World Fuel Services 2014 Annual Report Download - page 62

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We must assess the likelihood that our deferred tax assets will be recovered from our future taxable income, and to the
extent we believe that recovery is not likely, we must establish a valuation allowance against those deferred tax assets.
Deferred tax liabilities generally represent items for which we have already taken a deduction in our income 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 tax assets. We establish
reserves when, despite our belief that the income tax return positions are fully supportable, certain positions are likely to be
challenged and we may ultimately not prevail in defending those positions.
U.S. income taxes have not been recognized on undistributed earnings of foreign subsidiaries. Our intention is to reinvest
these earnings permanently in active non-U.S. business operations. Therefore, no income tax liability has been accrued for
these earnings. Because of the availability of U.S. foreign tax credits, it is not practicable to determine the amount of U.S.
income tax payable if such earnings are not reinvested indefinitely.
Earnings per Common Share
Basic earnings per common share is computed by dividing net income attributable to World Fuel and available to common
shareholders by the sum of the weighted average number of shares of common stock, stock units, restricted stock entitled to
dividends not subject to forfeiture and vested RSUs outstanding during the period. Diluted earnings per common share is
computed by dividing net income attributable to World Fuel and available to common shareholders by the sum of the weighted
average number of shares of common stock, stock units, restricted stock entitled to dividends not subject to forfeiture and
vested RSUs outstanding during the period and the number of additional shares of common stock that would have been
outstanding if our outstanding potentially dilutive securities had been issued. Potentially dilutive securities include restricted
stock subject to forfeitable dividends, non-vested RSUs and SSAR Awards. The dilutive effect of potentially dilutive securities
is reflected in diluted earnings per common share by application of the treasury stock method. Under the treasury stock method,
an increase in the fair market value of our common stock can result in a greater dilutive effect from potentially dilutive securities.
The following table sets forth the computation of basic and diluted earnings per common share for the periods presented
(in thousands, except per share amounts):
2014 2013 2012
Numerator:
Net income attributable to World Fuel $ 221,747 $ 203,075 $ 189,345
Denominator:
Weighted average common shares for basic earnings per common share 70,750 71,224 71,154
Effect of dilutive securities 573 576 663
Weighted average common shares for diluted earnings per common share 71,323 71,800 71,817
Weighted average securities which are not included in the calculation of
diluted earnings per common share because their impact is anti-dilutive or
their performance conditions have not been met 881 594 603
Basic earnings per common share $ 3.13 $ 2.85 $ 2.66
Diluted earnings per common share $ 3.11 $ 2.83 $ 2.64
Reclassifications
Certain amounts in prior years have been reclassified to conform to current year’s presentation.
Recent Accounting Pronouncements
Income Statement-Extraordinary and Unusual Items: Simplifying Income Statement Presentation by Eliminating the
Concept of Extraordinary Items. In January 2015, the Financial Accounting Standards Board (“FASB”) issued an Accounting
Standards Update (“ASU”) which eliminates from generally accepted accounting principles in the United States the concept
of extraordinary items. This update is effective at the beginning of our 2016 fiscal year. We do not believe the adoption of
this new guidance will have a significant impact on our consolidated financial statements and disclosures.
Business Combinations: Pushdown Accounting. In November 2014, the FASB issued an ASU which provides guidance for
determining whether and at what threshold an acquired entity can apply pushdown accounting in its separate financial
statements. This update became effective on November 18, 2014. The adoption of this ASU did not have a significant
impact on our consolidated financial statements and disclosures.
Derivatives and Hedging: Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a
Share Is More Akin to Debt or to Equity. In November 2014, the FASB issued an ASU which clarifies how current generally