offsetting a portion of the increase in payment processing revenue during 2008 was an increase in rebates as some of our customers have reached higher payout tiers.

          Operating expenses have increased in the following areas:

• Service fee expenses are based on a purchase volume which has increased period over period primarily due to the new business from our single use account card.

• The provision for credit loss was higher by $0.3 million for the three months ended September 30, 2008, and $1.1 million for the nine months ended September 30, 2008, as compared to the same periods last year. The increases were predominantly the result of higher reserve rates associated with increased spend.

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Liquidity, Capital Resources and Cash Flows

          Our primary source of liquidity is management operating cash, which we define as cash from operations adjusted for changes in deposits and borrowed federal funds. Management operating cash is not a measure in accordance with generally accepted accounting principles (“GAAP”). During the first nine months of 2008, we generated approximately $94.3 million in management operating cash as compared to approximately $36.5 million of management operating cash generated during the first nine months of 2007.

          In addition to the $94.3 million of management operating cash we generated during the first nine months of 2008, we also borrowed an additional $12.8 million on our revolving credit facility. These cash increases were offset by a $31.5 million use of cash to acquire the assets of Pacific Pride and a $31.4 million use of cash to purchase treasury stock during the first nine months of 2008.

     Management Operating Cash

          We focus on management operating cash as a key element in achieving maximum stockholder value, and it is the primary measure we use internally to monitor cash flow performance from our core operations. Since deposits and borrowed federal funds are used to finance our accounts receivable, we believe that they are a recurring and necessary use and source of cash. As such, management considers deposits and borrowed federal funds when evaluating our operating activities. For the same reason, we believe that management operating cash may also be useful to investors as one means of evaluating our performance. However, management operating cash is a non-GAAP measure and should not be considered a substitute for, or superior to, net cash used for operating activities as presented on the condensed consolidated statement of cash flows in accordance with GAAP.

          The table below reconciles net cash used for operating activities to management operating cash:

	Nine months ended
	September 30,
	2008		2007
Net cash provided by (used for) operating activities	$	4,367	$	(59,337	)
Net increase in deposits		66,650		161,265
Net increase (decrease) in borrowed federal funds		23,305		(65,396	)
Management operating cash	$	94,322	$	36,532

          The increase in our accounts receivable is predominantly a result of the 36 percent increase in the price per gallon of fuel. We expect that our accounts receivable balance will continue to fluctuate with changes in the average price per gallon of fuel.

          Our bank subsidiary, FSC, utilizes certificates of deposit to finance our accounts receivable. FSC issues certificates of deposit in denominations of $100,000 or less in various maturities ranging between three months and three years and with fixed interest rates ranging from 3.1 percent to 5.45 percent as of September 30, 2008. The interest rates on these certificates of deposit have lowered over the past few months. Approximately one-quarter of our certificate of deposit portfolio matured in the third quarter of 2008. The weighted average yield on these maturing certificates of deposits was 4.2 percent. As of September 30, 2008, we had approximately $666 million of deposits outstanding at a weighted average rate of 4.05 percent. Certificates of deposit are subject to regulatory capital requirements. Beyond these capital requirements, there is no limit on the total certificates of deposit that FSC may issue. Subsequent to the passing of the Emergency Economic Stabilization Act of 2008, our certificates of deposits will be in denominations of $250,000 or less, corresponding to the increase in the FDIC insurance limits to $250,000. We believe that our certificates of deposits are paying competitive yields and that there continues to be consumer demand for these instruments.

          FSC also utilizes federal funds lines of credit to supplement the financing of our accounts receivable. Our available federal funds lines of credit were $160 million at December 31, 2007. One of our federal funds lines was withdrawn during the second quarter of 2008. We no longer have a relationship with the bank which had been providing us a federal funds line of credit totaling $35 million. We replaced $15 million of the amount withdrawn with another bank. Our total federal funds lines of credit were $140 million at September 30, 2008. At September 30, 2008, outstanding borrowings under these federal funds lines total approximately $31 million with an interest rate of 2.15 percent.

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     Short-term Liquidity

          Our credit agreement contains various financial covenants requiring us to maintain certain financial ratios. In addition to the financial covenants, the credit agreement contains various customary restrictive covenants. FSC is not subject to certain of these restrictions. We have been, and expect to continue to be, in compliance with all material covenants and restrictions.

          On May 29, 2008, we entered into an incremental amendment agreement (the “Incremental Amendment Agreement”) of our existing credit facility (the “Credit Agreement”) to increase the aggregate unsecured revolving line-of-credit from $350 million to $450 million. This commitment increase, provided pursuant to terms already present in the Credit Agreement, permitted us to increase our revolving credit facility by an amount of $100 million. We incurred approximately $1.6 million in loan origination fees in conjunction with the Incremental Amendment Agreement. These fees are being amortized over the remaining term of the Credit Agreement. All other provisions of the Credit Agreement remain unchanged.

          Our average debt balance increased to $239.0 million for the three months ended September 30, 2008, as compared to $206.4 million for the three months ended September 30, 2007. The average debt balance increased to $238.1 million for the nine months ended September 30, 2008, as compared to $182.8 million for the nine months ended September 30, 2007. The average interest rate decreased to 5.0 percent for the three months ended September 30, 2008, as compared to 6.2 percent for the same period last year. The average interest rate decreased to 5.5 percent for the nine months ended September 30, 2008, as compared to 6.6 percent for the same period last year. The outstanding balance on our corporate credit facility at September 30, 2008, was $212.2 million.

          We have a letter of credit associated with the Credit Agreement. The letter of credit reduces the amount available for borrowings and collateralizes our fuel price derivative instruments. We are assessed a fee on the liquidation value of the letter of credit. This fee was 0.575 percent at September 30, 2008. The balance of the letter of credit was $12 million at September 30, 2008.

          We expect total capital expenditures for 2008 to be approximately $18 to $19 million. Our capital spending is financed primarily through internally generated funds.

          Concerns about future economic growth, high oil prices, lower consumer sentiment, and the adverse developments in the credit markets continue to challenge the U.S. economy and credit markets. Currently, we have not seen deterioration in our liquidity and our ability to access the capital we need to fund our operations.

          Management believes that we can adequately fund our cash needs during the next 12 months.

     Long-term Liquidity

          Management assesses our long-term liquidity requirements periodically. Based on the results of these assessments, we may elect to increase our borrowing capacity, issue additional equity instruments or discontinue our share repurchase program.

     Off-balance Sheet Arrangements

          We have no material changes to our off-balance sheet arrangements as discussed in our Annual Report on Form 10-K for the year ended December 31, 2007.

     Purchase of Treasury Shares

          The following table presents share repurchase program activity from January 1, 2008 through September 30, 2008 and February 12, 2007 (the date of inception of the plan), through September 30, 2007:

(in thousands)	Three months ended September 30,								Nine months ended September 30,
	2008				2007				2008				2007
	Shares		Cost		Shares		Cost		Shares		Cost		Shares		Cost
Treasury stock purchased		71.1	$	2,046		273.5	$	9,781		1,034.2	$	31,391		972.2	$	30,424

          In July 2008, our board of directors approved an increase of $75 million to our current share repurchase authorization. In addition, our board of directors extended the share repurchase program to July 25, 2010. As of September 30, 2008, we have approximately $81 million of remaining availability under the program. Share repurchases will be made on the open market and may be commenced or suspended at any time. Management, based on its evaluation of market and economic conditions and other factors, will determine the timing and number of shares repurchased.

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Critical Accounting Policies and Estimates

          We have no material changes to our critical accounting policies and estimates discussed in our Annual Report on Form 10-K for the year ended December 31, 2007.

     New Accounting Pronouncements

          See Note 1 to the condensed consolidated financial statements of this report for further details of new accounting pronouncements not yet adopted.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

          We have no material changes to the disclosure on this matter made in our Annual Report on Form 10-K for the year ended December 31, 2007.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

          The principal executive officer and principal financial officer of Wright Express Corporation evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. “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, within the time periods specified in the SEC’s rules and forms, is recorded, processed, summarized and reported, and 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 Wright Express Corporation concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2008.

Changes in Internal Control Over Financial Reporting

          There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2008, our most recently completed fiscal quarter, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II

Item 1. Legal Proceedings.

          As of the date of this filing, we are not involved in any material legal proceedings. We also were not involved in any material legal proceedings that were terminated during the third quarter of 2008. However, from time to time, we are subject to other legal proceedings and claims in the ordinary course of business, none of which we believe are likely to have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A. Risk Factors.

           Except as provided below, there has not been a material change to the risk factors disclosed inItem 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. The following risk factors have been added to reflect current economic conditions.

Our exposure to counterparty credit risk could create an adverse affect on our financial condition.

          We engage in a number of transactions where counterparty credit risk becomes a relevant factor. Specifically, we have fuel price derivatives and interest rate swaps whose values at any point in time are dependent upon not only the market but also the viability of the counterparty. The failure or perceived weakness of any of our counterparties has the potential to expose us to risk of loss in these situations. Financial institutions, primarily banks, have historically been our most significant counterparties. The current instability of the financial markets has resulted in many financial institutions becoming significantly less creditworthy, and we are therefore exposed currently to these counterparty risks.

General economic conditions may affect our revenue and harm our business.

          As widely reported, financial markets in the United States, Europe and Asia have been experiencing extreme disruption in recent months. Unfavorable changes in economic conditions, including declining consumer confidence, inflation, recession or other changes, may lead our customers to use less of our services and our revenue could be adversely affected. Challenging economic conditions also may impair the ability of our customers or partners to pay for services they have purchased, and as a result, our reserves for doubtful accounts and write-offs of accounts receivable could increase. We are unable to predict the likely duration and severity of the current disruption in financial markets and adverse economic conditions in the U.S. and other countries.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Share Repurchases

          The following table provides information about the Company’s purchases of shares of the Company’s common stock during the quarter ended September 30, 2008:

							Approximate Dollar
					Total Number of		Value of Shares
					Shares Purchased		that May Yet Be
					as Part of Publicly		Purchased Under
	Total Number of		Average Price		Announced Plans or		the Plans or
	Shares Purchased		Paid per Share		Programs(a)		Programs(a)
July 1 – July 31, 2008		—	$	—		—	$	82,944,195
August 1 – August 31, 2008		71,100	$	28.78		71,100	$	80,897,847
September 1 – September 30, 2008		—	$	—		—	$	80,897,847
Total		71,100	$	28.78		71,100

^(a) On February 7, 2007, the Company announced a share repurchase program authorizing the purchase of up to $75 million of its common stock over the next 24 months. In July 2008, our board of directors approved an increase of $75 million to our current share repurchase authorization. In addition, our board of directors extended the share repurchase program to July 25, 2010. We now have authorization to purchase up to $150 million of our common stock. Share repurchases will be 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, will determine the timing and number of shares repurchased.

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Item 6. Exhibits.

Exhibit No.	Description
3.1	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).
3.2	Amended and Restated By-Laws (incorporated by reference to Exhibit No. 3.1 to our Current Report on Form 8-K filed with the SEC on May 22, 2008, File No. 001-32426).
4.1	Rights Agreement, dated as of February 16, 2005 by and between Wright Express Corporation and Wachovia Bank, National Association (incorporated by reference to Exhibit No. 4.1 to our Current Report on Form 8-K filed with the SEC on March 1, 2005, File No. 001-32426).
* 31.1	Certification of Chief Executive Officer of Wright Express Corporation pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
* 31.2	Certification of Chief Financial Officer of Wright Express Corporation pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
* 32.1	Certification of Chief Executive Officer of Wright Express Corporation 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.
* 32.2	Certification of Chief Financial Officer of Wright Express Corporation 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.

* These exhibits have been filed with this Quarterly Report on Form 10-Q.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	WRIGHT EXPRESS CORPORATION
November 5, 2008	By:	/s/  Melissa D. Smith
		Melissa D. Smith
		CFO and Executive Vice President, Finance and
		Operations (principal financial officer)

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EXHIBIT INDEX

Exhibit No.	Description
3.1	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).
3.2	Amended and Restated By-Laws (incorporated by reference to Exhibit No. 3.1 to our Current Report on Form 8-K filed with the SEC on May 22, 2008, File No. 001-32426).
4.1	Rights Agreement, dated as of February 16, 2005 by and between Wright Express Corporation and Wachovia Bank, National Association (incorporated by reference to Exhibit No. 4.1 to our Current Report on Form 8-K filed with the SEC on March 1, 2005, File No. 001-32426).
* 31.1	Certification of Chief Executive Officer of Wright Express Corporation pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
* 31.2	Certification of Chief Financial Officer of Wright Express Corporation pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
* 32.1	Certification of Chief Executive Officer of Wright Express Corporation 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.
* 32.2	Certification of Chief Financial Officer of Wright Express Corporation 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.

* These exhibits have been filed with this Quarterly Report on Form 10-Q.

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