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Wright Express Reports Third-Quarter 2005 Results

14 Percent Increase in Total Fuel Transactions Drives 41 Percent Revenue Growth;
Company Continues to Pay Down Term Debt

SOUTH PORTLAND, Maine, Oct. 26 /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 third quarter ended September 30, 2005.

Total revenues for the third quarter of 2005 increased 41 percent to $67.4 million from $47.9 million for the third quarter of 2004. Net loss on a GAAP basis for the third quarter was $6.2 million, or $0.15 per share, compared with net income of $12.9 million, or $0.31 per diluted share, for the same period last year. On a non-GAAP basis, the Company's adjusted net income for the third quarter was $13.4 million, or $0.33 per diluted share.

The third 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 third quarter of 2005 include an unrealized $29.7 million pre-tax, non-cash, mark-to-market loss 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 third 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 third quarter of 2004, non- GAAP net income would have been $10.3 million. The Company's adjusted net income for the third quarter of 2005 of $13.4 million would have represented a 30 percent increase over this amount. Exhibit 2 reconciles non-GAAP net income to net income determined in accordance with GAAP for the third 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.

    Third-Quarter 2005 Performance Metrics
    * Average number of vehicles serviced increased 9 percent from the third
      quarter of 2004 to approximately 4.2 million.
    * Total fuel transactions processed increased 14 percent from the third
      quarter of 2004 to 60.9 million.  Payment processing transactions
      increased 19 percent to 44.3 million, and transaction processing
      transactions increased 4 percent to 16.5 million.
    * Average expenditure per payment processing transaction grew to $50.72,
      an increase of 39 percent from the same period last year.
    * Average retail fuel price was $2.57 per gallon, compared with $1.86 per
      gallon for the third quarter a year ago, an increase of 38 percent.
    * Total MasterCard purchase volume grew to $252.4 million, an increase of
      38 percent from the comparable period a year ago.
    * Wright Express paid $5.5 million in principal on its term debt.  The
      total paid year-to-date is $40.5 million.

Comments on the Third Quarter

"Wright Express Corporation's financial results this quarter reflected sustained and solid organic gains in business volume," said Michael Dubyak, president and chief executive officer. "Our front-end sales and marketing engine drove growth in each of our core markets -- large, mid-sized and small fleets -- and through all of our marketing channels: co-brand, private label and direct. Despite higher fuel prices, fleet fuel purchasing and demand for fuel card solutions remained very strong during the quarter. We posted increases in the number of vehicles serviced, transactions processed and expenditure per transaction, as well as in MasterCard purchase volume."

"Wright Express also performed well from an operational standpoint," said Dubyak. "Along with our front-end growth initiatives, our strengths in portfolio management and product differentiation are what truly drive the business. Capitalizing on these strengths, we made significant progress this quarter in acquiring and retaining customers, in minimizing credit loss, and in creating products that add value by meeting new customer needs."

"Our third-quarter results demonstrate the scalability of our business model," said Dubyak. "In addition to the strong growth in transaction volume, the quarter was highlighted by solid sales, low credit loss, reduced leverage, increased productivity and greater profitability. We are developing additional channel opportunities in our core business, as well as exploring ideas for penetrating new markets. Looking forward, although there tends to be less fueling activity during the fourth quarter, these drivers should have a positive impact on our business. At the same time, our fuel-price risk management strategy should continue to support the visibility and predictability of our future cash flow and earnings."

Financial Guidance

Wright Express Corporation is issuing financial guidance for the fourth 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 fourth quarter of 2005, revenue in the range of $63 million to
      $68 million.  This is based on an assumed average retail fuel price of
      $2.58 per gallon.
    * Fourth-quarter 2005 net income before unrealized gain or loss on
      derivative contracts in the range of $12 million to $13 million, or
      $0.29 to $0.32 per diluted share, based on approximately 41 million
      shares outstanding.
    * For the full year 2005, revenue in the range of $240 million to $245
      million.  This is based on an assumed average retail fuel price of $2.35
      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 $48 million to $49 million, or $1.17 to $1.20
      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, third-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 Tuesday, November 1 at (719) 457-0820 or (888) 203-1112. Please indicate passcode 6860924 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 298,000 commercial and government fleets containing 4.2 million vehicles. Wright Express markets these services directly as well as through more than 90 strategic relationships, and offers a MasterCard-branded corporate card. The Company employs more than 635 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: development of additional channel opportunities and ideas for penetrating new markets; fueling activity in the fourth quarter and its impact on business; the fuel-price management strategy's support of the visibility and predictability of future cash flow and earnings; and financial guidance for the fourth quarter and full year 2005. 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, fourth quarter fueling patterns; 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 Quarterly Reports on Form 10-Q 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 Nine months ended
                                            September 30,      September 30,
                                            2005     2004      2005     2004

    Revenues
     Payment processing revenue            $50,271  $33,758  $126,889  $94,875
     Transaction processing revenue          4,526    4,364    12,921   13,871
     Account servicing revenue               5,868    5,403    17,279   15,741
     Finance fees                            4,143    2,461    10,390    6,895
     Other                                   2,587    1,901     9,429    7,342
      Total revenues                        67,395   47,887   176,908  138,724

    Expenses
     Salary and other personnel             13,463   12,483    45,630   36,774
     Service fees                            3,045    2,060     9,592    6,802
     Provision for credit losses             2,326    1,684     7,203    6,233
     Technology leasing and support          2,270    2,423     6,446    5,947
     Occupancy and equipment                 1,569    1,767     4,443    4,284
     Depreciation and amortization           2,526    1,679     7,182    5,850
     Operating interest expense              4,139    1,752     9,592    3,824
     Operating interest income                -       (846)      -     (2,121)
     Other                                   3,987    3,770    11,388   10,646
      Total expenses                        33,325   26,772   101,476   78,239

    Operating income                        34,070   21,115    75,432   60,485

    Financing interest expense              (3,740)     -      (9,259)     -
    Realized and unrealized gains
     (losses)
     on derivative instruments             (38,450)     -     (79,994)     -
    Income (loss) before income taxes       (8,120)  21,115   (13,821)  60,485
    Provision (benefit) for income taxes    (1,935)   8,213    (4,147)  23,528

    Net income                             $(6,185) $12,902   $(9,674) $36,957

    Earnings (loss) per share (on a pro
     forma basis for 2004):
       Basic                                $(0.15)   $0.32    $(0.24)   $0.92
       Diluted                              $(0.15)   $0.31    $(0.24)   $0.90

    Weighted average common shares
     outstanding (on a pro forma basis
     for 2004):
       Basic                                40,194   40,185    40,189   40,185
       Diluted                              40,194   41,104    40,189   41,104



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

                                                September 30,     December 31,
                                                      2005             2004
                                                  (unaudited)

    Assets
     Cash and cash equivalents                       $31,223          $31,806
     Accounts receivable (less reserve for
      credit losses of $5,378 in 2005 and
      $4,212 in 2004)                                802,719          447,169
     Due from related parties                            -            134,182
     Property, equipment and capitalized
      software, net                                   38,207           37,474
     Deferred income taxes, net                      495,497              502
     Goodwill                                        135,047          135,047
     All other assets                                 32,431           26,509
    Total assets                                  $1,535,124         $812,689

    Liabilities and Stockholders' or
     Member's Equity
     Accounts payable                               $359,758         $197,647
     Accrued expenses                                 20,105           17,410
     Deposits                                        413,922          194,360
     Borrowed federal funds                              -             27,097
     Revolving line-of-credit facility                50,000              -
     Term loan, net                                  177,360              -
     Derivative instruments, at fair value            57,566              -
     Other liabilities                                   420              459
     Due to related parties                              -             91,466
     Amounts due to Cendant under tax
      receivable agreement                           404,488              -
     Preferred stock; 10,000 shares
      authorized:
       Series A non-voting convertible,
        redeemable preferred stock;
        0.1 shares authorized, issued and
        outstanding                                   10,000              -
    Total liabilities                              1,493,619          528,439

    Commitments and contingencies

    Stockholders' or Member's Equity
      Member's contribution                               -            182,379
      Common stock $0.01 par value; 175,000
       shares authorized
       40,199 shares issued and outstanding              402              -
      Additional paid-in capital                      50,204              -
      Retained earnings (accumulated
       deficit)                                       (9,674)         101,869
      Other comprehensive income, net of
       tax:
      Net unrealized gain on interest rate
       swaps                                             630              -
      Net unrealized gain (loss) on
       available-for-sale securities                     (57)               2
      Accumulated other comprehensive
       income                                            573                2
     Total stockholders' or member's
      equity                                          41,505          284,250
    Total liabilities and stockholders'
     or member's equity                           $1,535,124         $812,689





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

                                                      Nine months ended
                                                          September 30,
                                                     2005               2004

    Cash flows from operating activities
     Net income (loss)                              $(9,674)          $36,957
     Adjustments to reconcile net income
      (loss) to net cash
     provided by operating activities:
     Net unrealized loss on derivative
      instruments                                    57,566               -
     Stock-based compensation                         6,434               -
     Depreciation and amortization                    8,131             5,850
     Deferred taxes                                  (6,520)              -
     Provision for credit losses                      7,203             6,233
     Loss (gain) on disposal of property
      and equipment                                    (118)              802
     Changes in operating assets and
      liabilities:
      Accounts receivable                          (362,753)         (158,049)
      Other assets                                     (846)           (2,090)
      Accounts payable                              162,111            85,982
      Accrued expenses                                2,863             1,493
      Deposits                                      219,562            68,928
      Borrowed federal funds                        (27,097)           13,060
      Other liabilities                                 (39)             (718)
      Amounts due to Cendant under tax
       receivable agreement                         (10,923)                -
      Due to/from related parties                    45,051           (25,691)
    Net cash provided by operating
     activities                                      90,951            32,757

    Cash flows from investing activities
    Purchases of property and equipment              (7,899)           (7,047)
    Sales of property and equipment                     125             1,346
    Purchases of available-for-sale
     securities                                      (3,115)             (980)
    Maturities of available-for-sale
     securities                                         330               688
    Net cash used for investing
     activities                                     (10,559)           (5,993)

    Cash flows from financing activities
     Dividends paid                                (305,887)          (19,924)
     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 of $2,884                    217,116                -
     Repayments on term loan                        (40,500)               -
     Net cash used for financing
      activities                                    (80,975)          (19,924)
    Net change in cash and cash
     equivalents                                       (583)            6,840
    Cash and cash equivalents, beginning
     of period                                       31,806            22,134

    Cash and cash equivalents, end of
     period                                         $31,223           $28,974

    Supplemental cash flow information:
    Interest paid                                   $14,013            $3,861
    Income taxes paid                                $8,293               $-

The following non-cash transactions occurred during the nine months ended September 30, 2005:

    * The Company's tax basis of its assets increased, which increased
      deferred tax assets by $488,719.  The Company entered into a tax
      receivable agreement with its former parent company, Cendant
      Corporation, which provides that the Company will make payments
      estimated at a total of $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 0.1 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 Loss
                              Third Quarter 2005
                                (in thousands)
                                 (unaudited)

                                                  Three months ended
                                                  September 30, 2005

    Adjusted net income(1)                           $13,408
    Non-cash, mark-to-market
     adjustments on derivative instruments          (29,745)
    Tax impact                                       10,152
    GAAP net income                                 $(6,185)

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.

    (1) The number of diluted shares for adjusted net income is 41,143.

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

                                                  Three months ended
                                                  September 30, 2004

    Non-GAAP net income                              $10,295
    Loss of interest income on cash balances             846
    Incremental public company expenses,
     net of Cendant allocations                          832
    Founders grant vesting expense recognized in 2005    402
    Savings from vesting Cendant restricted stock
     units                                             (341)
    Additional interest on operating debt balances
     used to pay a dividend to Cendant                   124
    Interest expense on financing debt balances        2,347
    Tax impact                                        (1,603)
    GAAP net income                                  $12,902

Although non-GAAP net income is not calculated in accordance with generally accepted accounting principles (GAAP), 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.

    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