World Fuel Services 2007 Annual Report Download - page 58

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64435 TX 50WORLD FUEL SERVICES
ANNUAL REPORT
28-Feb-2008 00:12 EST
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9.9.26
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following presents the unaudited pro forma results for 2007 and 2006 as if the AVCARD acquisition
had been completed as of January 1, 2007 and 2006, respectively (in thousands, except per share data):
2007 2006
(Pro Forma) (Pro Forma)
Revenue .......................................... $13,817,311 $10,849,115
Net income ....................................... $ 65,702 $ 65,336
Basic earnings per share ............................. $ 2.34 $ 2.38
Diluted earnings per share ............................ $ 2.26 $ 2.26
In March 2006, we acquired the remaining 33% of the outstanding equity interest of Tramp Oil (Brasil)
Limitada (“Tramp Oil Brazil”) from the minority owners for an aggregate purchase price of approximately $2.7
million (the “ToBras Acquisition”). The aggregate purchase price consisted of $2.6 million in cash and
approximately $0.1 million in the form of a promissory note. The promissory note bears interest at the annual
rate of 5.0% and is payable in a single installment of principal and interest in March 2009. The purchase price of
the ToBras Acquisition may increase by up to $4.5 million if certain operating income targets are achieved by
Tramp Oil Brazil over the three year period which began on March 1, 2006 (the “Earn-out”). Purchase price
adjustments for the ToBras Acquisition related to the Earn-out will only be recorded if and when it is beyond a
reasonable doubt that the related operating income targets will be met. As such, no amounts relating to the
Earn-out have been recorded or reflected in the financial statements as of December 31, 2007.
Prior to the ToBras Acquisition, we owned 67% of the outstanding shares of Tramp Oil Brazil and exercised
control, and as such, we consolidated Tramp Oil Brazil in our financial statements. Immediately prior to the
closing of the ToBras Acquisition, Tramp Oil Brazil declared dividends of approximately $0.2 million to the
minority owners that represented their share of Tramp Oil Brazil’s net assets.
The purchase price of the ToBras Acquisition was allocated to the acquired net assets based on their
estimated fair values. At acquisition date, we recorded identifiable intangible assets of $0.5 million for the value
attributable to certain non-compete agreements. We recorded goodwill, representing the cost in excess of the
estimated fair value of net assets acquired for this acquisition, of $2.2 million, which is deductible for tax
purposes. The amount of goodwill may be increased in future periods due to a purchase price adjustment related
to Earn-out, as discussed above.
Significant Accounting Policies
Basis of Consolidation
The accompanying consolidated financial statements and related notes to the consolidated financial
statements include our accounts and those of our majority owned or controlled subsidiaries, after elimination of
all significant intercompany accounts, transactions, and profits.
Our wholly-owned subsidiary, Marine Energy Arabia Establishment Ltd., a British Virgin Islands (“BVI”)
corporation, owns 49% of Marine Energy Arabia Co, LLC, a United Arab Emirates (“Dubai”) corporation. In
accordance with local laws, the Dubai entity is 51% owned by a Dubai citizen, referred to as a Sponsor. The
Dubai company, pursuant to a management contract, is required to pay for the staff and administrative support
provided by the BVI entity. Our BVI subsidiary has entered into various agreements with the Dubai Sponsor to
prevent an unauthorized ownership transfer and to effectively grant majority control of the Dubai entity to our
BVI subsidiary. Accordingly, the financial position and operations of the Dubai entity have been included in our
consolidated financial statements.
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