World Fuel Services 2004 Annual Report Download - page 66

2. Restatement of Financial Statements
a) Restatement related to cutoff procedures used to recognize revenue and cost of sales
We have restated our previously reported consolidated financial statements for the years ended December 31, 2003 and
2002, the nine months ended December 31, 2002, and the year ended March 31, 2002. The restatement reflects the correction
of the cutoff procedures used to recognize sales and sales related costs. Under the corrected cutoff procedures, revenues and
sales related costs are recognized at the time fuel deliveries are made and related services are performed. Because we contract
with third parties for fuel deliveries and the performance of the related services, this causes delays in our receiving the
necessary information for invoicing. As a result of these delays, the Company had historically recorded revenue and sales
related costs when supporting documentation relating to fuel deliveries and related services had been received from third
parties.
The primary impact of the restatement to correct the cutoff procedures used to recognize sales and sales related costs on
the balance sheets at December 31, 2003 and 2002, and March 31, 2002 was to increase accounts receivable and accounts
payable. In the statements of income, the principal impact of the restatement was to increase revenue and cost of sales for the
years ended December 31, 2003 and 2002, the nine months ended December 31, 2002, and the year ended March 31, 2002.
For the statements of cash flows, there was no impact to net cash from operating activities, investing activities, and financing
activities since the changes were to net income and other operating cash flow items.
We also determined that certain of our historical accounts were misclassified including inventories, prepaid and other
current assets, accounts payable, and accrued expenses and other current liabilities. Accordingly, the consolidated balance
sheets as of December 31, 2003 and 2002, and March 31, 2002 have been adjusted to reflect the correct classifications.
The following table sets forth the impact of the restatement to correct the cutoff procedures used to recognize sales and
sales related costs and the correction of the misclassification on amounts previously reported in the consolidated balance sheets
(in thousands):
Previously Previously Previously
Reported Restated Reported Restated Reported Restated
Balance Sheet
Accounts and notes
receivable, net 192,119$ 243,612$ 177,360$ 212,578$ 132,586$ 161,054$
Inventories 22,940 14,847 5,144 3,051 2,219 1,437
Prepaid expenses and other
current assets 20,176 19,948 22,300 21,884 20,162 19,796
Total current assets 311,491 354,663 262,580 295,289 213,139 240,459
Total assets 357,678 400,850 312,287 344,996 257,923 285,243
Accounts payable 172,885 213,945 146,784 178,615 108,267 134,343
Accrued salaries and wages 9,547 9,687 5,634 5,711 6,461 6,564
Accrued expenses and other
current liabilities 9,987 10,620 16,788 16,537 5,443 5,707
Total current liabilities 204,762 246,595 180,359 212,016 133,851 160,294
Total liabilities 209,299 251,132 184,557 216,214 141,484 167,927
Retained earnings 132,976 134,315 114,334 115,386 106,841 107,718
Total stockholders' equity 148,379 149,718 127,730 128,782 116,439 117,316
Total liabilities and
stockholders' equity 357,678 400,850 312,287 344,996 257,923 285,243
As of December 31, 2003 As of December 31, 2002 As of March 31, 2002
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