World Fuel Services 2008 Annual Report Download - page 61

WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2006 Acquisition
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”). Based on actual
operating income of Tramp Oil Brazil from March 1, 2006 to December 31, 2008, it appears, beyond a
reasonable doubt, that the operating targets will be met. Accordingly, in 2008, we have recorded an increase to
goodwill and a related payable accrual of $4.5 million for the anticipated Earn-out which will be paid within 90
days after February 28, 2009.
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. As of the acquisition date, we recorded an identifiable intangible asset of $0.5 million for
the value attributable to certain non-compete agreements, which is amortized over an estimated life of 3 years.
We recorded goodwill, representing the cost in excess of the estimated fair value of net assets acquired for this
acquisition, of $6.7 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 the Earn-out, as discussed above.
The following reconciles the estimated fair values of the assets acquired, liabilities assumed and promissory
notes issued with cash paid for the acquisition of the ToBras Acquisition, net of cash acquired (in thousands):
Assets acquired:
Identifiable intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 500
Goodwill........................................................ 6,679
Liabilities assumed:
Other current liabilities (Earn-out) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,480)
Purchaseprice ..................................................... 2,699
Promissorynotesissued .............................................. (53)
Cash paid for acquisition of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,646
Cashacquired ...................................................... —
Cash paid for acquisition of business, net of cash acquired . . . . . . . . . . . . . . . . . . . $2,646
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