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 SEPTEMBER 30, 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 September 30, 1995, the Registrant had a total of 7,922,518
shares of Common Stock, par value $0.01 per share, issued and outstanding.
Page 1 of 19
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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 six months ended September 30, 1995 will not be necessarily
indicative of the results for the entire fiscal year ending March 31, 1996.
Page 2 of 19
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<TABLE>
<CAPTION>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
SEPTEMBER 30, MARCH 31,
1995 1995
------------ -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 17,042,000 $10,907,000
Accounts receivable, net of allowance
for bad debts of $5,000,000 and
$4,566,000 at September 30, 1995
and March 31, 1995, respectively 45,504,000 38,800,000
Inventories 3,772,000 3,714,000
Prepaid expenses and other current assets 3,695,000 4,585,000
------------ -----------
Total current assets 70,013,000 58,006,000
------------ -----------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 601,000 705,000
Buildings and improvements 2,818,000 2,929,000
Office equipment and furniture 2,572,000 2,394,000
Plant, machinery and equipment 14,143,000 15,052,000
Construction in progress 8,000 184,000
------------ -----------
20,142,000 21,264,000
Less accumulated depreciation
and amortization 5,799,000 5,680,000
------------ -----------
14,343,000 15,584,000
------------ -----------
OTHER ASSETS:
Unamortized cost in excess of net
assets of acquired companies, net of
accumulated amortization 12,303,000 12,391,000
Other 3,581,000 3,555,000
------------ -----------
$100,240,000 $89,536,000
============ ===========
</TABLE>
(Continued)
Page 3 of 19
<PAGE>
<TABLE>
<CAPTION>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
SEPTEMBER 30, MARCH 31,
1995 1995
------------ -----------
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt $ 1,957,000 $ 2,128,000
Accounts payable and accrued expenses 30,946,000 24,334,000
Customer deposits 1,358,000 1,559,000
Accrued salaries and wages 1,511,000 747,000
Income taxes payable 953,000 1,718,000
------------ -----------
Total current liabilities 36,725,000 30,486,000
------------ -----------
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities 4,104,000 4,447,000
Accrued litigation settlement expense - 1,300,000
Deferred compensation 1,184,000 1,237,000
Deferred income taxes 294,000 -
------------ -----------
5,582,000 6,984,000
------------ -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value;
100,000 shares authorized,
none issued - -
Common stock, $.01 par value;
10,000,000 shares authorized,
7,923,000 and 7,805,000 shares issued and
outstanding at September 30, 1995
and March 31, 1995, respectively,
net of treasury shares 79,000 78,000
Capital in excess of par value 21,740,000 20,414,000
Retained earnings 36,171,000 31,631,000
Less treasury stock, at cost 57,000 57,000
------------ -----------
57,933,000 52,066,000
------------ -----------
$100,240,000 $89,536,000
============ ===========
</TABLE>
The accompanying notes to the consolidated financial statements are an
integral part of these consolidated balance sheets (unaudited).
Page 4 of 19
<PAGE>
<TABLE>
<CAPTION>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
SIX MONTHS ENDED
SEPTEMBER 30,
----------------------------
1995 1994
------------ ------------
<S> <C> <C>
Revenue $284,618,000 $149,184,000
Cost of sales 265,533,000 136,211,000
------------ ------------
Gross profit 19,085,000 12,973,000
------------ ------------
Operating expenses:
Salaries and wages 6,195,000 3,371,000
Provision for bad debts 836,000 1,288,000
Other 4,648,000 2,766,000
------------ ------------
11,679,000 7,425,000
------------ ------------
Income from operations 7,406,000 5,548,000
Other income, net 824,000 372,000
------------ ------------
Income before income taxes 8,230,000 5,920,000
Provision for income taxes 3,030,000 2,216,000
------------ ------------
Net income $ 5,200,000 $ 3,704,000
============ ============
Net income per share $ .65 $ .52
============ ============
Weighted average shares outstanding 8,050,000 7,191,000
============ ============
</TABLE>
The accompanying notes to the consolidated financial statements are an integral
part of these consolidated statements (unaudited).
Page 5 of 19
<PAGE>
<TABLE>
<CAPTION>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1995 1994
------------ -----------
<S> <C> <C>
Revenue $145,658,000 $76,660,000
Cost of sales 135,747,000 70,929,000
------------ -----------
Gross profit 9,911,000 5,731,000
------------ -----------
Operating expenses:
Salaries and wages 3,189,000 1,753,000
Provision for bad debts 686,000 77,000
Other 2,292,000 1,322,000
------------ -----------
6,167,000 3,152,000
------------ -----------
Income from operations 3,744,000 2,579,000
Other income, net 438,000 242,000
------------ -----------
Income before income taxes 4,182,000 2,821,000
Provision for income taxes 1,527,000 1,061,000
------------ -----------
Net income $ 2,655,000 $ 1,760,000
============ ===========
Net income per share $ .33 $ .24
============ ===========
Weighted average shares outstanding 8,076,000 7,200,000
============ ===========
</TABLE>
The accompanying notes to the consolidated financial statements are an integral
part of these consolidated statements (unaudited).
Page 6 of 19
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<TABLE>
<CAPTION>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
SEPTEMBER 30,
-----------------------
1995 1994
---------- -----------
<C> <C> <C>
Cash flows from operating activities:
Net income $5,200,000 $3,704,000
---------- ----------
Adjustments to reconcile net
income to net cash provided by
operating activities-
Depreciation and amortization 816,000 610,000
Provision for bad debts 836,000 1,288,000
Deferred income taxes 559,000 573,000
Equity in earnings of joint venture (856,000) -
Other non-cash operating charges 30,000 -
Changes in assets and liabilities,
net of assets sold and liabilities
transferred:
(Increase) decrease in-
Accounts receivable (7,590,000) 243,000
Inventories (133,000) (182,000)
Prepaid expenses and other
current assets 569,000 (101,000)
Other assets (164,000) (33,000)
Increase (decrease) in-
Accounts payable, accrued expenses
and customer deposits 5,829,000 613,000
Accrued salaries and wages 764,000 352,000
Income taxes payable (764,000) 490,000
---------- ----------
Total adjustments (104,000) 3,853,000
---------- ----------
Net cash provided by operating
activities 5,096,000 7,557,000
---------- ----------
</TABLE>
(Continued)
Page 7 of 19
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<TABLE>
<CAPTION>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Continued)
SIX MONTHS ENDED
SEPTEMBER 30,
-----------------------------------
1995 1994
-------------- -----------
<S> <C> <C>
Cash flows from investing activities:
Short-term investments $ - $(3,500,000)
Repayments from joint venture 338,000 -
Dividends received from joint venture 708,000 -
Additions to property, plant and
equipment (611,000) (786,000)
Proceeds from sale of assets 207,000 27,000
Proceeds from notes receivable 793,000 569,000
Additional expenditures for acquisition
of business (40,000) -
---------- -----------
Net cash provided by (used in)
investing activities 1,395,000 (3,690,000)
---------- -----------
Cash flows from financing activities:
Dividends paid on common stock (264,000) (239,000)
Proceeds from exercise of warrants - 464,000
Repayment of long-term debt (92,000) (120,000)
---------- -----------
Net cash (used in) provided by
financing activities (356,000) 105,000
---------- -----------
Net increase in cash and cash
equivalents 6,135,000 3,972,000
Cash and cash equivalents, at beginning
of period 10,907,000 7,699,000
---------- -----------
Cash and cash equivalents, at end of
period $17,042,000 $11,671,000
=========== ===========
</TABLE>
(Continued)
Page 8 of 19
<PAGE>
<TABLE>
<CAPTION>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Continued)
SIX MONTHS ENDED
SEPTEMBER 30,
-----------------------
1995 1994
---------- ----------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 38,000 $ 44,000
========== ==========
Income taxes $3,276,000 $1,115,000
========== ==========
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
On July 28, 1995, in accordance with the Acquisition Agreement relating
to the Trans-Tec acquisition, the Company reduced the principal outstanding
under the promissory notes issued in connection with the acquisition by
$229,000, because the Company was unable to collect or realize certain of the
acquired assets. Of this amount, $207,000 reduced Goodwill and $22,000 reduced
Prepaid expenses and other current assets.
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 $979,000 in notes receivable.
Cash dividends declared, but not yet paid, totaling $396,000 and
$238,000, were included in the accounts payable balances as of September 30,
1995 and 1994, respectively.
The Company had $378,000 in assets held for sale, previously included
in property, plant and equipment, which were reclassified to prepaid expenses
and other current assets as of September 30, 1994.
During the six months ended September 30, 1994, notes receivable
totaling $267,000 were recorded in connection with the recovery of previously
written-off accounts receivable.
The accompanying notes to the consolidated financial statements are an
integral part of these consolidated statements (unaudited).
Page 9 of 19
<PAGE>
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
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 the three
and six months ended September 30, 1994. The following unaudited pro-forma
consolidated results of operations for the three and six months ended September
30, 1994, assume that the Company acquired the Trans-Tec group of companies as
of April 1, 1994.
PRO-FORMA PRO-FORMA
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, 1994 SEPTEMBER 30, 1994
------------------ ------------------
Revenue $147,564,000 $258,255,000
============ ============
Net Income $ 2,135,000 $ 4,285,000
============ ============
Net Income Per Share $ .27 $ .55
============ ============
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 19
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(2) DISPOSITION OF ASSETS
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. A cash
payment of $200,000 was received at closing, and a promissory note for $979,000
was obtained for the balance. The promissory note bears interest at 10% per
annum, has a term of 12 years commencing June 1, 1995, and is payable in equal
monthly installments of principal and interest. The promissory note is
collateralized by the property, plant and equipment sold.
(3) STOCKHOLDERS' EQUITY
On June 5, 1995, the Board of Directors approved a three for two 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.
Page 11 of 19
<PAGE>
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 six months
ended September 30, 1994. See Note 1 of notes to the consolidated financial
statements.
THE SIX MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO
THE SIX MONTHS ENDED SEPTEMBER 30, 1994
The Company's revenue for the six months ended September 30, 1995 was
$284,618,000, an increase of $135,434,000, or 90.8%, as compared to revenue of
$149,184,000 for the corresponding period the prior year. The Company's revenue
during these periods was attributable to the following segments:
PERCENT
SIX MONTHS ENDED SEPTEMBER 30, INCREASE
1995 1994 (DECREASE)
------------ ------------ ----------
Aviation Fueling $136,398,000 $140,055,000 (2.6%)
Marine Fueling 139,936,000 - *
Oil Recycling 8,284,000 9,135,000 (9.3)
Intersegment Eliminations - (6,000) *
------------ ------------
Total Revenue $284,618,000 $149,184,000 90.8%
============ ============ =====
* Percent not meaningful
The aviation fueling segment contributed $136,398,000 in revenue for
the six months ended September 30, 1995. This represented a decrease in revenue
of $3,657,000, or 2.6%, as compared to the same period last year. This decrease
in revenue was due to a 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.
Partially offsetting was a price related revenue increase which reflects general
market conditions. The marine fueling segment contributed $139,936,000 in
revenue. The oil recycling segment contributed $8,284,000 in revenue for the six
months ended September 30, 1995. This was a decrease in revenue of $851,000, or
9.3%, as compared to the same period last year. The revenue decrease was due to
the sale of its Georgia operations (see Note 2) and lower sales volume.
Partially offsetting were higher used oil and waste water collection revenues,
and a price related increase on recycled product.
Page 12 of 19
<PAGE>
The Company's gross profit of $19,085,000 increased by $6,112,000, or
47.1%, as compared to the same period last year. The Company's gross margin
decreased from 8.7% for the six months ended September 30, 1994 to 6.7% for the
six months ended September 30, 1995.
The Company's aviation fueling business achieved a 7.5% gross margin
for the six months ended September 30, 1995, as compared to 7.2% 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 six months
ended September 30, 1995. The gross margin in the Company's oil recycling
segment increased from 31.0% for the six months ended September 30, 1994, to
32.7% for the six months ended September 30, 1995.
Total operating expenses for the six months ended September 30, 1995
were $11,679,000, an increase of $4,254,000, or 57.3%, as compared to the same
period a year ago. This increase resulted primarily from operating expenses of
the marine fueling segment, which totalled $4,708,000 and higher corporate
overhead salaries and payroll related costs totalling $526,000. Partially
offsetting were a $747,000 decrease in the aviation segment provision for bad
debts and $317,000 due to the termination of the Company's fuel terminaling
activities. In relation to revenue, total operating expenses decreased from 5.0%
to 4.1%.
The Company's income from operations for the six months ended September
30, 1995 was $ 7,406,000, an increase of $1,858,000, or 33.5%, as compared to
the same period a year ago. Income from operations during these periods was
attributable to the following segments:
SIX MONTHS ENDED SEPTEMBER 30, PERCENT
1995 1994 INCREASE
---------- ---------- --------
Aviation Fueling $6,978,000 $5,898,000 18.3%
Marine Fueling 1,453,000 - *
Oil Recycling 1,472,000 1,469,000 *
Corporate Overhead (2,497,000) (1,819,000) 37.3
---------- ----------
Total Income from
Operations $7,406,000 $5,548,000 33.5%
========== ========== =====
* Percent not meaningful.
Income from operations of the aviation fueling segment increased
$1,080,000, or 18.3%, for the six months ended September 30, 1995, as compared
to the six months ended September 30, 1994. This improvement resulted from a
price related revenue increase and a decrease in the provision for bad debts.
Partially offsetting were a volume decrease in narrow margin bulk transactions
and lower operating income due to the termination of the Company's fuel
terminaling activities. The marine fueling segment earned $1,453,000 in income
from operations for the six months ended September 30, 1995. The gross profit of
this segment was $6,161,000, reduced by $4,708,000 in operating expenses. Income
from operations of the oil recycling segment increased by $3,000, for the six
months ended September 30, 1995, as compared to the same period last year.
Page 13 of 19
<PAGE>
Corporate overhead costs not charged to the business segments totalled
$2,497,000 for the six months ended September 30, 1995, an increase of $678,000,
or 37.3%, 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 .9% for the six months ended September 30,
1995, as compared to 1.2% for the same period a year prior.
In the six months ended September 30, 1995, the Company had net other
income of $824,000, an increase of $452,000 over the same period a year ago.
This improvement was due primarily to $856,000 in equity earnings of a joint
venture. Partially offsetting this increase was $213,000 related to foreign
currency transactions.
Net income for the six months ended September 30, 1995 was $5,200,000,
an increase of $1,496,000, as compared to net income for the six months ended
September 30, 1994. Earnings per share of $.65 for the six months ended
September 30, 1995 exhibited a $.13 increase over the $.52 achieved during the
same period last year.
THE THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO
THE THREE MONTHS ENDED SEPTEMBER 30, 1994
The Company's revenue for the three months ended September 30, 1995
was $145,658,000, an increase of $68,998,000, or 90.0%, as compared to revenue
of $76,660,000 for the corresponding period the prior year. The Company's
revenue during these periods was attributable to the following segments:
PERCENT
THREE MONTHS ENDED SEPTEMBER 30, INCREASE
1995 1994 (DECREASE)
----------- ----------- ----------
Aviation Fueling $73,539,000 $72,052,000 2.1%
Marine Fueling 67,849,000 - *
Oil Recycling 4,270,000 4,614,000 (7.5)
Intersegment Eliminations - (6,000) *
----------- -----------
Total Revenue $145,658,000 $76,660,000 90.0%
============ =========== ======
* Percent not meaningful
The aviation fueling segment contributed $73,539,000 of revenue for the
three months ended September 30, 1995. This represented an increase in revenue
of $1,487,000, or 2.1%, as compared to the same period last year. This increase
in revenue was due to an overall price related revenue increase and higher sales
volume. The marine fueling segment contributed $67,849,000 in revenues. The oil
recycling segment contributed $4,270,000 of revenue for the three months ended
September 30, 1995. This was a decrease in revenue of $344,000, or 7.5% as
compared to the same period last year. The revenue decrease was due to the sale
of its Georgia operations and a price related decrease on recycled product.
Partially offsetting were higher used oil and waste water collection revenues.
Page 14 of 19
<PAGE>
The Company's gross profit of $9,911,000 increased by $4,180,000, or
72.9%, as compared to the same period last year. The Company's gross margin
decreased from 7.5% for the three months ended September 30, 1994 to 6.8% for
the three months ended September 30, 1995.
The Company's aviation fueling business achieved a 7.3% gross margin
for the three months ended September 30, 1995, as compared to 5.9% achieved for
the same period during the prior fiscal year. The Company's marine fueling
segment achieved a 4.6% gross margin for the three months ended September 30,
1995. The gross margin in the Company's oil recycling segment increased from
32.8% for the three months ended September 30, 1994, to 33.9% for the three
months ended September 30, 1995.
Total operating expenses for the three months ended September 30, 1995
were $6,167,000, an increase of $3,015,000, or 95.7%, as compared to the same
period a year ago. This increase resulted primarily from operating expenses of
the marine segment, which totalled $2,350,000, and a $488,000 increase in the
aviation segment provision for bad debts. In relation to revenue, total
operating expenses increased from 4.1% to 4.2%.
The Company's income from operations for the three months ended
September 30, 1995 was $3,744,000, an increase of $1,165,000, or 45.2%, as
compared to the same period a year ago. Income from operations during these
periods was attributable to the following segments:
THREE MONTHS ENDED SEPTEMBER 30, PERCENT
1995 1994 INCREASE
---------- ---------- --------
Aviation Fueling $3,479,000 $2,733,000 27.3%
Marine Fueling 775,000 - *
Oil Recycling 910,000 902,000 *
Corporate Overhead (1,420,000) (1,056,000) 34.5
---------- ----------
Total Income From
Operations $3,744,000 $2,579,000 45.2%
========== ========== =====
* Percent not meaningful.
Income from operations of the aviation fueling segment increased
$746,000, or 27.3%, for the three months ended September 30, 1995, as compared
to the three months ended September 30, 1994. This improvement resulted from
product volume and price related revenue increases. Partially offsetting was an
increase in the provision for bad debts. The marine fueling segment earned
$775,000 in income from operations for the three months ended September 30,
1995. The gross profit of this segment was $3,125,000, reduced by $2,350,000 in
operating expenses. Income from operations of the oil recycling segment
increased by $8,000 for the three months ended September 30, 1995, as compared
to the same period last year.
Corporate overhead costs not charged to the business segments totalled
$1,420,000 for the three months ended September 30, 1995, an increase of
$364,000, or 34.5%, as compared to the same period last year. This increase was
due to higher salaries and payroll related costs. In relation to revenue, total
corporate overhead decreased to 1.0% for the three months ended September 30,
1995, as compared to 1.4% for the same period a year prior.
Page 15 of 19
<PAGE>
In the three months ended September 30, 1995, the Company had net other
income of $438,000, an increase of $196,000 over the same period a year ago.
This improvement was due to $479,000 in equity earnings of a joint venture.
Partially offsetting this increase was $102,000 in foreign currency transaction
losses.
Net income for the three months ended September 30, 1995 was
$2,655,000, an increase of $895,000, as compared to net income for the three
months ended September 30, 1994. Earnings per share of $.33 for the three months
ended September 30, 1995 exhibited a $ .09 increase over the $.24 achieved
during the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents amounted to $17,042,000 at September 30, 1995
as compared to $10,907,000 at March 31, 1995. The principal sources of cash
during the first half of fiscal year 1996 were $5,096,000 in net cash provided
by operating activities, $1,046,000 in dividends and repayments of advances from
the joint venture, $793,000 from collections on notes receivable and $207,000
from proceeds on the sale of assets. Partially offsetting the increase in cash
and cash equivalents was $611,000 used for the purchase and construction of
plant, equipment and other capital expenditures, and $264,000 in a dividend 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 September 30, 1995 was $33,288,000, exhibiting a
$5,768,000 increase from working capital as of March 31, 1995.
As of September 30, 1995, the Company's accounts receivable, excluding
the allowance for bad debts, amounted to $50,504,000, an increase of $7,138,000
as compared to the March 31, 1995 balance. This increase in accounts receivable
resulted from a $5,283,000 and $2,406,000 increase in the marine and aviation
segments' accounts receivable, respectively. Partially offsetting was a decrease
of $551,000 in the oil recycling segment. The allowance for bad debts as of
September 30, 1995 amounted to $5,000,000, an increase of $434,000 when compared
to the March 31, 1995 balance. During the first half of fiscal year 1996, the
Company charged $836,000 to the provision for bad debts and had charge-offs in
excess of recoveries of $402,000.
Capital expenditures, which amounted to $611,000 for the first half of
fiscal year 1996, consisted primarily of $231,000 in office equipment and
furniture, $209,000 in delivery equipment as well as $115,000 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 fiscal year 1996, the Company anticipates spending
approximately $1,000,000 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. Clean up will be capitalized as part of the cost of
the site, up to the fair market value of the site.
Page 16 of 19
<PAGE>
In the aggregate, accounts payable, accrued expenses and customer
deposits increased $6,411,000. This increase is attributed to the marine and
aviation segments. Accrued salaries and wages increased $764,000, principally as
the result of sales and management performance bonuses.
Long-term liabilities as of September 30, 1995, were $5,582,000
exhibiting a $1,402,000 decrease as compared to March 31, 1995. This decrease
was primarily the result of the issuance of the Company's common stock in
settlement of the $1,300,000 accrued litigation settlement expense.
Stockholders' equity amounted to $57,933,000, or $7.31 per share, at September
30, 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 during fiscal year 1996. The Company expects to meet its cash
requirements for 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 17 of 19
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Except for the proceedings described in the Company's Form
10-K for the fiscal year ended March 31, 1995, 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
The Company's annual meeting of stockholders was held on
August 21, 1995.
The matters voted on at the meeting were the election of
directors, a proposal to change the Company's name to World
Fuel Services Corporation and a proposal to increase the
number of shares issuable under the 1986 Employee Stock Option
Plan. All of the Company's director nominees were elected and
the proposals were approved.
ELECTION OF DIRECTORS
NAME OF DIRECTOR VOTES FOR VOTES AGAINST
---------------- --------- -------------
1. Ralph R. Weiser 6,624,387 11,495
2. Jerrold Blair 6,624,387 11,495
3. Celestin Durand, III 6,623,637 12,245
4. Ralph R. Feuerring 6,624,387 11,495
5. John R. Benbow 6,624,387 11,495
6. Phillip S. Bradley 6,624,363 11,519
7. Myles Klein 6,622,337 13,545
8. Michael Kasbar 6,624,387 11,495
9. Paul Stebbins 6,624,387 11,495
PROPOSAL TO CHANGE NAME OF COMPANY
FOR AGAINST ABSTAIN
6,596,406 16,468 23,008
PROPOSAL TO INCREASE EMPLOYEE STOCK OPTION PLAN SHARES
FOR AGAINST ABSTAIN
5,499,282 1,079,530 57,070
ITEM 5. OTHER INFORMATION - None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) During the three months ended September 30, 1995,
the Company did not file any reports on Form 8-K.
Page 18 0f 19
<PAGE>
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: NOVEMBER 1, 1995 WORLD FUEL SERVICES CORPORATION
/S/ JERROLD BLAIR
--------------------------------
JERROLD BLAIR
PRESIDENT
/S/ CARLOS A. ABAUNZA
--------------------------------
CARLOS A. ABAUNZA
CHIEF FINANCIAL OFFICER
Page 19 of 19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ITS SEPTEMBER 30, 1995 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 17,042,000
<SECURITIES> 0
<RECEIVABLES> 45,504,000
<ALLOWANCES> 5,000,000
<INVENTORY> 3,772,000
<CURRENT-ASSETS> 70,013,000
<PP&E> 20,142,000
<DEPRECIATION> 5,799,000
<TOTAL-ASSETS> 100,240,000
<CURRENT-LIABILITIES> 36,725,000
<BONDS> 0
<COMMON> 79,000
0
0
<OTHER-SE> 57,933,000
<TOTAL-LIABILITY-AND-EQUITY> 100,240,000
<SALES> 284,618,000
<TOTAL-REVENUES> 284,618,000
<CGS> 265,533,000
<TOTAL-COSTS> 265,533,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 836,000
<INTEREST-EXPENSE> 153,000
<INCOME-PRETAX> 8,230,000
<INCOME-TAX> 3,030,000
<INCOME-CONTINUING> 5,200,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,200,000
<EPS-PRIMARY> .65
<EPS-DILUTED> .65
</TABLE>
