World Fuel Services 2002 Annual Report Download - page 52

Property and Equipment
Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and
amortization are calculated on a straight-line basis over the estimated useful lives of the assets as follows:
Years
Leasehold and improvements 5 - 10
Office equipment, furniture, computer equipment and software 3 – 7
Costs of major additions and improvements, including appropriate interest, are capitalized and expenditures for
maintenance and repairs, which do not extend the life of the asset, are expensed. Upon sale or disposition of property and
equipment, the cost and related accumulated depreciation and amortization are eliminated from the accounts and any
resulting gain or loss is credited or charged to income. Long-lived assets held and used by us are reviewed based on market
factors and operational considerations for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable.
Computer software costs are accounted for under Statement of Position (“SOP”) 98-1, “Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use.” SOP 98-1 established criteria for determining which costs of
developing or obtaining internal-use computer software should be charged to expense and which should be capitalized. In
March 2000, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 00-2, “Accounting for Web Site
Development Costs,” which applies to all web site development costs incurred for quarters beginning after June 30, 2000.
The consensus states that the accounting for specific web site development costs should be based on a model consistent with
SOP 98-1. As of December 31, 2002, March 31, 2002 and 2001, capitalized computer software costs, including web site
development costs, amounted to $3.0 million, $3.5 million, and $3.7 million, net of accumulated amortization of $2.8
million, $1.8 million, and $1.1 million, respectively.
In February 2003, we moved our corporate office from 700 South Royal Poinciana Boulevard in Miami Springs to 9800
Northwest 41st Street in Miami. As of December 31, 2002, leasehold improvements for our new corporate office, office
equipment and furniture totaling approximately $1.9 million was included in Construction in progress – corporate office in
the accompanying Consolidated Balance Sheets.
Goodwill, Identifiable Intangible Asset and Investment Goodwill
Goodwill and investment goodwill represent our cost or investment in excess of net assets, including identifiable
intangible assets, of the acquired companies. Investment goodwill of approximately $2.9 million was included in Other
assets in the accompanying Consolidated Balance Sheets at December 31, 2002, and March 31, 2002 and 2001. The
identifiable intangible asset for customer relations existing at the date of acquisition of $1.8 million was recorded and is
being amortized over its useful life of five years. Effective April 2001, as permitted, we elected to early adopt SFAS No.
142, “Goodwill and Other Intangible Assets.” SFAS No. 142 established accounting and reporting standards for acquired
goodwill and other intangible assets, and states that goodwill shall not be amortized prospectively. Accordingly, no goodwill
amortization was recorded subsequent to the adoption of SFAS No. 142. We recorded goodwill amortization of $824
thousand, including investment goodwill amortization of $74 thousand, for the year ended March 31, 2001 and $730
thousand for the year ended March 31, 2000. We recorded amortization of our identifiable intangible asset of $276 thousand
for the nine months ended December 31, 2002 and $92 thousand for the year ended March 31, 2002.
In accordance with SFAS No. 142, goodwill must be reviewed annually (or more frequently under certain
circumstances) for impairment. The initial step of the goodwill impairment test compares the fair value of a reporting unit
with its carrying amount, including goodwill. Based on results of these comparisons, goodwill in each of our reporting units
is not considered impaired. Accordingly, no impairment charges were recognized.
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