World Fuel Services 2008 Annual Report Download - page 62

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WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Pro Forma Information
The following presents the unaudited pro forma results for 2008 as if the acquisition of the Texor business
had been completed on January 1, 2008, and the unaudited pro forma results for 2007 as if the acquisitions of the
Texor business and AVCARD had been completed on January 1, 2007 (in thousands, except per share data):
2008 2007
(pro forma) (pro forma)
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,961,436 $14,743,621
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 105,732 $ 66,371
Earnings per share:
Basic ........................................ $ 3.66 $ 2.33
Diluted....................................... $ 3.62 $ 2.25
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
corporation (“ME BVI”), owns 49% of Marine Energy Arabia Co., LLC, a United Arab Emirates corporation
(“ME Dubai”). In accordance with local laws, the ME Dubai is 51% owned by a Dubai citizen, referred to as a
Sponsor. ME Dubai, pursuant to a management contract, is required to pay for the staff and administrative
support provided by ME BVI. ME BVI has entered into various agreements with the ME Dubai Sponsor to
prevent an unauthorized ownership transfer and to effectively grant majority control of ME Dubai to ME BVI.
Accordingly, the financial position and operations of ME Dubai have been included in our consolidated financial
statements.
Our wholly-owned subsidiary, World Fuel Services, Inc., a Texas corporation, owns 50% of Page Avjet
Fuel Co. LLC (“PAFCO”), a Delaware limited liability company. PAFCO is a joint venture with Signature Flight
Support Corporation (“Signature”) which owns the other 50% of PAFCO. In accordance with PAFCO’s
operating agreement, we are entitled to 80% of the income from PAFCO’s operations. The higher allocation
percentage versus the ownership percentage is in consideration of the risks assumed by us with respect to credit
losses on PAFCO’s accounts receivable. PAFCO distributes its income to its partners on a quarterly basis. We
are required to purchase, without recourse, PAFCO’s accounts receivable that are 120 days past due, subject to
certain requirements. Net losses (including infrequent or unusual losses), interest expense incurred by PAFCO,
and any gain resulting from the liquidation of the joint venture will be shared equally between Signature and us.
Due to the higher allocation percentage versus the ownership percentage, we have determined that PAFCO is a
variable interest entity. We consolidated the financial position and results of operations of PAFCO, after
elimination of all significant intercompany accounts, transactions and profits, because we are the primary
beneficiary.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally
accepted in the United States requires us to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial
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