World Fuel Services 2005 Annual Report Download - page 63

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WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The fair value of each stock option and SSARs granted was estimated using the Black-Scholes option
pricing model. The following table summarizes the weighted average fair value of the stock options and SSARs
granted for each of the following periods and the related weighted average assumptions:
2003 2004 2005
Fair-value of stock option and SSARs (per share) .......... $2.25 $3.91 $7.61
Expected life (in years) .............................. 3.0 1.6 4.6
Dividend yields .................................... 1.4% 1.6% 0.6%
Risk-free interest rates ............................... 2.0% 2.0% 3.9%
Volatility .......................................... 20.0% 20.0% 30.7%
The following table reflects per share net income and earnings per share if the fair value accounting method
had been applied to all outstanding share-based awards in each period (in thousands, except earnings per share
data):
2003 2004 2005
Net income:
Net income, as reported ....................... $22,161 $28,559 $39,609
Add: Share-based compensation for employee and
non-employee directors included in reported net
income, net of related tax effects .............. 569 1,050 2,445
Deduct: Total share-based compensation for
employee and non-employee directors determined
under fair value accounting for all share-based
awards, net of related tax effects .............. (636) (1,079) (2,445)
Pro forma net income ......................... $22,094 $28,530 $39,609
Basic earnings per share:
As reported ................................. $ 1.04 $ 1.29 $ 1.67
Pro forma .................................. $ 1.04 $ 1.29 $ 1.67
Diluted earnings per share:
As reported ................................. $ 0.99 $ 1.22 $ 1.57
Pro forma .................................. $ 0.99 $ 1.22 $ 1.57
As of December 31, 2005, our unearned deferred compensation related to non-vested award was $5.9
million, which will be recognized as compensation expense as follows: $3.6 million, $2.0 million and $0.3
million for 2006, 2007 and 2008, respectively.
Foreign Currency
Our primary functional currency is the U.S. dollar, which also serves as our reporting currency. Our foreign
entities translate their monetary assets and liabilities, denominated in foreign currencies, at fiscal year-end
exchange rates while non-monetary assets and liabilities, denominated in foreign currencies, are translated at
historical rates. Income and expense accounts, denominated in foreign currencies, are translated at the average
rates in effect during the year, except for depreciation which was translated at historical rates. Unrealized foreign
currency gains and losses relating to the translation of foreign entities’ assets, liabilities, income, and expense are
included in other, net in the accompanying consolidated statements of income in the period incurred. Realized
49