World Fuel Services 2012 Annual Report Download - page 81

Disclosure Relating to Comprehensive Income. In June 2011, the FASB issued an ASU aimed at
increasing the prominence of items reported in other comprehensive income in the financial statements.
This update requires companies to present comprehensive income in a single statement below net
income or in a separate statement of comprehensive income immediately following the income
statement. This ASU became effective on a prospective basis at the beginning of our 2012 fiscal year. In
December 2011, the FASB issued an ASU to defer the effective date of the specific requirement to
present items that are reclassified out of accumulated other comprehensive income to net income
alongside their respective components of net income and other comprehensive income. All other
provisions of this update are currently in effect. The adoption of this ASU resulted in the inclusion of
consolidated statements of comprehensive income for the periods presented below the consolidated
statements of income.
Fair Value Measurements. In May 2011, the FASB issued an ASU to provide a consistent definition of fair
value and common requirements for measurement and disclosure of fair value between International
Financial Reporting Standards and U.S. Generally Accepted Accounting Principles. This ASU changes
some fair value measurement principles and enhances disclosure requirements related to activities in
Level 3 of the fair value hierarchy. The guidance became effective on a prospective basis at the
beginning of our 2012 fiscal year. The adoption of this ASU did not have a material impact on our
consolidated financial statements and disclosures.
2. Accounts Receivable
We had accounts receivable of $2.2 billion as of December 31, 2012 and 2011, net of an allowance for
bad debt of $23.7 million and $24.3 million, as of December 31, 2012 and 2011, respectively. Accounts
receivable are written-off when it becomes apparent based upon age or customer circumstances that
such amounts will not be collected.
The following table sets forth activities in our allowance for bad debt (in thousands):
2011 2010
Balance as of beginning of period $24,301 $20,201 $19,690
Charges to provision for bad debt 4,790 8,173 4,262
Write-off of uncollectible accounts receivable (6,025) (4,681) (4,291)
Recoveries of bad debt 653 608 540
Balance as of end of period $23,719 $24,301 $20,201
3. Derivatives
The following describes our derivative classifications:
Cash Flow Hedges. Includes certain of our foreign currency forward contracts we enter into in order to
mitigate the risk of currency exchange rate fluctuations. We recorded an unrealized net gain of
$0.1 million as of December 31, 2012 and there were no outstanding cash flow hedges as of
December 31, 2011.
Fair Value Hedges. Includes derivatives we enter into in order to hedge price risk associated with our
inventory and certain firm commitments relating to fixed price purchase and sale contracts. As of
December 31, 2012 and 2011, we recorded unrealized net gains of $1.0 million and $2.4 million related
to the ineffectiveness between our derivative hedging instruments and hedged items on the respective
dates.
Non-designated Derivatives. Includes derivatives we primarily enter into in order to mitigate the risk of
market price fluctuations in aviation, marine and land fuel in the form of swaps or futures as well as
certain fixed price purchase and sale contracts and proprietary trading. In addition, non-designated
derivatives are also entered into to hedge the risk of currency rate fluctuations. As of December 31, 2012
and 2011, we recorded unrealized net gains of $9.8 million and $11.1 million, respectively, related to our
non-designated derivative positions.
For additional information on our derivatives accounting policy, see Note 1.
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