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 JUNE 30, 1996
[ ] 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
(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 June 30, 1996, the registrant had a total of 8,042,518 shares of
common stock, par value $0.01 per share, issued and outstanding.
Page 1 of 14
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 three months ended June 30, 1996, will not be necessarily
indicative of the results for the entire fiscal year ending March 31, 1997.
Page 2 of 14
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
JUNE 30, 1996 MARCH 31, 1996
------------- --------------
CURRENT ASSETS:
Cash and cash equivalents $ 12,267,000 $ 12,856,000
Accountsd receivable, net of allowance
for bad debts of $5,113,000 and
$4,363,000 at June 30 and
March 31, 1996, respectively 59,342,000 62,745,000
Inventories 3,667,000 4,592,000
Prepaid expenses and other current asstets 4,174,000 3,059,000
------------ ------------
Total current assets 79,450,000 83,252,000
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 601,000 601,000
Buildings and improvements 2,938,000 2,890,000
Office equipment and furniture 2,933,000 2,645,000
Plant, machinery and equipment 14,369,000 14,171,000
Construction in progress 502,000 67,000
------------ ------------
21,343,000 20,374,000
Less accumulated depreciation
and amortization 6,080,000 5,856,000
------------ ------------
15,263,000 14,518,000
------------ ------------
OTHER ASSETS:
Unamortized cost in excess of net
assets of acquired companies, net of
accumulated amortization 12,056,000 12,123,000
Other 2,281,000 2,081,000
---------- ----------
$109,050,000 $111,974,000
============ =============
(Continued)
Page 3 of 14
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
JUNE 30, 1996 MARCH 31, 1996
---------------- --------------
CURRENT LIABILITIES:
CURRENT MATURITIES OF LONG-TERM DEBT $ 1,947,000 $ 1,944,000
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 32,400,000 37,808,000
CUSTOMER DEPOSITS 1,618,000 1,467,000
ACCRUED SALARIES AND WAGES 729,000 2,055,000
INCOME TAXES PAYABLE 1,421,000 432,000
------------- --------------
TOTAL CURRENT LIABILITIES 38,115,000 43,706,000
------------- --------------
LONG TERM LIABILITIES:
LONG-TERM DEBT, NET OF CURRENT MATURITIES 2,106,000 2,103,000
DEFERRED COMPENSATION 1,369,000 1,572,000
DEFERRED INCOME TAXES 1,171,000 843,000
------------- --------------
4,646,000 4,518,000
------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
PREFERRED STOCK, $1.00 PER VALUE;
100,000 SHARES AUTHORIZED, NONE ISSUED -- --
COMMON STOCK, $0.01 PAR VALUE;
10,000,000 SHARES AUTHORIZED,
8,043,000 AND 8,039,000 SHARES ISSUED
AND OUTSTANDING AT JUNE 30,1996
AND MARCH 31, 1996, RESPECTIVELY 81,000 80,000
CAPITAL IN EXCESS OF PAR VALUE 22,652,000 22,615,000
RETAINED EARNINGS 43,613,000 41,112,000
LESS TREASURY STOCK, AT COST 57,000 57,000
------------- --------------
66,289,000 63,750,000
------------- --------------
$ 109,050,000 $ 111,974,000
============= ==============
Page 4 of 14
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED JUNE 30,
--------------------------------
1996 1995
------------- --------------
Revenue $170,694,000 $138,960,000
Cost of Sales 159,062,000 129,786,000
----------- -------------
Gross profit 11,632,000 9,174,000
----------- -------------
Operating expenses:
Salaries and wages 3,206,000 3,006,000
Provision for bad debts 1,318,000 150,000
Other 2,771,000 2,356,000
----------- -------------
Income from operations 7,295,000 5,512,000
----------- -------------
4,337,000 3,662,000
----------- -------------
Other income (expense), net:
Equity in earnings of
aviation joint venture 409,000 377,000
Other, net (13,000) 9,000
----------- ------------
396,000 386,000
----------- ------------
Income before income taxes 4,733,000 4,048,000
Provision for income taxes 1,629,000 1,503,000
----------- ------------
Net income $ 3,104,000 $ 2,545,000
=========== ============
Net income per share $ 0.38 $ 0.32
=========== ============
Weighted average shares outstanding 8,184,000 8,023,000
=========== ============
Page 5 of 14
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED JUNE 30,
--------------------------------
1996 1995
------------- --------------
Cash flows from operating activities:
Net income $ 3,104,000 $ 2,545,000
----------- -----------
Adjustments to reconcile net
income to net cash provided by
operating activities -
Depreciation and amortization 443,000 409,000
Provision for bad debts 1,318,000 150,000
Deferred income tax provision 328,000 599,000
Equity in earnings of aviation
joint venture, net (325,000) 133,000
Other non-cash operating charges 3,000 16,000
Changes in assets and liabilities,
net of dispositions:
(Increase) decrease in -
Accounts receivable 2,085,000 (2,630,000)
Inventories 925,000 (317,000)
Prepaid expenses and other
current assets (984,000) 1,093,000
Other assets (157,000) (36,000)
Increase (decrease)in -
Accounts payable and accrued
expenses (5,609,000) 2,858,000
Customer deposits 151,000 259,000
Accrued salaries and wages (1,326,000) 163,000
Income taxes payable 989,000 651,000
Deferred compensation (203,000) (168,000)
------------- -----------
Total adjustments (2,362,000) 3,180,000
------------- -----------
Net cash provided by operating
activities $ 742,000 $ 5,725,000
------------ ------------
(Continued)
Page 6 of 14
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Continued)
THREE MONTHS ENDED JUNE 30,
--------------------------------
1996 1995
------------- --------------
Cash flows from investing activities:
Additions to property, plant and
equipment $ (1,063,000) $ (246,000)
Repayments from aviation joint venture -- 338,000
Proceeds from disposition of assets 7,000 203,000
Proceeds from notes receivable 107,000 131,000
Additional expenditures for
acquisition of business (7,000) (41,000)
------------ ------------
Net cash (used in) provided by
investing activities (956,000) 631,000
------------ ------------
Cash flows from financing activities:
Dividends paid on common stock (402,000) (1,056,000)
Repayments of long-term debt (11,000) (47,000)
Proceeds from issuance of
common stock 38,000 --
------------ ------------
Net cash used in financing
activities (375,000) (1,103,000)
------------ ------------
Net (decrease) increase in cash
and cash equivalents (589,000) 5,253,000
Cash and cash equivalents, at
beginning of period 12,856,000 10,907,000
------------ ------------
Cash and cash equivalents, at end
of period $ 12,267,000 $ 16,160,000
============ ============
(Continued)
Page 7 of 14
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Continued)
THREE MONTHS ENDED JUNE 30,
---------------------------
1996 1995
------------ ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
INTEREST $ 44,000 $ 15,000
========= =========
INCOME TAXES $ 326,000 $ 292,000
========= ==========
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:
Cash dividends declared, but not yet paid, totaling $603,000 are
included in accounts payable and accrued expenses as of June 30, 1996.
There were no unpaid dividends at June 30, 1995.
Page 8 of 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THE THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO
THE THREE MONTHS ENDED JUNE 30, 1995
The Company's revenue for the three months ended June 30, 1996 was
$170,694,000, an increase of $31,734,000, or 22.8%, as compared to revenue of
$138,960,000 for the corresponding period for the prior year. The Company's
revenue during these periods was attributable to the following segments:
THREE MONTHS ENDED JUNE 30, PERCENTAGE
1996 1995 INCREASE
------------- ------------ ----------
AVIATION FUELING $ 87,984,000 $ 62,859,000 40.0%
MARINE FUELING 77,132,000 72,087,000 7.0%
OIL RECYCLING 5,578,000 4,014,000 39.0%
------------ ------------
TOTAL REVENUE $170,694,000 $138,960,000 22.8%
============ ============ =======
The aviation fueling segment contributed $87,984,000 in revenue for the
three months ended June 30, 1996. This represented an increase in revenue of
$25,125,000, or 40.0%, as compared to the same period of the prior year. The
increase in revenue was due to an increase in volume and the average price per
gallon sold. The marine fueling segment contributed $77,132,000 in revenue for
the three months ended June 30, 1996, an increase of $5,045,000, or 7.0%, over
the corresponding period of the prior year. The increase in revenue was related
primarily to an increase in the average price per metric ton sold. The oil
recycling segment contributed $5,578,000 in revenue for the three months ended
June 30, 1996, an increase of $1,564,000, or 39.0%, as compared to the same
period of the prior year. The increase in revenue was due to an increase in
volume and the average sales price per gallon of recycled oil sold, and higher
used oil and waste water collection revenue.
The Company's gross profit of $11,632,000 for the three months ended
June 30, 1996, increased $2,458,000, or 26.8%, as compared to the same period of
the prior year. The Company's gross margin increased from 6.6% for the three
months ended June 30, 1995, to 6.8% for the three months ended June 30, 1996.
The Company's aviation fueling business achieved a 6.9% gross margin
for the three months ended June 30, 1996, as compared to 7.8% achieved for the
same period during the prior year. This resulted from the average gross profit
per gallon remaining constant while the average sales price per gallon
increased. The Company's marine fueling segment
Page 9 of 14
achieved a 4.7% gross margin for the three months ended June 30, 1996, as
compared to a 4.2% gross margin for the same period of the prior year. This
resulted from higher gross margins in trading and brokering activities over the
same period of the prior year. The gross margin in the Company's oil recycling
segment increased from 31.5% for the three months ended June 30, 1995, to 34.7%,
for the three months ended June 30, 1996. This increase in the gross margin
resulted from higher used oil and waste water collection gross profit and a
higher gross profit per gallon of recycled oil sold.
Total operating expenses for the three months ended June 30, 1996 were
$7,295,000, an increase of $1,783,000, or 32.3%, as compared to the same period
of the prior year. The increase resulted primarily from a higher provision for
bad debts in the aviation fueling segment, which increased $1,090,000 over the
corresponding period during the prior year. In relation to revenue, total
operating expenses increased from 4.0% to 4.3%.
The Company's income from operations for the three months ended June
30, 1996 was $4,337,000, an increase of $675,000, or 18.4%, as compared to the
same period of the prior year. Income from operations during these periods was
attributable to the following segments:
PERCENTAGE
THREE MONTHS ENDED JUNE 30, INCREASE
1996 1995 (DECREASE)
------------- ------------ ----------
AVIATION FUELING $ 3,093,000 $ 3,499,000 (11.6)%
MARINE FUELING 1,018,000 678,000 50.1%
OIL RECYCLING 1,348,000 562,000 139.9%
CORPORATE OVERHEAD (1,122,000) (1,077,000) 4.2%
----------- -----------
TOTAL INCOME FROM
OPERATIONS $ 4,337,000 $ 3,662,000 18.4%
=========== =========== =====
The aviation fueling segment's income from operations was $3,093,000
for the three months ended June 30, 1996, a decrease of $406,000, or 11.6%, as
compared to the three months ended June 30, 1995. This resulted from an increase
in operating expenses, principally in the provision for bad debts, partially
offset by an increase in the volume of product sold. The Company's aviation
fueling segment also earned $409,000 from its joint venture during the three
months ended June 30, 1996, as compared to $377,000 during the same period
of the prior year. The results of the joint venture are shown in other income.
The marine fueling segment earned $1,018,000 in income from operations for the
three months ended June 30, 1996, an increase of $340,000, or 50.1% over the
corresponding period of the prior year. This increase was
Page 10 of 14
related primarily to an increase in the average gross profit per metric ton
sold, partially offset by higher operating expenses. Income from operations of
the oil recycling segment increased by $786,000, or 139.9%, for the three months
ended June 30, 1996, as compared to the same period of the prior year. This
improvement resulted from an increase in volume and the average gross profit per
recycled oil gallon sold, a higher used oil and waste water collection gross
profit, and lower operating expenses.
Corporate overhead costs not charged to the business segments totaled
$1,122,000 for the three months ended June 30, 1996, an increase of $45,000, or
4.2%, as compared to the same period of the prior year. In relation to revenue,
total corporate overhead decreased to 0.7% for the three months ended June 30,
1996, as compared to 0.8% for the same period of the prior year.
The Company's effective income tax rate for the three months ended June
30, 1996 was 34.4%, as compared to 37.1% for the same period of the prior year.
The decrease is the result of an overall decline in foreign income taxes.
Net income for the three months ended June 30, 1996 was $3,104,000, an
increase of $559,000, or 22.0%, as compared to net income for the three months
ended June 30, 1995. Earnings per share of $0.38 for the three months ended June
30, 1996 exhibited a $0.06, or 18.8% increase over the $0.32 achieved during the
same period of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents amounted to $12,267,000 at June 30, 1996, as
compared to $12,856,000 at March 31, 1996. The principal uses of cash and cash
equivalents during the first three months of fiscal year 1997 were $1,063,000
for capital expenditures and $402,000 in dividends paid on common stock,
partially offset by net cash provided by operating activities of $742,000. Other
components of changes in cash and cash equivalents are detailed in the
Consolidated Statements of Cash Flows.
Working capital as of June 30, 1996 was $41,335,000, exhibiting a
$1,789,000 increase from working capital as of March 31, 1996. As of June 30,
1996, the Company's accounts receivable, excluding the allowance for bad debts,
amounted to $64,455,000, a decrease of $2,653,000, as compared to the March 31,
1996 balance. In the aggregate, accounts payable, accrued expenses, and customer
deposits decreased $5,257,000. The net increase in trade credit of $2,604,000
was primarily attributable to the aviation segment. The allowance for bad debts
as of June 30, 1996 amounted to $5,113,000, an increase of $750,000 compared to
the March 31, 1996 balance. During the first three months of fiscal year 1997,
the Company charged $1,318,000 to the provision for bad debts
Page 11 of 14
and had charge-offs in excess of recoveries of $568,000.
Capital expenditures, which amounted to $1,063,000 for the first three
months of fiscal year 1997, consisted primarily of $290,000 in office equipment
and furniture, $274,000 in plant, machinery and equipment, and $470,000 in
construction in progress related to increased storage capacity at the Company's
Louisiana used oil facility. During the balance of fiscal year 1997, the Company
anticipates spending approximately $1,250,000 to upgrade plant, machinery and
equipment. 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. The clean up costs will be
capitalized as part of the cost of the site, up to the fair market value of the
site.
Accrued salaries and wages decreased $1,326,000, resulting from the
payment of sales and management performance bonuses accrued for the 1996 fiscal
year.
Income taxes payable at June 30, 1996, increased $989,000, when
compared to March 31, 1996. This increase resulted primarily from the payment of
the first income tax installment for fiscal year 1997, subsequent to June 30,
1996, in accordance with U.S. federal and state income tax regulations.
Deferred income taxes increased $328,000 from March 31, 1996 to June
30, 1996, principally due to an increase in the difference between tax and book
depreciation, partially offset by an increase in the difference between the tax
and book provision for bad debts.
Deferred compensation decreased $203,000 from March 31, 1996 to June
30, 1996, primarily as a result of distributions in accordance with the
Company's deferred compensation plans.
The Company's working capital requirements are not expected to vary
substantially for the balance of fiscal year 1997. The Company expects to meet
its cash requirements for the balance of fiscal year 1997 from existing cash,
operations, and additional borrowings, as necessary, under its existing credit
facility. The Company's business has not been significantly affected by
inflation during the periods discussed in this report.
Page 12 of 14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
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
27 FINANCIAL DATA SCHEDULE (for SEC use only)
(a) During the three months ended June 30, 1996, the Company
did not file any reports on Form 8-K.
Page 13 of 14
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: AUGUST 1, 1996 WORLD FUEL SERVICES CORPORATION
/s/ JERROLD BLAIR
------------------------------
JERROLD BLAIR
PRESIDENT
/s/ CARLOS A. ABAUNZA
-------------------------------
CARLOS A. ABAUNZA
CHIEF FINANCIAL OFFICER
Page 14 of 14
5
3-MOS
MAR-31-1997
JUN-30-1996
12,267,000
0
64,455,000
5,113,000
3,667,000
79,450,000
21,343,000
6,080,000
109,050,000
38,115,000
0
0
0
81,000
66,208,000
109,050,000
170,694,000
170,694,000
159,062,000
159,062,000
0
1,318,000
136,000
4,733,000
1,629,000
3,104,000
0
0
0
3,104,000
0.38
0.38
