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WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Recent Accounting Pronouncements
Accounting for Purchases and Sales of Inventory with the Same Counterparty. In September 2005, the
Emerging Issues Task Force issued Issue No. 04-13 (“EITF 04-13”), “Accounting for Purchases and Sales of
Inventory with the Same Counterparty.” The EITF concluded that inventory purchases and sales transactions
with the same counterparty should be combined for accounting purposes if they were entered into in
contemplation of each other. The EITF provided indicators to be considered for purposes of determining whether
such transactions are entered into in contemplation of each other. Guidance was also provided on the
circumstances under which nonmonetary exchanges of inventory within the same line of business should be
recognized at fair value. EITF 04-13 will be effective in reporting periods beginning after March 15, 2006. The
adoption of EITF 04-13 will cause inventory purchases and sales under buy/sell transactions, which were
recorded gross as purchases and sales, to be treated as inventory exchanges in consolidated statements of income.
We do not expect the affects of the adoption of EITF 04-13 will have a material impact on our results of
operations or financial position.
Accounting Changes and Error Corrections. In May 2005, the Financial Accounting Standards Board
(“FASB”) issued SFAS No. 154, “Accounting Changes and Error Corrections – a replacement of APB No. 20
and FASB Statement No. 3”. SFAS No. 154 changes the requirements of accounting for and reporting a change
in accounting principle and applies to all voluntary changes in accounting principle and changes required by an
accounting pronouncement, in the event that the accounting pronouncement does not include specific transition
provisions. SFAS No. 154 requires retrospective application of changes in accounting principle to prior periods’
financial statements unless it is impracticable. SFAS No. 154 also requires that a change in the method of
depreciation, amortization or depletion of long-lived, nonfinancial assets be accounted for as a change in
accounting estimate affected by a change in accounting principle. The guidance contained in APB Opinion
No. 20, “Accounting Changes” for reporting the correction of an error was carried forward in SFAS No. 154
without change. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005.
Share-Based Payment. In December 2004, the FASB issued a revised SFAS No. 123, “Share-Based
Payment,” which was also renamed from “Accounting for Stock-Based Compensation.” Among other provisions,
the revised statement requires that all share-based payments to employees be recognized in the financial
statements based on their grant-date fair value. Under previous guidance, companies had the option of
recognizing the fair value of share-based compensation in the financial statements or disclosing the pro forma
impact of share-based compensation on the statement of income in the notes to the financial statements. In April
2005, the SEC amended Rule 4-01(a) of Regulation S-X, which deferred the compliance date for the adoption of
the revised statement to the beginning of the next fiscal year, instead of the next reporting period, that begins
after June 15, 2005. Consistent with the new rule, we intend to adopt the revised statement in the first quarter of
2006 using the modified prospective application method. As described above in Share-Based Compensation, we
have recognized the fair value of share-based compensation in our financial statements for all share-based
compensation granted since April 2002. Accordingly, we do not believe the adoption of the revised statement
will have a material impact on our results of operations or financial position.
American Jobs Creation Act of 2004. In December 2004, the FASB issued Staff Position (“FSP”) No. 109-2,
“Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs
Creation Act of 2004.” The American Jobs Creation Act of 2004 (the “Act”), signed into law on October 22,
2004, provides for a special one-time tax deduction, or dividend received deduction (“DRD”), of 85% of
qualifying foreign earnings that are repatriated in either a company’s last tax year that began before the
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