World Fuel Services 2007 Annual Report Download - page 75

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64435 TX 67WORLD FUEL SERVICES
ANNUAL REPORT
28-Feb-2008 15:18 EST
CLN PSTAM
RR Donnelley ProFile SER willj0da 9*
PMT 2C
TX8724AC351073
9.9.26
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
repatriation affected our effective tax rate for 2005 by approximately 5.1%. The remaining net decrease in the
effective tax rate resulted primarily from fluctuations in the actual results achieved by our subsidiaries in tax
jurisdictions with different tax rates.
U.S. income taxes have not been provided on undistributed earnings of foreign subsidiaries. As of
December 31, 2007 and 2006, we had approximately $244.6 million and $175.9 million, respectively, of earnings
attributable to foreign subsidiaries. Our intention is to reinvest these earnings permanently or to repatriate the
earnings only when it is tax effective to do so. It is not practicable to determine the amount of U.S. income tax
payable in the event all such foreign earnings are repatriated.
The temporary differences which comprise our net deferred income tax assets are as follows (in thousands):
As of December 31,
2007 2006
Excess of provision for bad debts over charge-offs ........................ $ 2,400 $ 3,963
Net operating loss ................................................. 691 1,558
Income tax credits ................................................. 765 765
Excess of financial reporting over tax (tax over financial ...................
reporting) for depreciation of fixed assets ............................... 925 (333)
Excess of tax over financial reporting amortization of .....................
identifiable intangible assets and goodwill .............................. (3,869) (3,504)
Accrued compensation expenses recognized for financial reporting ..........
purposes, not currently deductible for tax purposes ....................... 9,216 5,579
Accrued expenses recognized for financial reporting purposes, ..............
not currently deductible for tax purposes ............................... 3,107 2,007
Accrued revenue .................................................. (172) (347)
13,063 9,688
Valuation allowance ................................................ (765) (765)
Total deferred income tax assets, net ............................... $12,298 $ 8,923
Deferred income tax assets, current ............................ $ 8,701 $ 5,255
Deferred income tax assets, non-current ........................ $ 3,597 $ 3,668
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 credit
of $0.8 million at December 31, 2007 and 2006 is comprised of a foreign tax credit (“FTC”) carryforward of $0.8
million at December 31, 2007 and 2006. The FTC carryforward will expire in 2014, if unused. As of and for the
year ended December 31, 2007 and 2006, we recorded a valuation allowance of $0.8 million to reduce the value
of FTC carryforwards to the estimated realizable amount.
As of December 31, 2007, we had state and foreign net operating losses (“NOLs”) of $12.5 million and $1.6
million, respectively. The state losses, if unused, will begin to expire, in varying amounts, after 2015. The foreign
losses have an unlimited carryforward period. As of December 31, 2006, we had U.S. federal, state and foreign
net operating losses (“NOLs”) of $2.3 million, $8.3 million and $0.9 million, respectively.
In addition, as a result of certain realization requirements of SFAS 123(R), the table of deferred tax assets
and liabilities shown above does not include certain deferred tax assets at December 31, 2007 and 2006 that arose
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