World Fuel Services 2012 Annual Report Download - page 50

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increased expenses to support our growing global business. The increase in provision for bad debt was
due to the increase in accounts receivable as a result of increased volume and higher world oil prices and
changes in the customer mix in the 2011 receivable portfolio as compared to 2010. The $60.0 million
increase in general and administrative expenses was due to $34.9 million related to the inclusion of
expenses from acquired businesses and $25.1 million in increased expenses to support our growing
global business.
Income from Operations. Our income from operations for 2011 was $257.0 million, an increase of
$76.1 million, or 42.1%, as compared to 2010. Income from operations during these periods was
attributable to the following segments (in thousands):
2011 2010 $ Change
Aviation segment $146,411 $118,351 $28,060
Marine segment 95,982 84,656 11,326
Land segment 62,049 15,948 46,101
304,442 218,955 85,487
Corporate overhead – unallocated 47,470 38,089 9,381
Total $256,972 $180,866 $76,106
Our aviation segment income from operations for 2011 was $146.4 million, an increase of $28.1 million,
or 23.7%, as compared to 2010. This increase resulted from $91.0 million in higher gross profit, which
was partially offset by increased operating expenses of $62.9 million. Of the increase in aviation
segment operating expenses, $42.7 million was related to the inclusion of expenses from acquired
businesses and $20.2 million was due to increased expenses to support our growing global business.
Our marine segment income from operations for 2011 was $96.0 million, an increase of $11.3 million, or
13.4%, as compared to 2010. This increase resulted from $29.8 million in higher gross profit, which was
partially offset by increased operating expenses of $18.5 million. The increase in marine segment
operating expenses was attributable to higher compensation and employee benefits, provision for bad
debt and general and administrative expenses.
Our land segment income from operations for 2011 was $62.0 million, an increase of $46.1 million, as
compared to 2010. This increase resulted from $72.1 million in higher gross profit, which was partially
offset by increased operating expenses of $26.0 million. Of the increase in land segment operating
expenses, $16.8 million was related to the inclusion of expenses from acquired businesses and
$9.2 million was due to increased expenses to support our growing global business.
Corporate overhead costs not charged to the business segments for 2011 were $47.5 million, an
increase of $9.4 million, or 24.6%, as compared to 2010. The increase in corporate overhead costs not
charged to the business segments was attributable to higher compensation and employee benefits and
general and administrative expenses incurred.
Non-Operating Expenses, net. For 2011, we had non-operating expenses, net of $18.8 million, an
increase of $15.4 million as compared to 2010. This increase was primarily due to an increase in interest
expense and other financing costs, net, as a result of higher average borrowings as compared to 2010,
additional fees attributable to the Credit Facility amendments in 2011 and Term loan borrowings.
Income Taxes. For 2011, our effective income tax rate was 16.4% and our income tax provision was
$39.0 million, as compared to an effective income tax rate of 17.5% and an income tax provision of
$31.0 million for 2010. The lower effective income tax rate for 2011 resulted primarily from differences in
the actual results of our subsidiaries in tax jurisdictions with different income tax rates as compared to
2010 and the reduction of certain income tax reserves for uncertain tax positions due to the lapse of their
respective statutes of limitation.
Net Income and Diluted Earnings per Common Share. Our net income for 2011 was $194.0 million, an
increase of $47.2 million, or 32.1%, as compared to 2010. Diluted earnings per common share for 2011
was $2.71 per common share, an increase of $0.40 per common share, or 17.3%, as compared to 2010.
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