SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ to _____________________
COMMISSION FILE NUMBER 1-9533
WORLD FUEL SERVICES CORPORATION
(formerly International Recovery Corp.)
(Exact name of registrant as specified in its charter)
Florida 59-2459427
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 South Royal Poinciana Blvd., Suite 800, Miami Springs, Florida 33166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code: (305) 884-2001
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of December 31, 1995, the registrant had a total of 8,038,768 shares
of Common Stock, par value $0.01 per share, issued and outstanding.
Page 1 of 20
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited, condensed consolidated financial statements of World
Fuel Services Corporation (the "Company") have been prepared in accordance with
the instructions to Form 10-Q and, therefore, omit or condense certain footnotes
and other information normally included in financial statements prepared in
accordance with generally accepted accounting principles. In the opinion of
management, all adjustments necessary for a fair presentation of the financial
information for the interim periods reported have been made. Results of
operations for the nine months ended December 31, 1995 will not be necessarily
indicative of the results for the entire fiscal year ending March 31, 1996.
Page 2 of 20
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
DECEMBER 31, MARCH 31,
1995 1995
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 15,077,000 $ 10,907,000
Accounts receivable, net of allowance
for bad debts of $4,953,000 and
$4,566,000 at December 31, 1995
and March 31, 1995, respectively 62,807,000 38,800,000
Inventories 4,394,000 3,714,000
Prepaid expenses and other current assets 3,349,000 4,585,000
------------ ------------
Total current assets 85,627,000 58,006,000
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 601,000 705,000
Buildings and improvements 2,814,000 2,929,000
Office equipment and furniture 2,478,000 2,394,000
Plant, machinery and equipment 14,151,000 15,052,000
Construction in progress 90,000 184,000
------------ ------------
20,134,000 21,264,000
Less accumulated depreciation
and amortization 5,641,000 5,680,000
------------ ------------
14,493,000 15,584,000
------------ ------------
OTHER ASSETS:
Unamortized cost in excess of net
assets of acquired companies, net of
accumulated amortization 12,213,000 12,391,000
Other 2,476,000 3,555,000
------------ ------------
$114,809,000 $ 89,536,000
============ ============
(Continued)
Page 3 of 20
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
DECEMBER 31, MARCH 31,
1995 1995
------------ -----------
CURRENT LIABILITIES:
Current maturities of long-term debt $ 1,875,000 $ 2,128,000
Accounts payable and accrued expenses 40,272,000 24,334,000
Customer deposits 864,000 1,559,000
Accrued salaries and wages 1,872,000 747,000
Income taxes payable 1,014,000 1,718,000
------------ -----------
Total current liabilities 45,897,000 30,486,000
------------ -----------
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities 6,011,000 4,447,000
Accrued litigation settlement expense - 1,300,000
Deferred compensation 1,257,000 1,237,000
Deferred income taxes 376,000 -
------------ -----------
7,644,000 6,984,000
------------ -----------
COMMITMENTS AND CONTINGENCIES
(Notes 2 and 4)
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value;
100,000 shares authorized,
none issued - -
Common stock, $.01 par value;
10,000,000 shares authorized,
8,039,000 and 7,805,000 shares issued
and outstanding at December 31, 1995
and March 31, 1995, respectively,
net of treasury shares 80,000 78,000
Capital in excess of par value 22,615,000 20,414,000
Retained earnings 38,630,000 31,631,000
Less treasury stock, at cost 57,000 57,000
------------ -----------
61,268,000 52,066,000
------------ -----------
$114,809,000 $89,536,000
============ ===========
The accompanying notes to the consolidated financial statements are an
integral part of these consolidated balance sheets (unaudited).
Page 4 of 20
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
NINE MONTHS ENDED
DECEMBER 31,
------------------------------
1995 1994
------------ ------------
Revenue $451,289,000 $227,287,000
Cost of sales 421,876,000 208,512,000
------------ ------------
Gross profit 29,413,000 18,775,000
------------ ------------
Operating expenses:
Salaries and wages 9,662,000 5,283,000
Provision for bad debts 1,185,000 1,430,000
Other 7,124,000 3,903,000
------------ ------------
17,971,000 10,616,000
------------ ------------
Income from operations 11,442,000 8,159,000
Other income, net 1,279,000 1,006,000
------------ ------------
Income before income taxes 12,721,000 9,165,000
Provision for income taxes 4,660,000 3,407,000
------------ ------------
Net income $ 8,061,000 $ 5,758,000
============ ============
Net income per share $ 1.00 $ .80
============ ============
Weighted average shares outstanding 8,072,000 7,199,000
============ ============
The accompanying notes to the consolidated financial statements are an
integral part of these consolidated statements (unaudited).
Page 5 of 20
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED
DECEMBER 31,
-----------------------------
1995 1994
------------ -----------
Revenue $166,671,000 $78,103,000
Cost of sales 156,343,000 72,301,000
------------ -----------
Gross profit 10,328,000 5,802,000
------------ -----------
Operating expenses:
Salaries and wages 3,467,000 1,912,000
Provision for bad debts 349,000 142,000
Other 2,476,000 1,137,000
------------ -----------
6,292,000 3,191,000
------------ -----------
Income from operations 4,036,000 2,611,000
Other income, net 455,000 634,000
------------ -----------
Income before income taxes 4,491,000 3,245,000
Provision for income taxes 1,630,000 1,191,000
------------ -----------
Net income $ 2,861,000 $ 2,054,000
============ ===========
Net income per share $ .35 $ .28
============ ===========
Weighted average shares outstanding 8,111,000 7,223,000
============ ===========
The accompanying notes to the consolidated financial statements are an
integral part of these consolidated statements (unaudited).
Page 6 of 20
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
DECEMBER 31,
----------------------------
1995 1994
------------ ------------
Cash flows from operating activities:
Net income $ 8,061,000 $ 5,758,000
------------ ------------
Adjustments to reconcile net
income to net cash provided by
operating activities-
Depreciation and amortization 1,231,000 884,000
Provision for bad debts 1,185,000 1,430,000
Provision for deferred income taxes 641,000 491,000
Equity in earnings of aviation joint
venture, net (74,000) (216,000)
Other non-cash operating (credits)
charges (54,000) 16,000
Changes in assets and liabilities,
net of assets sold and liabilities
transferred:
(Increase) decrease in-
Accounts receivable (25,242,000) (405,000)
Inventories (755,000) (784,000)
Prepaid expenses and other
current assets 778,000 (397,000)
Other assets (213,000) (156,000)
Increase (decrease) in-
Accounts payable, accrued expenses
and customer deposits 14,728,000 3,989,000
Accrued salaries and wages 1,125,000 768,000
Income taxes payable (704,000) 592,000
------------ ------------
Total adjustments (7,354,000) 6,212,000
------------ ------------
Net cash provided by operating
activities 707,000 11,970,000
------------ ------------
(Continued)
Page 7 of 20
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Continued)
NINE MONTHS ENDED
DECEMBER 31,
------------------------------
1995 1994
------------ ------------
Cash flows from investing activities:
Additions to property, plant and
equipment $ (1,062,000) $ (1,383,000)
Proceeds from sale of assets 325,000 450,000
Advances to aviation joint venture -- (370,000)
Repayments from aviation joint venture 338,000 --
Proceeds from notes receivable 1,940,000 676,000
Additional payments for acquisition
of business (40,000) --
------------ ------------
Net cash provided by (used in)
investing activities 1,501,000 (627,000)
------------ ------------
Cash flows from financing activities:
Net borrowing under the revolving
line of credit 2,000,000 --
Dividends paid on common stock (660,000) (478,000)
Proceeds from exercise of warrants -- 464,000
Proceeds from exercise of options 863,000 --
Repayment of long-term debt (241,000) (209,000)
------------ ------------
Net cash provided by (used in)
financing activities 1,962,000 (223,000)
------------ ------------
Net increase in cash and cash
equivalents 4,170,000 11,120,000
Cash and cash equivalents, at beginning
of period 10,907,000 7,699,000
------------ ------------
Cash and cash equivalents, at end of
period $ 15,077,000 $ 18,819,000
============ ============
(Continued)
Page 8 of 20
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Continued)
NINE MONTHS ENDED
DECEMBER 31,
--------------------------
1995 1994
---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 52,000 $ 61,000
========== ==========
Income taxes $4,996,000 $2,116,000
========== ==========
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
As of December 31, 1995, in accordance with the Acquisition Agreement
relating to the Trans-Tec acquisition, the Company has reduced by $255,000 the
principal outstanding under the promissory notes issued in connection with the
acquisition, because the Company was unable to realize certain of the acquired
assets, and was required to pay certain liabilities of the selling corporation.
In April 1995, the Company paid $1,300,000, representing its share of
the stockholders' class action settlement, by issuing 117,825 shares of the
Company's common stock at an agreed upon price of $11.03 per share (restated to
reflect the 3-for-2 stock split). Accordingly, as of March 31, 1995, the Company
classified the accrued litigation settlement expense as a long-term liability.
As partial consideration for the sale of certain assets on June 1,
1995, the Company received a $979,000 note receivable with an original maturity
date of July 1, 2007. In October 1995, the entire outstanding principal balance
was collected in cash, net of a $98,000 pre-payment discount.
Cash dividends declared, but not yet paid, totaling $402,000 and
$239,000, were included in the accounts payable balances as of December 31, 1995
and 1994, respectively.
The accompanying notes to the consolidated financial statements are an
integral part of these consolidated statements (unaudited).
Page 9 of 20
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) SIGNIFICANT ACCOUNTING POLICIES
The accounting policies followed for quarterly financial reporting are the same
as those disclosed in Note 1 of the Notes to the Consolidated Financial
Statements included in the Company's Annual Report on Form 10-K for the year
ended March 31, 1995.
ORGANIZATION AND NATURE OF ACQUISITIONS AND DIVESTITURES
On August 21, 1995, the shareholders of International Recovery Corp. approved a
change in the Company's name to World Fuel Services Corporation.
In January 1995, the Company entered the marine fuel business through the
acquisition of the Trans-Tec group of companies. The acquisition was accounted
for as a purchase. Accordingly, the results of operations of Trans-Tec are not
reflected in the accompanying consolidated statements of income for either the
nine or three months ended December 31, 1994. The following unaudited pro-forma
consolidated results of operations for the nine and three months ended December
31, 1994, assume that the Company acquired the Trans-Tec group of companies as
of April 1, 1994.
PRO-FORMA PRO-FORMA
NINE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, 1994 DECEMBER 31, 1994
----------------- ------------------
Revenue $374,610,000 $116,355,000
============ ============
Net Income $ 6,561,000 $ 2,276,000
============ ============
Net Income Per Share $ .84 $ .29
============ ============
The pro-forma consolidated results shown above are not necessarily indicative of
those that would have occurred had the acquisition taken place on April 1, 1994.
Page 10 of 20
Effective June 1, 1995, the Company sold substantially all of the operating
assets and liabilities of International Petroleum Corporation of Georgia
("IPC-GA"), a subsidiary of the Company engaged in the used oil recycling
business, to Universal Refining, LLC ("URL") and Mr. Barry Paul. URL's president
is Mr. Barry Paul, the former president of IPC-GA and of the entity from which
IPC-GA initially purchased these assets in August 1990. Mr. Paul is the cousin
of the Company's President. The sales price was $1,179,000, which closely
approximated the Company's carrying values of the net assets sold. At closing,
a cash payment of $200,000 and a note receivable for $979,000, with an original
maturity date of July 1, 2007, were received. In October 1995, the entire
outstanding principal balance was collected in cash, net of a $98,000
pre-payment discount.
(2) LONG-TERM DEBT
In June 1995, a mortgage note totalling $177,000, was assumed by the buyer as
part of the sale of IPC-GA.
As of January 26, 1996, the Company had outstanding approximately $5,493,000 in
standby letters of credit under the NationsBank credit facility. The Company
also had $435,000 outstanding in standby letters of credit from other financing
institutions of which $100,000 were cash collaterized.
(3) STOCKHOLDERS' EQUITY
In April 1995, the Company paid $1,300,000, representing its share of the
stockholders' class action settlement, by issuing 117,825 shares of the
Company's common stock at an agreed upon price of $11.03 per share (restated to
reflect the 3-for-2 stock split).
On June 5, 1995, the Board of Directors approved a 3-for-2 stock split for all
shares of common stock outstanding as of June 19, 1995. The shares were
distributed on June 27, 1995. Accordingly, all share and per share data, as
appropriate, have been retroactively adjusted to reflect the effects of this
split.
On August 21, 1995, the shareholders approved an increase of 300,000 shares of
common stock to the total shares available for awards of options pursuant to the
Company's 1986 Employee Stock Option Plan.
In November 1995, previously granted options to purchase 116,250 shares of the
Company's common stock were exercised at prices ranging from $2.00 to $10.08 per
share. The proceeds received by the Company from the exercised options totalled
$863,000.
(4) COMMITMENTS AND CONTINGENCIES
CAPITAL EXPENDITURES
During the balance of fiscal year 1996, the Company anticipates spending
approximately $200,000 to upgrade plant, machinery and equipment. The Company
also anticipates committing approximately
Page 11 of 20
$800,000 to upgrade the storage tank facilities of its Louisiana oil recycling
plant, with an anticipated completion date in the second half of fiscal year
1997.
LEGAL MATTERS
In December 1995, the Company settled a lawsuit filed in January 1993, by
Hillsborough County and other plaintiffs, arising from alleged environmental
contamination at the County's Sidney Mine disposal facility. The Company paid
$350,000, of which $175,000 was reimbursed by another potentially responsible
party. The net cost of the settlement to the Company was $175,000.
EMPLOYMENT AGREEMENTS
In January 1996, the Company extended until March 31, 2001, the term of its
employment agreements with the Chairman of the Board and the President.
(5) JOINT VENTURE
In August 1994, the Company, through its wholly-owned subsidiary World Fuel
Services, Inc. began operation of a joint venture with Petrosur, an Ecuador
corporation. The Company's original ownership interest in the joint venture was
42%. Effective October 1, 1995, the Company's ownership interest was increased
to 51%. As part of this new ownership agreement, the Company agreed to a
requirement of at least 75% positive vote by the joint venture owners on all
significant decisions. Since this new arrangement precludes the Company from
having control under generally accepted accounting principles, the Company has
continued to use the equity method of accounting to record its proportionate
share of joint venture earnings.
For the nine and three months ended December 31, 1995, the Company recorded in
the accompanying consolidated statements of income its proportionate share of
the net earnings of the joint venture which amounted to $1,236,000 and $380,000
respectively, included as part of Other income, net.
Page 12 of 20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
In January 1995, the Company entered the marine fuel business through
the acquisition of the Trans-Tec group of companies. The Company acquired
substantially all of the assets and assumed certain liabilities of Trans-Tec
Services, Inc., a New York corporation, and Trans-Tec Servicios, S.A., a Costa
Rica corporation, and acquired all of the outstanding stock of Trans-Tec
Services (UK), Ltd., a United Kingdom corporation ("UK"). The UK company owns
Trans-Tec Services (Singapore) Pte., Ltd. As the acquisition was accounted for
as a purchase, the results of operations of Trans-Tec are not reflected in the
accompanying consolidated statements of income for the three and nine months
ended December 31, 1994. See Note 1 of the notes to the consolidated financial
statements.
THE NINE MONTHS ENDED DECEMBER 31, 1995 COMPARED TO
THE NINE MONTHS ENDED DECEMBER 31, 1994
The Company's revenue for the nine months ended December 31, 1995 was
$451,289,000, an increase of $224,002,000, or 98.6%, as compared to revenue of
$227,287,000 for the corresponding period the prior year. The Company's revenue
during these periods was attributable to the following segments:
PERCENT
NINE MONTHS ENDED DECEMBER 31, INCREASE
1995 1994 (DECREASE)
----------------- ------------- ----------
Aviation Fueling $214,180,000 $ 213,492,000 0.3%
Marine Fueling 223,641,000 - *
Oil Recycling 13,468,000 13,801,000 (2.4)
Intersegment Eliminations - (6,000) *
------------ -------------
Total Revenue $451,289,000 $ 227,287,000 98.6%
============ ============= ====
* Percent not meaningful
The aviation fueling segment contributed $214,180,000 in revenue for
the nine months ended December 31, 1995. This represented an increase in revenue
of $688,000, or 0.3%, as compared to the same period last year. This increase in
revenue was due to an increase in the average price per gallon sold. Partially
offsetting was an overall volume decrease in narrow margin bulk transactions,
and the termination of the fuel terminaling operations conducted at Miami
International Airport, which contract was not renewed effective June 30, 1994.
The marine fueling segment contributed $223,641,000 in revenue. The oil
recycling segment contributed $13,468,000 in revenue for the nine months ended
December 31, 1995, a decrease of $333,000, or 2.4%, as compared to the same
period last year. The revenue decrease was due primarily to the sale of its
Georgia operations. Partially offsetting were higher used oil and waste water
collection revenues.
Page 13 of 20
The Company's gross profit of $29,413,000 increased by $10,638,000, or
56.7%, as compared to the same period last year. The Company's gross margin
decreased from 8.3% for the nine months ended December 31, 1994, to 6.5% for the
nine months ended December 31, 1995.
The Company's aviation fueling business achieved a 7.1% gross margin
for the nine months ended December 31, 1995, as compared to 6.8% achieved for
the same period during the prior fiscal year. The increase in the gross margin
was largely attributed to a reduction in narrow margin bulk transactions. The
Company's marine fueling segment achieved a 4.4% gross margin for the nine
months ended December 31, 1995. The gross margin in the Company's oil recycling
segment increased from 31.4% for the nine months ended December 31, 1994, to
33.2%, for the nine months ended December 31, 1995. The increase in the gross
margin was due to higher used oil and waste water collection gross profit.
Total operating expenses for the nine months ended December 31, 1995
were $17,971,000, an increase of $7,355,000, or 69.3%, as compared to the same
period a year ago. This increase resulted from operating expenses of the marine
fueling segment, which totalled $7,427,000, and higher corporate overhead
salaries and payroll related costs totalling $843,000. Partially offsetting was
an $888,000 decrease in the aviation segment provision for bad debts. In
relation to revenue, total operating expenses decreased from 4.7% to 4.0%.
The Company's income from operations for the nine months ended December
31, 1995 was $11,442,000, an increase of $3,283,000, or 40.2%, as compared to
the same period a year ago. Income from operations during these periods was
attributable to the following segments:
NINE MONTHS ENDED DECEMBER 31, PERCENT
1995 1994 INCREASE
----------------- ------------- ----------
Aviation Fueling $ 10,403,000 $ 8,719,000 19.3%
Marine Fueling 2,332,000 - *
Oil Recycling 2,699,000 2,290,000 17.9
Corporate Overhead (3,992,000) (2,850,000) 40.1
------------ -----------
Total Income from
Operations $ 11,442,000 $ 8,159,000 40.2%
============ =========== ====
* Percent not meaningful.
Income from operations of the aviation fueling segment increased
$1,684,000, or 19.3%, for the nine months ended December 31, 1995, as compared
to the nine months ended December 31, 1994. This improvement resulted from an
increase in the average gross profit per gallon sold, and a decrease in the
provision for bad debts. Partially offsetting were an overall volume decrease in
narrow margin bulk transactions, and the termination of the Company's fuel
terminaling activities. The marine fueling segment earned $2,332,000 in income
from operations for the nine months ended December 31, 1995. The gross profit of
this segment was $9,759,000, reduced by $7,427,000 in operating expenses. Income
from operations of the oil recycling segment increased by $409,000, or 17.9%,
for the nine months ended December 31, 1995, as compared to the same period last
year. This improvement resulted from
Page 14 of 20
lower operating expenses and a higher average gross profit per gallon sold.
Partially offsetting was a volume decrease.
Corporate overhead costs not charged to the business segments totalled
$3,992,000 for the nine months ended December 31, 1995, an increase of
$1,142,000, or 40.1%, as compared to the same period last year. This increase
was due largely to higher salaries and payroll related costs. In relation to
revenue, total corporate overhead decreased to 0.9% for the nine months ended
December 31, 1995, as compared to 1.3% for the same period a year prior.
For the nine months ended December 31, 1995, the Company had net other
income of $1,279,000, an increase of $273,000 over the same period a year ago.
This increase was due to a $1,020,000 increase in equity earnings of the
Company's aviation fueling joint venture in Ecuador. Partially offsetting were
a decline in foreign currency exchange gains in the third quarter of fiscal year
1995, the Hillsborough County litigation settlement, and a decline in net
interest income resulting from the financing of receivables.
Net income for the nine months ended December 31, 1995 was $8,061,000,
an increase of $2,303,000, as compared to net income for the nine months ended
December 31, 1994. Earnings per share of $1.00 for the nine months ended
December 31, 1995 exhibited a $.20, or 25% increase over the $.80 achieved
during the same period last year.
THE THREE MONTHS ENDED DECEMBER 31, 1995 COMPARED TO
THE THREE MONTHS ENDED DECEMBER 31, 1994
The Company's revenue for the three months ended December 31, 1995 was
$166,671,000, an increase of $88,568,000, or 113.4%, as compared to revenue of
$78,103,000 for the corresponding period the prior year. The Company's revenue
during these periods was attributable to the following segments:
THREE MONTHS ENDED DECEMBER 31, PERCENT
1995 1994 INCREASE
------------ ----------- --------
Aviation Fueling $ 77,782,000 $73,437,000 5.9%
Marine Fueling 83,705,000 - *
Oil Recycling 5,184,000 4,666,000 11.1
------------ -----------
Total Revenue $166,671,000 $78,103,000 113.4%
============ =========== =====
* Percent not meaningful
The aviation fueling segment contributed $77,782,000 of revenue for the
three months ended December 31, 1995. This represented an increase in revenue of
$4,345,000, or 5.9%, as compared to the same period last year. This increase in
revenue was due to an increase in the average price per gallon sold. The marine
fueling segment contributed $83,705,000 in revenues. The oil recycling segment
contributed $5,184,000 of revenue for the three months ended December 31, 1995.
This was an increase in revenue of $518,000, or 11.1% as compared to the same
period last year. This increase in revenue was
Page 15 of 20
due primarily to higher sales volume and higher used oil and waste water
collection revenues. Partially offsetting was a revenue decrease due to the sale
of the Georgia operations.
The Company's gross profit of $10,328,000 increased by $4,526,000, or
78.0%, as compared to the same period last year. The Company's gross margin
decreased from 7.4% for the three months ended December 31, 1994, to 6.2% for
the three months ended December 31, 1995.
The Company's aviation fueling business achieved a 6.4% gross margin
for the three months ended December 31, 1995, as compared to 5.9% achieved for
the same period during the prior fiscal year. The Company's marine fueling
segment achieved a 4.3% gross margin for the three months ended December 31,
1995. The gross margin in the Company's oil recycling segment increased from
32.3% for the three months ended December 31, 1994, to 34.0% for the three
months ended December 31, 1995.
Total operating expenses for the three months ended December 31, 1995
were $6,292,000, an increase of $3,101,000, or 97.2%, as compared to the same
period a year ago. This increase resulted primarily from operating expenses of
the marine segment, totalling $2,719,000, and higher corporate overhead salaries
and payroll related costs totalling $317,000. In relation to revenue, total
operating expenses decreased from 4.1% to 3.8%.
The Company's income from operations for the three months ended
December 31, 1995 was $4,036,000, an increase of $1,425,000, or 54.6%, as
compared to the same period a year ago. Income from operations during these
periods was attributable to the following segments:
THREE MONTHS ENDED DECEMBER 31, PERCENT
1995 1994 INCREASE
------------ ----------- --------
Aviation Fueling $3,425,000 $2,821,000 21.4%
Marine Fueling 879,000 - *
Oil Recycling 1,227,000 821,000 49.5
Corporate Overhead (1,495,000) (1,031,000) 45.0
---------- ----------
Total Income From
Operations $4,036,000 $2,611,000 54.6%
========== ========== ====
* Percent not meaningful.
Income from operations of the aviation fueling segment increased
$604,000, or 21.4%, for the three months ended December 31, 1995, as compared to
the three months ended December 31, 1994. This improvement resulted primarily
from a higher average gross profit per gallon sold. The marine fueling segment
earned $879,000 in income from operations for the three months ended December
31, 1995. The gross profit of this segment was $3,598,000, reduced by $2,719,000
in operating expenses. Income from operations of the oil recycling segment
increased by $406,000 for the three months ended December 31, 1995, as compared
to the same period last year. This increase was due to higher sales volume,
higher used oil and waste water collection revenues, and lower operating
expenses.
Page 16 of 20
Corporate overhead costs not charged to the business segments totalled
$1,495,000 for the three months ended December 31, 1995, an increase of
$464,000, or 45.0%, as compared to the same period last year. This increase was
due primarily to higher salaries and payroll related costs. In relation to
revenue, total corporate overhead decreased to 0.9% for the three months ended
December 31, 1995, as compared to 1.3% for the same period a year prior.
For the three months ended December 31, 1995, the Company had net other
income of $455,000, a decrease of $179,000 over the same period a year ago. This
decrease was due primarily to a decline in the foreign exchange gains in the
third quarter of fiscal year 1995, as compared to the same period last year.
Net income for the three months ended December 31, 1995 was $2,861,000,
an increase of $807,000, as compared to net income for the three months ended
December 31, 1994. Earnings per share of $.35 for the three months ended
December 31, 1995 exhibited a $.07, or 25% increase over the $.28 achieved
during the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents amounted to $15,077,000 at December 31, 1995,
as compared to $10,907,000 at March 31, 1995. The principal sources of cash and
cash equivalents during the first nine months of fiscal year 1996 were
$1,940,000 from collections on notes receivable, $338,000 in repayments of
advances from the aviation joint venture, $325,000 from proceeds on the sale of
assets, $2,000,000 in net borrowings under the revolving line of credit,
$863,000 in proceeds from the issuance of common stock in connection with the
exercise of options and $707,000 in net cash provided by operating activities.
Partially offsetting the increase in cash and cash equivalents was $1,062,000
used for the purchase and construction of plant, equipment and other capital
expenditures and $660,000 in dividends paid on common stock. Other components
of changes in cash and cash equivalents are detailed in the Consolidated
Statements of Cash Flows.
Working capital as of December 31, 1995 was $39,730,000, exhibiting a
$12,210,000 increase from working capital as of March 31, 1995. As of December
31, 1995, the Company's accounts receivable, excluding the allowance for bad
debts, amounted to $67,760,000, an increase of $24,394,000, as compared to the
March 31, 1995 balance. In the aggregate, accounts payable, accrued expenses and
customer deposits increased $15,243,000. The increase in net trade receivables
of $9,151,000 was attributed to the marine and aviation segments. The allowance
for bad debts as of December 31, 1995 amounted to $4,953,000, an increase of
$387,000 when compared to the March 31, 1995 balance. During the first nine
months of fiscal year 1996, the Company charged $1,185,000 to the provision for
bad debts and had charge-offs in excess of recoveries of $798,000.
Page 17 of 20
Capital expenditures, which amounted to $1,062,000 for the first nine
months of fiscal year 1996, consisted primarily of $510,000 in office equipment
and furniture, $288,000 in delivery equipment as well as $206,000 in plant
construction costs. Effective June 1, 1995, the Company sold property, plant and
equipment, with a net book value of $1,294,000, of its Georgia oil recycling
operations. During the balance of fiscal year 1996, the Company anticipates
spending approximately $200,000 to upgrade plant, machinery and equipment. The
Company also anticipates committing approximately $800,000 to upgrade the
storage tank facilities of its Louisiana oil recycling plant, with an
anticipated completion date in the second half of fiscal year 1997. The
Company also anticipates spending an estimated $1,000,000 over the next several
years to clean up contamination which was present at one of the Company's sites
when it was acquired by the Company. Clean up will be capitalized as part of the
cost of the site, up to the fair market value of the site.
Accrued salaries and wages increased $1,125,000, principally as the
result of sales and management performance bonuses.
Long-term liabilities as of December 31, 1995, were $7,644,000,
exhibiting an increase of $660,000 as compared to March 31, 1995. This increase
was the result of net borrowings of $2,000,000 under the Company's revolving
line of credit. Partially offsetting was the $1,300,000 payment in settlement of
the shareholders' class action litigation, through the issuance of common stock.
Stockholders' equity amounted to $61,268,000, or $7.62 per share, at December
31, 1995 compared to $52,066,000, or $6.67 per share, at March 31, 1995.
The Company's working capital requirements are not expected to vary
substantially for the balance of fiscal year 1996. The Company expects to meet
its cash requirements for the balance of fiscal year 1996 from existing cash,
operations, and additional borrowings, as necessary, under its existing line of
credit. The Company's business has not been significantly affected by inflation
during the periods discussed in this report.
Page 18 of 20
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings to which the Company
or any of its subsidiaries is a party.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) During the three months ended December 31, 1995,
the Company did not file any reports on Form
8-K.
Page 19 of 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: JANUARY 30, 1996 WORLD FUEL SERVICES CORPORATION
/S/ JERROLD BLAIR
-------------------------------
JERROLD BLAIR
PRESIDENT
/S/ CARLOS A. ABAUNZA
-------------------------------
CARLOS A. ABAUNZA
CHIEF FINANCIAL OFFICER
Page 20 of 20
5
9-MOS
MAR-31-1996
APR-01-1995
DEC-31-1995
15,077,000
0
62,807,000
4,953,000
4,394,000
85,627,000
20,134,000
5,641,000
114,809,000
45,897,000
0
0
0
80,000
61,268,000
114,809,000
451,289,000
451,289,000
421,876,000
421,876,000
0
1,185,000
445,000
12,721,000
4,660,000
8,061,000
0
0
0
8,061,000
1.00
.99
