World Fuel Services 2008 Annual Report Download - page 84

WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
For 2008, our effective tax rate was 23.5%, for an income tax provision of $32.4 million, as compared to an
effective tax rate of 24.5% and $21.2 million for 2007. The lower effective tax rate for 2008 resulted primarily
from fluctuations in the actual results achieved by our subsidiaries in tax jurisdictions with different tax rates.
For 2007, our effective tax rate was 24.5%, for an income tax provision of $21.2 million, as compared to an
effective tax rate of 21.3% and $17.4 million for 2006. The higher effective tax rate for 2007 resulted primarily
from additional income tax expense recorded in connection the accounting guidance of FASB Interpretation
No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (“FIN
48”) in 2007 as well as 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, 2008 and 2007, we had approximately $374.8 million and $244.6 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 and
foreign withholding 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,
2008 2007
Excess of provision for bad debts over charge-offs . . . . . . . . . . . . . . . . . . . . . . . $ 5,607 $ 2,400
Netoperatingloss ................................................. 90 691
Incometaxcredits ................................................. 3,348 765
Excess of financial reporting over tax (tax over financial reporting) for
depreciationoffixedassets ........................................ (1,410) 925
Excess of tax over financial reporting amortization of identifiable intangible
assetsandgoodwill .............................................. (4,727) (3,869)
Accrued compensation expenses recognized for financial reporting purposes,
not currently deductible for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,912 9,216
Accrued expenses recognized for financial reporting purposes, not currently
deductiblefortaxpurposes ........................................ 5,686 3,107
Accruedrevenue .................................................. — (172)
21,506 13,063
Valuationallowance ............................................... (3,348) (765)
Total deferred income tax assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,158 $12,298
Deferred income tax assets, current . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,331 $ 8,701
Deferred income tax assets, non-current . . . . . . . . . . . . . . . . . . . . . . . . $ 6,827 $ 3,597
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 $3.3 million and $0.8 million at December 31, 2008 and 2007, respectively, are comprised of foreign tax credit
(“FTC”) carryforwards. The FTC carryforwards will expire in 2014, if unused. As of and for the year ended
December 31, 2008 and 2007, we recorded a valuation allowance of $3.3 million and $0.8 million, respectively,
to reduce the value of FTC carryforwards to the estimated realizable amount.
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