World Fuel Services 2012 Annual Report Download - page 45

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acquisitions bring to existing operations and the prevailing market value for comparable companies.
Goodwill is not subject to periodic amortization; instead, it is reviewed annually at year-end (or more
frequently under certain circumstances) for impairment. We assess qualitative factors to determine
whether it is more likely than not that the fair value of any individual reporting unit is less than its carrying
amount. In performing the qualitative assessment, we assess relevant events and circumstances that
may impact the fair value of our reporting units, including the following: (i) macroeconomic conditions,
(ii) industry and market considerations, (iii) earnings quality/sustainability, (iv) overall financial
performance, (v) events affecting a reporting unit, (vi) share price and (vii) recent fair value calculation for
our reporting units, if available.
After assessing the above described events and circumstances, if we determine that it is more likely
than not that the fair value of a reporting unit is greater than its carrying value, then no further testing is
required. Otherwise, we would perform the first step of quantitative testing for goodwill impairment.
In connection with our acquisitions, we record identifiable intangible assets existing at the date of the
acquisitions for customer relationships, supplier and non-compete agreements, developed technology
and trademark/trade name rights. Identifiable intangible assets subject to amortization are amortized
over their estimated lives and are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable based on market
factors and operational considerations. For identifiable intangible assets not subject to amortization, we
first assess qualitative factors to determine whether it is more likely than not that an asset has been
impaired. After assessing qualitative factors, if we determine that it is more likely than not that the fair
value of an asset is greater than its carrying value, then no further testing is required. Otherwise, we
would review for impairment by comparing the fair value of the intangible asset to its carrying value.
Extinguishment of Liability
In the normal course of business, we accrue liabilities for fuel and services received for which invoices
have not yet been received. These liabilities are derecognized, or extinguished, if either (i) payment is
made to relieve our obligation for the liability or (ii) we are legally released from our obligation for the
liability, such as when our legal obligations with respect to such liabilities lapse or otherwise no longer
exist. We derecognized vendor liability accruals due to the legal release of our obligations in the amount
of $11.2 million, $8.3 million and $9.8 million during 2012, 2011 and 2010, respectively, which is
reflected as a reduction of cost of revenue in the accompanying consolidated statements of income and
comprehensive income.
Results of Operations
The results of operations include the results of (i) the CarterEnergy business (land segment)
commencing on September 1, 2012, (ii) Ascent (aviation segment) commencing on April 1, 2011,
(iii) NCS (aviation and land segments) commencing on March 1, 2011, (iv) Hiller (aviation segment)
commencing on December 31, 2010, (v) Western (aviation and land segments) commencing on
October 1, 2010 and (vi) the Lakeside business (land segment) commencing on July 1, 2010.
2012 compared to 2011
Revenue. Our revenue for 2012 was $38.9 billion, an increase of $4.3 billion, or 12.5%, as compared to
2011. Our revenue during these periods was attributable to the following segments (in thousands):
2011 $ Change
Aviation segment $14,692,042 $12,866,019 $1,826,023
Marine segment 14,750,425 14,565,086 185,339
Land segment 9,502,871 7,191,749 2,311,122
Total $38,945,338 $34,622,854 $4,322,484
Our aviation segment revenue for 2012 was $14.7 billion, an increase of $1.8 billion, or 14.2% as
compared to 2011. The increase in aviation segment revenue was principally due to increased volume
attributable to new and existing customers.
26
2012