World Fuel Services 2004 Annual Report Download - page 70

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The Company is awaiting further clarifying guidance from the U.S. Treasury Department on certain provisions of the Act.
Once this guidance is received, the Company expects to complete its evaluation of the effects of the Act during 2005. Under
the limitations on the amount of dividends qualifying for the DRD of the Act, the maximum repatriation of the Company’ s
foreign earnings that may qualify for the special one-time DRD is approximately $111.1 million. Therefore, the range of
possible amounts of qualifying dividends of foreign earnings is between zero and approximately $111.1 million. Because the
evaluation is ongoing, it is not yet practical to estimate a range of possible income tax effects of potential repatriations.
A reconciliation of the Federal statutory tax rate with the effective tax rate is as follows (in thousands):
For the
Nine Months
ended
For the Year ended December 31, December 31,
2004 2003 2002 2002
Restated Restated Restated
U.S. federal statutory rate 34.0 % 34.0 % 34.0 % 34.0 %
Foreign earnings, net of foreign taxes (14.8) (12.8) (15.7) (21.6)
State income taxes, net of U.S. federal
income tax benefit 0.2 0.6 0.5 1.1
Net operating loss - (0.4) 1.8 -
Income tax credits - (0.9) 0.8 -
Non-deductible goodwill amortization - - - -
Other permanent differences 0.2 0.3 0.4 2.6
Effective income tax rate 19.6 % 20.8 % 21.8 % 16.1 %
(Unaudited)
The temporary differences which comprise our net deferred income tax assets are as follows (in thousands):
As of December 31,
200
4
2003
Restate
d
Excess of provision for bad debts over charge-offs 3,040$ 2,974$
Net operating loss 5,036 1,730
Income tax credits 1,346 248
Excess of tax over financial reporting for depreciation of fixed assets 95 (150)
Excess of tax over financial reporting amortization of identifiable
intangibles and goodwill (2,799) (2,414)
Accrued compensation expenses recognized for financial reporting
purposes, not currently deductible for tax purposes 2,711 2,453
Accrued expenses recognized for financial reporting purposes, not
currently deductible for tax purposes 2,784 3,250
Accrued revenue (644) (481)
Total deferred income tax assets, net 11,569$ 7,610$
Deferred income tax assets, current 4,740$ 6,684$
Deferred income tax assets, non-current 6,829$ 926$
In the accompanying balance sheets, the current deferred income tax assets are included in prepaid expenses and other
current assets, and the non-current income tax assets are included in other assets. The income tax credits of $1.3 million and
$248 thousand at December 31, 2004 and 2003, respectively, are comprised of the following: foreign tax credit (“FTC”)
carryforward of $978 thousand at December 31, 2004 and an alternative minimum tax (“AMT”) credit carryforward of $368
thousand and $248 at December 31, 2004 and 2003, respectively. The FTC carryforward will expire in 2014, if unused, and
the AMT credit carries forward indefinitely.
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