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Wright Express Reports Second-Quarter 2005 Results

Double-Digit Increase in Total Transactions Drives 21 Percent Revenue Growth; Company Continues to Pay Down Term Debt

SOUTH PORTLAND, Maine, July 27 /PRNewswire-FirstCall/ -- Wright Express Corporation (NYSE: WXS), a leading provider of payment processing and information management services to the U.S. commercial and government fleet industry, today reported financial results for the second quarter ended June 30, 2005.

Revenues for the second quarter of 2005 increased 21 percent to $57.3 million from $47.2 million for the second quarter of 2004. Net income on a GAAP basis for the second quarter was $15.0 million, or $0.37 per diluted share, compared with net income of $13.6 million, or $0.34 per diluted share, for the same period last year. On a non-GAAP basis, the Company's adjusted net income for the second quarter was $11.2 million, or $0.27 per diluted share.

The second quarters of 2005 and 2004 are not directly comparable on a GAAP basis due to the non-cash earnings fluctuations associated with the Company's fuel-price risk management strategy, which is based on derivative instruments. The GAAP financial results for the second quarter of 2005 include a $6.6 million pre-tax, non-cash, mark-to-market gain on these instruments. Exhibit 1 reconciles adjusted net income, which has not been determined in accordance with GAAP, to net income as determined in accordance with GAAP.

In addition, GAAP net income and adjusted net income for the second quarter of 2005 include the effect of certain costs related to the Company operating as an independent public company, which were not present in 2004. If the Company had been incurring these costs during the second quarter of 2004, non-GAAP net income would have been $10.8 million. The Company's adjusted net income for the second quarter of 2005 of $11.2 million would have represented a 3 percent increase over this amount. Exhibit 2 reconciles non- GAAP net income to net income determined in accordance with GAAP for the second quarter of 2004.

Management uses the non-GAAP measures presented within this news release to evaluate the Company's performance on a comparable basis and to eliminate the volatility associated with its derivative instruments. Management believes that investors may find these measures useful for the same purposes, but cautions that they should not be considered a substitute for disclosure in accordance with GAAP.

    Second-Quarter 2005 Performance Metrics
    * Wright Express paid $15 million in principal on its term debt.
    * Average number of vehicles serviced increased 8 percent from the second
      quarter of 2004 to approximately 4 million.
    * Total transactions processed increased 10 percent from the second
      quarter of 2004 to 56.8 million.  Payment processing transactions
      increased 12 percent to 40.9 million, and transaction processing
      transactions increased 5 percent to 15.9 million.
    * Average expenditure per payment processing transaction grew to $44.03,
      an increase of 21 percent from the same period last year.
    * Average retail fuel price was $2.20 per gallon, compared with $1.86 per
      gallon for the second quarter a year ago, an increase of 18 percent.
    * Total MasterCard purchase volume grew to $225.7 million, an increase of
      32 percent from the comparable period a year ago.

    Comments on the Second Quarter

"Our powerful front-end sales and marketing engine continued to perform well in the second quarter, producing strong growth in transaction volume and revenue," said Michael Dubyak, president and chief executive officer. "The Wright Express team is leveraging all of the Company's marketing channels to win profitable new business across fleets of all sizes. In addition, our MasterCard business continued to grow at a strong pace in the second quarter."

"The Company's predictable and scalable business model is generating consistently strong net income margin and free cash flow," Dubyak said. "We took steps during the second quarter to build on this momentum and further improve the Company's financial performance. We continued executing on our de-leveraging plan, paying down an additional $15 million of term debt. We also developed a revised fuel-price risk management strategy that we began executing in early July. Going forward, this initiative should significantly reduce the sensitivity of the Company's earnings to changes in retail fuel prices."

Fuel-Price Risk Management Program

During the second quarter of 2005, the Company incurred a realized loss on its derivative instruments of $3.9 million before taxes, which was approximately equal to the additional revenue earned. On July 6, 2005, Wright Express began executing on a revised fuel-price risk management strategy that extends the Company's existing risk management program into 2007. The Company believes the structure of the new instruments improves on the program currently in effect. The instruments are intended to be more effective in enhancing the visibility and predictability of the Company's future earnings. In addition, the settlement terms of the Company's existing fuel-price instrument have been amended to provide benefits comparable to those expected from the new instruments.

Financial Guidance

Wright Express Corporation is issuing financial guidance for the third quarter of 2005 and updating its guidance for the full year. This guidance excludes the impact of non-cash, mark-to-market adjustments on the Company's fuel-price-related derivative instruments. The fuel prices referenced below are based on the applicable NYMEX futures price:

For the third quarter of 2005, revenue in the range of $57 million to $60 million. This is based on an assumed average retail fuel price of $2.26 per gallon.

Third-quarter 2005 net income before unrealized gain or loss on derivative contracts in the range of $11 million to $12 million, or $0.27 to $0.29 per diluted share, based on approximately 41 million shares outstanding.

For the full year 2005, revenue in the range of $222 million to $227 million. This is based on an assumed average retail fuel price of $2.17 per gallon.

For the full year 2005, net income before non-recurring charges from the first quarter of 2005 and unrealized gain or loss on derivative contracts in the range of $44 million to $46 million, or $1.08 to $1.13 per diluted share, based on approximately 41 million shares outstanding.

Conference Call Details

In conjunction with this announcement, Wright Express will host a conference call today at 5:00 p.m. (ET) to discuss the Company's financial results, second-quarter highlights, business strategy and business outlook. To access this call by telephone, dial (800) 500-0311 or (719) 457-2698. A telephone replay will be available through midnight on Wednesday, August 3 at (719) 457-0820 or (888) 203-1112. Please indicate passcode 3191406 to access the replay. A live webcast of this conference call will be available at the "Investor Relations" section of the Company's website (http://www.wrightexpress.com), and a webcast archive will be posted on the website for approximately three months.

About Wright Express

Wright Express is a leading provider of payment processing and information management services to the U.S. commercial and government vehicle fleet industry. Wright Express provides these services for more than 290,000 commercial and government fleets containing more than 4 million vehicles. Wright Express markets these services directly as well as through more than 85 strategic relationships, and offers a MasterCard-branded corporate card. The Company employs more than 640 people and maintains its headquarters in South Portland, Maine. For more information about Wright Express, please visit http://www.wrightexpress.com.

This press release contains forward looking statements, including statements regarding Wright Express Corporation's financial guidance for the third quarter and full year 2005 and the long term economic effect of its fuel-price related derivative instruments. These forward-looking statements include a number of risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include: volatility in fuel prices, the effect of the Company's fuel-price related derivative instruments, effects of competition, the potential loss of key strategic relationships, decreased demand for fuel and other vehicle products and services and the effects of general economic conditions on the commercial activity of fleets, the Company's ability to rapidly implement new technology and systems, changes in interest rates and the other risks and uncertainties included from time to time in the Company's filings with the Securities and Exchange Commission, including the final prospectus filed on February 16, 2005, the Company's Form 10-Q for the quarter ended March 31, 2005, and any current reports on Form 8- K. Wright Express Corporation undertakes no obligation to update these forward-looking statements at any future date or dates.

    Condensed Financial Statements and Supplemental Exhibits Follow  ...


                          WRIGHT EXPRESS CORPORATION
                CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
                    (in thousands, except per share data)
                                 (unaudited)
                             Three months ended         Six months ended
                                  June 30,                  June 30,
                             2005         2004         2005         2004

    Revenues
     Payment processing
      revenue              $41,809      $32,921      $76,618      $61,117
     Transaction processing
      revenue                4,288        4,190        8,395        9,507
     Account servicing
     revenue                 5,792        5,253       11,411       10,338
     Finance fees            3,052        2,280        6,247        4,434
     Other                   2,370        2,595        6,842        5,441

      Total revenues        57,311       47,239      109,513       90,837

    Expenses
     Salary and other
      personnel             13,450       12,215       32,167       24,291
     Service fees            3,005        1,617        6,547        4,742
     Provision for
      credit losses          1,940        1,920        4,877        4,549
     Technology leasing
      and support            2,099        1,860        4,176        3,524
     Occupancy and equipment 1,432        1,340        2,874        2,517
     Depreciation and
      amortization           2,684        2,059        4,656        4,171
     Operating interest
      expense                3,192          987        5,453        2,072
     Operating interest
      income                     -        (664)            -      (1,275)
    Other                    3,482        3,601        7,401        6,876

      Total expenses        31,284       24,935       68,151       51,467

    Operating income        26,027       22,304       41,362       39,370

    Financing interest
     expense               (4,133)            -      (5,519)            -

    Realized and
     unrealized gains
     (losses)
     on derivative
     instruments             2,658            -     (41,544)            -

    Income (loss) before
     income taxes           24,552       22,304      (5,701)       39,370

    Provision (benefit)
     for income taxes        9,568        8,676      (2,212)       15,315

    Net income (loss)      $14,984      $13,628     $(3,489)      $24,055

    Earnings (loss)
     per share (on a
     pro forma basis
     for 2004):
     Basic                   $0.37        $0.34      $(0.09)        $0.60
     Diluted                 $0.37        $0.34      $(0.09)        $0.59

    Weighted average
     common shares
     outstanding (on a
     pro forma basis
     for 2004):
     Basic                  40,186       40,185       40,186       40,185
     Diluted                41,072       41,105       40,186       41,105



                          WRIGHT EXPRESS CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
               (in thousands, except share and per share data)
                                                    June 30,   December 31,
                                                      2005           2004
                                                  (unaudited)

    Assets
     Cash and cash equivalents                       $27,548        $31,806
     Accounts receivable (less reserve
      for credit losses of
      $4,715 in 2005 and $4,212 in 2004)             606,863        447,169
     Due from related parties                              -        134,182
     Property, equipment and
      capitalized software, net                       37,957         37,474
     Deferred income taxes, net                      489,377            502
     Goodwill                                        135,047        135,047
     All other assets                                 30,786         26,509


    Total assets                                  $1,327,578       $812,689

    Liabilities and Stockholders' or Member's Equity
     Accounts payable                               $282,548       $197,647
     Accrued expenses                                 17,408         17,410
     Deposits                                        294,520        194,360
     Borrowed federal funds                            6,583         27,097
     Revolving line-of-credit facility                50,000              -
     Term loan                                       182,674              -
     Derivative instruments, at fair value            27,821              -
     Other liabilities                                   404            459
     Due to related parties                                -         91,466
     Amounts due to Cendant under
      tax receivable agreement                       409,032              -
     Preferred stock; 10,000,000 shares authorized:
      Series A non-voting convertible,
      redeemable preferred stock;
      100 shares authorized, issued and outstanding   10,000              -

      Total liabilities                            1,280,990        528,439

    Commitments and contingencies

    Stockholders' or Member's Equity
     Member's contribution                                 -        182,379
     Common stock $0.01 par value; 175,000,000 shares
      authorized; 40,188,687 shares issued
      and outstanding                                    402              -
     Additional paid-in capital                       49,666              -
     Retained earnings (accumulated deficit)         (3,489)        101,869
     Other comprehensive income (loss), net of tax:
      Net unrealized gain (loss) on
       interest rate swaps                                13              -
      Net unrealized gain (loss) on
       available-for-sale securities                     (4)              2

     Accumulated other comprehensive income (loss)         9              2

     Total stockholders' or member's equity           46,588        284,250

     Total liabilities and stockholders'
      or member's equity                          $1,327,578       $812,689


                          WRIGHT EXPRESS CORPORATION
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (in thousands)
                                 (unaudited)
                                                        Six months ended
                                                            June 30,
                                                     2005           2004

    Cash flows from operating activities
     Net income (loss)                              $(3,489)        $24,055
     Adjustments to reconcile net income
      (loss) to net cash provided by
      operating activities:
      Net unrealized loss on derivative instruments   27,821              -
      Non-cash charge for stock-based compensation     6,031              -
      Depreciation and amortization                    5,333          4,171
      Deferred taxes                                   (161)          (191)
      Provision for credit losses                      4,877          4,549
      Loss (gain) on disposal of property
       and equipment                                   (118)            157
      Changes in operating assets and liabilities:
       Accounts receivable                         (164,571)      (137,740)
       Other assets                                  (1,706)          (960)
       Accounts payable                               84,901         81,925
       Accrued expenses                                   31            773
       Deposits                                      100,160         85,941
       Borrowed federal funds                       (20,514)       (23,966)
       Other liabilities                                (55)          (728)
       Amounts due to Cendant under tax
        receivable agreement                         (6,379)              -
       Due to/from related parties                    45,051       (28,346)

      Net cash provided by operating activities       77,212          9,640

    Cash flows from investing activities
     Purchases of property and equipment             (5,145)        (4,066)
     Sales of property and equipment                     125             23
     Purchases of available-for-sale securities      (1,096)          (972)
     Maturities of available-for-sale securities         121            333

     Net cash used for investing activities          (5,995)        (4,682)

    Cash flows from financing activities
     Dividends paid                                (305,887)       (11,985)
     Net borrowings on revolving line of credit       50,000              -
     Loan origination fees paid for revolving
      line of credit                                 (1,704)              -
     Borrowings on term loan, net of
      loan origination fees                          217,116              -
     Repayments on term loan                        (35,000)              -

     Net cash used for financing activities         (75,475)       (11,985)

    Net change in cash and cash equivalents          (4,258)        (7,027)
    Cash and cash equivalents, beginning of period    31,806         22,134

    Cash and cash equivalents, end of period         $27,548        $15,107


                          WRIGHT EXPRESS CORPORATION
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                               (in thousands)
                                 (unaudited)
                                                        Six months ended
                                                            June 30,
                                                      2005          2004

    Supplemental cash flow information:
     Interest paid                                    $7,975          2,041
     Income taxes paid                                $3,870              -

    During the six months ended June 30, 2005 the following non-cash
    transactions occurred:

    * The Company's tax basis of its assets increased resulting in a deferred
      tax asset of $488,719.  The Company entered into a tax receivable
      agreement with its former parent company, which provides that the
      Company will make payments estimated at $415,411 over the next 15
      years.  The difference between the asset recorded and the liability
      payable to Cendant Corporation was recorded as $73,308 of stockholders'
      equity.
    * The Company issued 40,000 shares of common stock upon the completion of
      the Company's initial public offering and as part of the conversion of
      the Company from a Delaware limited liability company to a Delaware
      corporation.  The Company did not receive any proceeds from this
      offering as Cendant received all common stock proceeds from the
      offering concurrent with their sale of 100% of their interest in the
      Company.
    * The Company issued one hundred shares of preferred stock as part of the
      conversion of the Company from a Delaware limited liability company to
      a Delaware corporation.  The Company did not receive any proceeds from
      this offering as Cendant received all preferred stock proceeds from
      this conversion.


                                  Exhibit 1
                          Wright Express Corporation
           Reconciliation of Adjusted Net Income to GAAP Net Income
                             Second Quarter 2005
                                (in thousands)
                                 (unaudited)

                                                  Three months
                                                 ended June 30,
                                                      2005

    Adjusted net income (i)                          $11,160
    Non-cash, mark-to-market adjustments
     on derivative instruments                         6,553
    Tax impact                                       (2,729)
    GAAP net income                                  $14,984

Although adjusted net income is not calculated in accordance with generally accepted accounting principles (GAAP), this measure is integral to the Company's reporting and planning processes. The Company considers this measure integral because it eliminates the non-cash volatility associated with the derivative instruments. 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 derivative
      instruments helps management identify and assess trends in the
      Company's underlying business that might otherwise be obscured due to
      quarterly non-cash earnings fluctuations associated with fuel-price
      derivative contracts; and
    * The non-cash, mark-to-market adjustments on derivative instruments are
      difficult to forecast accurately, making comparisons across historical
      and future quarters difficult to evaluate.

For the same reasons, Wright Express believes that adjusted net income may also be useful to investors as one means of evaluating the Company's 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 Wright Express may not be comparable to similarly titled measures employed by other companies.


                                  Exhibit 2
                          Wright Express Corporation
           Reconciliation of Non-GAAP Net Income to GAAP Net Income
                             Second Quarter 2004
                                (in thousands)
                                 (unaudited)

                                                  Three months
                                                 ended June 30,
                                                      2004

    Non-GAAP net income                              $10,816
    Loss of interest income on cash balances             664
    Incremental public company expenses,
     net of Cendant allocations                        1,080
    Founders grant vesting expense recognized in 2005    400
    Savings from vesting Cendant restricted
     stock units                                       (126)
    Additional interest on operating debt balances
     used to pay a dividend to Cendant                    95
    Interest expense on financing debt balances        2,431
    Tax impact                                       (1,732)
    GAAP net income                                  $13,628

Although non-GAAP net income is not calculated in accordance with generally accepted accounting principles, this measure is integral to the Company's internal reporting. Management considers this an important measure because it includes the effect of new costs related to the Company's operating for the first time as an independent public company, as well as financing costs related to the indebtedness incurred to pay a $306 million dividend to Cendant prior to the initial public offering. However, because non-GAAP net income has not been determined in accordance with generally accepted accounting principles, it should not be considered as a substitute for net income, operating income or cash flows from operating activities as determined in accordance with GAAP. In addition, non-GAAP net income as used by Wright Express may not be comparable to similarly titled measures employed by other companies. The non-GAAP adjustments are based upon available information the Company believes to be reasonable as of today. The non-GAAP results are not necessarily indicative of the future results of operations.

    (1) The number of fully diluted shares for adjusted net income is 41,072.

    News media contact:                 Investor contact:
     Jessica Roy                         Steve Elder
     Wright Express                      Wright Express
     207.523.6763                        207.523.7769
     Jessica_Roy@wrightexpress.com       Steve_Elder@wrightexpress.com

SOURCE Wright Express Corporation 07/27/2005

CONTACT:
Jessica Roy, +1-207-523-6763, Jessica_Roy@wrightexpress.com, or
Steve Elder, +1-207-523-7769, Steve_Elder@wrightexpress.com both of Wright Express