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64435 TX 56WORLD FUEL SERVICES
ANNUAL REPORT
28-Feb-2008 12:09 EST
CLN PSTAM
RR Donnelley ProFile SER willj0da 8*
PMT 2C
TX8724AC351073
9.9.26
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
deferred tax assets. Deferred tax liabilities generally represent items for which we have already taken a deduction
in our tax return, but we have not yet recognized the items as expenses in our results of operations. Significant
judgment is required in evaluating our tax positions, and in determining our provisions for income taxes, our
deferred tax assets and liabilities and any valuation allowance recorded against our net deferred assets. We
establish reserves when, despite our belief that the tax return positions are fully supportable, certain positions are
likely to be challenged and we may ultimately not prevail in defending those positions. As of December 31, 2007
and 2006, we had a valuation allowance of $0.8 million to reduce the value of US foreign tax credit
carryforwards to the estimated realizable amount. This valuation allowance was recorded in 2005.
U.S. income taxes have not been provided on undistributed earnings of foreign subsidiaries. It is not
practicable to estimate the amount of taxes that might be payable, if distributed. Our intention is to reinvest these
undistributed earnings permanently or to repatriate the undistributed earnings only when it is tax effective to do
so.
Comprehensive Income
Our comprehensive income is calculated by adjusting net income for the unrealized gains or losses on the
mark to market of derivatives which qualify and are designated as cash flow hedges. The following reconciles
our reported net income with comprehensive income for all years presented (in thousands):
2007 2006 2005
Net income, as reported ........................... $64,773 $63,948 $39,609
Net unrealized (loss) income on the mark to market of
qualifying cash flow hedges, net of income tax benefit
of $81 for 2007 and net of income tax provision of
$13 and $90 for 2006 and 2005, respectively ........ (129) 21 143
Comprehensive income ........................... $64,644 $63,969 $39,752
Earnings per Share
Basic earnings per share is computed by dividing net income by the weighted average number of shares of
common stock, stock units and vested RSUs outstanding. Diluted earnings per share is computed by dividing net
income by the sum of the weighted average number of shares of common stock, stock units and vested RSUs
outstanding and the common stock equivalents arising out of weighted average number of ‘in the money’ stock
options, SSARs, restricted stock and non-vested RSUs outstanding, using the treasury stock method. Our net
income is the same for basic and diluted earnings per share calculations.
56