World Fuel Services 2011 Annual Report Download - page 76

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The purchase price for each of the 2010 Acquisitions was allocated to the assets acquired and liabilities
assumed based on their estimated fair value at the acquisition date. On an aggregate basis, the purchase
price allocation for the 2010 Acquisitions is as follows (in thousands):
Assets acquired:
Cash and cash equivalents $ 6,840
Accounts receivable 115,075
Inventories 25,548
Property and equipment 19,565
Identifiable intangible assets 45,171
Goodwill 148,436
Other current and non-current assets 9,976
Liabilities assumed:
Accounts payable (86,987)
Assumed pension fund exit fee (post employment benefits) (11,306)
Accrued expenses and other current liabilities (24,349)
Other long-term liabilities (7,156)
Purchase price $240,813
The payment of the assumed pension fund exit fee has been classified as a financing activity in the
consolidated statement of cash flows due to the fact that the liability was paid on behalf of the seller
subsequent to closing as the actuarially calculated amount was not available prior to the acquisition. The
terms of the acquisition agreement called for the termination of participation in the applicable pension
plan and a dollar for dollar decrease in the purchase consideration for amounts paid to exit from the plan.
2009 Acquisitions
In April 2009, we acquired all of the outstanding stock of Henty Oil Limited, Tank and Marine Engineering
Limited and Henty Shipping Services Limited (collectively, ‘‘Henty’’) and completed the acquisition of
certain assets of TGS Petroleum, Inc., including the assets comprising its wholesale motor fuel
distribution business (the ‘‘TGS business’’). Henty is a provider of marine and land based fuels in the
United Kingdom and the TGS business, based in Chicago, Illinois, is primarily a distributor of branded and
unbranded gasoline and diesel fuel. The financial position and results of operations of Henty and the TGS
business have been included in our consolidated financial statements since April 1, 2009. The estimated
aggregate purchase price of these two acquisitions was $61.3 million which consisted of $47.5 million in
cash, net of cash acquired of $3.4 million, $4.3 million in promissory notes issued and $6.2 million in
estimated contingent consideration (Earn-out). The estimated purchase price for each of the Henty and
the TGS business acquisitions was allocated to the assets acquired and liabilities assumed based on
their estimated fair value: fixed assets of $5.6 million, identifiable intangible assets of $22.0 million,
goodwill of $29.9 million, working capital of $9.2 million and long-term and deferred tax liabilities of
$5.4 million.
The Henty purchase agreement includes an earn-out based on Henty meeting certain operating targets
over the three-year period ending April 30, 2012 (the ‘‘Earn-out’’). Pursuant to an amendment to the
purchase agreement in September 2010, the maximum Earn-out that may be paid was reduced from
£9.0 million to £6.0 million ($9.3 million as of December 31, 2011) if all operating targets are achieved. In
consideration for the reduction in the maximum Earn-out, a minimum Earn-out of £2.7 million
($4.2 million as of December 31, 2011) was established. As of the acquisition date, we estimated the fair
value of the Earn-out to be £4.2 million ($6.2 million) which was recorded as a liability and as part of the
purchase consideration. We estimate the fair value of the Earn-out at each reporting period based on our
assessment of the probability of Henty achieving such operating targets over the three-year period. We
recorded a decrease in the estimated fair value of the Earn-out liability of £0.5 million ($0.8 million) and
£1.0 million ($1.5 million) during 2011 and 2010, respectively, with a corresponding credit to general and
administrative operating expenses in the consolidated statements of income. As of December 31, 2011,
the estimated fair value of the Earn-out liability is £2.7 million ($4.2 million). The impact of Henty’s
revenue and net income did not have a significant impact on our results in 2011.
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