UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 2000
[ ] 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 July 11, 2000, the registrant had a total of 10,793,000 shares of
common stock, par value $0.01 per share, issued and outstanding.
Page 1 of 15
<PAGE>
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, 2000, will not be necessarily
indicative of the results for the entire fiscal year ending March 31, 2001.
Page 2 of 15
<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
JUNE 30, 2000 MARCH 31, 2000
------------- --------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 25,872,000 $ 32,773,000
Accounts and notes receivable, net of allowance
for bad debts of $14,725,000 and $15,202,000
at June 30 and March 31, 2000, respectively 139,604,000 142,250,000
Inventories 6,808,000 10,418,000
Prepaid expenses and other current assets 11,574,000 9,829,000
Current net assets of discontinued operations 2,703,000 --
------------ ------------
Total current assets 186,561,000 195,270,000
------------ ------------
PROPERTY AND EQUIPMENT, at cost:
Leasehold and improvements 353,000 335,000
Office equipment and furniture 9,360,000 9,074,000
------------ ------------
9,713,000 9,409,000
Less accumulated depreciation
and amortization 4,634,000 4,289,000
------------ ------------
5,079,000 5,120,000
------------ ------------
OTHER ASSETS:
Unamortized cost in excess of net
assets of acquired companies, net of
accumulated amortization 22,855,000 23,040,000
Other 2,975,000 3,346,000
------------ ------------
$217,470,000 $226,776,000
============ ============
</TABLE>
(Continued)
Page 3 of 15
<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30, 2000 MARCH 31, 2000
------------- --------------
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt $ 1,423,000 $ 17,000
Accounts payable 79,105,000 80,404,000
Accrued expenses 24,596,000 26,316,000
Customer deposits 3,658,000 3,017,000
Accrued salaries and wages 2,384,000 3,558,000
Income taxes payable 1,095,000 1,419,000
Current net liabilities of discontinued operations -- 6,498,000
------------ ------------
Total current liabilities 112,261,000 121,229,000
------------ ------------
LONG-TERM LIABILITIES 4,257,000 5,886,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value;
100,000 shares authorized, none issued -- --
Common stock, $0.01 par value;
25,000,000 shares authorized; 12,537,000
shares issued and outstanding 125,000 125,000
Capital in excess of par value 26,800,000 26,800,000
Retained earnings 87,962,000 85,256,000
Less treasury stock, at cost; 1,733,000 and
1,540,000 shares at June 30 and
March 31, 2000, respectively 13,935,000 12,520,000
------------ ------------
100,952,000 99,661,000
------------ ------------
$217,470,000 $226,776,000
============ ============
</TABLE>
The accompanying notes to the consolidated financial statements are an
integral part of these consolidated balance sheets.
Page 4 of 15
<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
---------------------------------
2000 1999
------------- -------------
<S> <C> <C>
Revenue $ 374,530,000 $ 225,446,000
Cost of sales 357,462,000 210,394,000
------------- -------------
Gross profit 17,068,000 15,052,000
------------- -------------
Operating expenses:
Salaries and wages 6,551,000 5,368,000
Provision for bad debts 1,253,000 1,557,000
Other 5,685,000 3,802,000
------------- -------------
13,489,000 10,727,000
------------- -------------
Income from operations 3,579,000 4,325,000
------------- -------------
Other income (expense), net:
Special provision for bad debts in aviation joint venture -- (1,193,000)
Other, net 742,000 (103,000)
------------- -------------
742,000 (1,296,000)
------------- -------------
Income from continuing operations before income taxes 4,321,000 3,029,000
Provision for income taxes 1,074,000 1,222,000
------------- -------------
Income from continuing operations 3,247,000 1,807,000
Income from discontinued operations of
oil recycling segment, net of tax -- 435,000
------------- -------------
Net income $ 3,247,000 $ 2,242,000
============= =============
Basic earnings per share:
Continuing operations $ 0.30 $ 0.15
Discontinued operations -- 0.03
------------- -------------
Net income $ 0.30 $ 0.18
============= =============
Weighted average shares - basic 10,888,000 12,188,000
============= =============
Diluted earnings per share:
Continuing operations $ 0.30 $ 0.15
Discontinued operations -- 0.03
------------- -------------
Net income $ 0.30 $ 0.18
============= =============
Weighted average shares - diluted 10,896,000 12,311,000
============= =============
</TABLE>
The accompanying notes to the consolidated financial statements are an
integral part of these consolidated financial statements.
Page 5 of 15
<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from continuing operating activities:
Net income $ 3,247,000 $ 1,807,000
------------ ------------
Adjustments to reconcile net income
to net cash used in operating activities -
Depreciation and amortization 580,000 613,000
Provision for bad debts 1,253,000 1,557,000
Deferred income tax provision 110,000 --
Equity in losses of aviation joint venture, net -- 1,184,000
Other non-cash operating charges (credits) 8,000 (3,000)
Changes in assets and liabilities, net of acquisition:
(Increase) decrease in -
Accounts and notes receivable 1,313,000 (16,906,000)
Inventories 3,610,000 (140,000)
Prepaid expenses and other current assets (1,743,000) (233,000)
Other assets 331,000 (783,000)
Increase (decrease) in -
Accounts payable and accrued expenses (3,006,000) 7,517,000
Customer deposits 641,000 (932,000)
Accrued salaries and wages (1,174,000) (651,000)
Income taxes payable (324,000) 863,000
Deferred compensation (212,000) (430,000)
------------ ------------
Total adjustments 1,387,000 (8,344,000)
------------ ------------
Net cash provided by (used in)
continuing operating activities 4,634,000 (6,537,000)
------------ ------------
Cash flows from investing activities:
Capital expenditures (354,000) (730,000)
Payment for acquisition of business, net of cash acquired -- (4,183,000)
------------ ------------
Net cash used in investing activities (354,000) (4,913,000)
------------ ------------
</TABLE>
(continued)
Page 6 of 15
<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Continued)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from financing activities:
Dividends paid on common stock $ (554,000) $ (609,000)
Purchases of treasury stock (1,415,000) --
Borrowings under revolving credit facitily, net -- 5,500,000
Other (11,000) 4,000
------------ ------------
Net cash (used in) provided by financing activities (1,980,000) 4,895,000
------------ ------------
Discontinued operations (9,201,000) 595,000
------------ ------------
Net decrease in cash and cash equivalents (6,901,000) (5,960,000)
Cash and cash equivalents, at beginning
of period 32,773,000 16,527,000
------------ ------------
Cash and cash equivalents, at end
of period $ 25,872,000 $ 10,567,000
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (including $8,000 in fiscal 2000 for
discontinued operations) $ 3,000 $ 125,000
============ ============
Income taxes (including $9,168,000 and $142,000
in fiscal 2001 and 2000, respectively, for
discontinued operations) $ 10,504,000 $ 679,000
============ ============
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES:
Cash dividends declared, but not yet paid, totaling $541,000 and $609,000 are
included in Accrued expenses as of June 30, 2000 and 1999, respectively.
During the three months ended June 30, 2000, the Company reclassified notes
receivable of approximately $80,000 from Accounts and notes receivable to Other
assets.
In connection with the April 1, 1999 acquisition of the Bunkerfuels group of
companies, the Company issued $4,250,000 in notes payable. In March 2000, the
Company paid $1,410,000 pursuant to the terms of the notes payable.
The accompanying notes to the consolidated financial statements are an
integral part of these consolidated financial statements.
Page 7 of 15
<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting polices 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, 2000.
(2) DISCONTINUED OPERATIONS
In January 2000, the Company's Board of Directors authorized the sale
of its oil recycling segment. Accordingly, as of December 31, 1999, the Company
reported its oil recycling segment as a discontinued operation. The consolidated
financial statements of the Company have been restated to report separately the
operating results of the discontinued operation for all periods presented.
Financial results for periods prior to the dates of discontinuance have been
restated to reflect continuing operations.
In February 2000, the Company sold all of the issued and outstanding
stock of its oil recycling subsidiaries, the International Petroleum Corporation
group ("IPC"), to EarthCare Company ("EarthCare"). For the three months ended
June 30, 1999, the Company recognized net income from discontinued operations of
$435,000. Potential costs which could not be reasonably estimated include
expenses associated with the indemnifications provided by the Company as part of
the purchase agreement.
The Company reported current net assets of discontinued operations of
$2,703,000 as of June 30, 2000 and net current liabilities of discontinued
operations of $6,498,000 as of March 31, 2000. As of March 31, 2000, net
liabilities of discontinued operations consist of $9,168,000 in income taxes
payable related to the ten months of operations and the gain on sale, partially
offset by $2,670,000 of current net assets of discontinued operations. As of
June 30, 2000, income taxes related to the discontinued operations had been
paid. For the three months ended June 30, 1999, revenues applicable to the
discontinued operations and income from operations of the discontinued
operations were $6,104,000 and $715,000, respectively.
In April 2000, the Company filed a Demand for Arbitration with the
American Arbitration Association, against EarthCare to collect approximately
$3,827,000 in cash due pursuant to the Purchase Agreement. On May 23, 2000,
EarthCare filed a response to the Company's action which acknowledges the
amounts due to the Company, but asserts defenses and counterclaims against the
Company as a result of alleged breaches by the Company of certain
representations under the purchase agreement. See Note 3, below.
Page 8 of 15
<PAGE>
The Company anticipates substantial completion of its plan of
discontinuance by the end of fiscal 2001, and believes that the remaining net
assets will be realized.
(3) COMMITMENTS AND CONTINGENCIES
In February and March 2000, two shareholders filed class action
lawsuits against the Company and four of its executive officers in the United
States District Court for the Southern District of Florida. The lawsuits have
since been consolidated. The lawsuit alleges violations of federal securities
laws and seeks an unspecified amount of damages arising from the decrease in the
Company's stock price, which occurred on January 31, 2000. On June 30, 2000, the
plaintiffs amended their complaint to delete two of the claims made therein and
to drop two of the Company's officers as defendants. Management of the Company
believes that the claims made in this lawsuit are without merit and is
vigorously defending this action.
In February 2000, the Company filed a lawsuit against American Home
Assurance Company ("AHAC"), a subsidiary of AIG, seeking recovery under the
Company's insurance policies for the Company's loss of product by theft off the
coast of Nigeria. Six of the Company's shipments of marine fuel, with a total
value of approximately $2,683,000, were converted in the course of transhipment
to Nigeria, and were never received by the Company's intended customer. The
Company believes that this loss is covered by insurance which was in effect at
the time of the loss. AHAC is contesting the Company's insurance claim, but has
not yet filed an answer in the pending legal proceedings which sets forth
specific defenses. The Company is vigorously prosecuting its action against
AHAC.
In April 2000, the Company filed arbitration proceedings against
EarthCare to collect approximately $3,827,000 due to the Company pursuant to the
stock purchase agreement between EarthCare and the Company relating to the sale
of the Company's oil recycling segment. In May 2000, EarthCare filed a response
to the Company's action which acknowledges the amounts due to the Company, but
asserts defenses and counterclaims against the Company as a result of alleged
breaches by the Company of certain representations under the purchase agreement.
The Company believes that EarthCare's allegations are without merit and is
vigorously prosecuting its action against EarthCare.
There can be no assurance that the Company will prevail in the above
legal proceedings and management cannot estimate the exposure or recovery to the
Company if it does not prevail in the proceedings and counterclaims pending
against the Company.
The Company is also involved in litigation and administrative
proceedings primarily arising in the normal course of its business. In the
opinion of management, except as set forth above, the Company's liability, if
any, under any pending litigation or administrative proceedings will not
materially affect its financial condition or results of operations.
Page 9 of 15
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THE THREE MONTHS ENDED
JUNE 30, 1999
The Company's revenue for the three months ended June 30, 2000 was
$374,530,000, an increase of $149,084,000, or 66.1%, as compared to revenue of
$225,446,000 for the corresponding period of the prior year. The revenue
increase is due to a substantial increase in world oil prices. The Company's
revenue during these periods was attributable to the following segments:
Three Months Ended June 30,
2000 1999
------------- -------------
Aviation Fueling $ 132,801,000 $ 92,216,000
Marine Fueling 241,729,000 133,230,000
------------- -------------
Total Revenue $ 374,530,000 $ 225,446,000
============= =============
The aviation fueling segment contributed $132,801,000 in revenue for
the three months ended June 30, 2000. This represented an increase in revenue of
$40,585,000, or 44.0%, as compared to the same period of the prior year. The
increase in revenue was due to an increase in the average price per gallon sold.
The marine fueling segment contributed $241,729,000 in revenue for the three
months ended June 30, 2000, an increase of $108,499,000, or 81.4%, 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 Company's gross profit of $17,068,000 for the three months ended
June 30, 2000 increased $2,016,000, or 13.4%, as compared to the same period of
the prior year. The Company's gross margin decreased from 6.7% for the three
months ended June 30, 1999, to 4.6% for the three months ended June 30, 2000.
The Company's aviation fueling business achieved a 6.3% gross margin for the
three months ended June 30, 2000, as compared to 10.4% achieved for the same
period during the prior year. This decrease resulted from an overall increase in
the average price per gallon sold. The Company's marine fueling segment achieved
a 3.6% gross margin for the three months ended June 30, 2000, as compared to a
4.1% gross margin for the same period of the prior year. The decrease resulted
from higher fuel prices, despite an increase in the average gross profit per
metric ton sold.
Total operating expenses for the three months ended June 30, 2000 were
$13,489,000, an increase of $2,762,000, or 25.7%, as compared to the same period
of the prior year. The increase resulted in part from higher salaries and
related personnel costs, and professional fees.
Page 10 of 15
<PAGE>
The Company's income from operations for the three months ended June
30, 2000 was $3,579,000, a decrease of $746,000, or 17.2%, as compared to the
same period of the prior year. Income from operations during these periods was
attributable to the following segments:
Three Months Ended June 30,
2000 1999
------------ ------------
Aviation Fueling $ 3,206,000 $ 4,339,000
Marine Fueling 2,447,000 1,124,000
Corporate Overhead (2,074,000) (1,138,000)
------------ ------------
Total Income from Operations $ 3,579,000 $ 4,325,000
============ ============
The aviation fueling segment's income from operations was $3,206,000
for the three months ended June 30, 2000, a decrease of $1,133,000, or 26.1%, as
compared to the three months ended June 30, 1999. This resulted from a decrease
in the volume of fuel sales and in the average gross profit per gallon sold. The
marine fueling segment earned $2,447,000 in income from operations for the three
months ended June 30, 2000, an increase of $1,323,000, or 117.7%, over the
corresponding period of the prior year. This increase resulted from an improved
gross profit on trade and brokered transactions. Partially offsetting were
increases in salaries and performance based bonuses, and other operating
expenses.
During the three months ended June 30, 2000, the Company reported
$742,000 in other income, net, compared to other expense, net, of $1,296,000,
for the same quarter a year ago. During the quarter ended June 30, 1999, the
Company recorded a special charge to the provision for bad debts in its aviation
joint venture in Ecuador related to the deteriorating economic conditions in
that country. Also contributing to the variance in other income and expense,
net, were increases in net interest income and foreign exchange gains. The
Company's effective income tax rate for the three months ended June 30, 2000,
compared to the same quarter a year ago, decreased substantially because of the
impact of the provision for bad debts, special or otherwise, for which the
Company did not receive a tax benefit during the three months ended June 30,
1999.
Net income from continuing operations for the three months ended June
30, 2000 was $3,247,000, an increase of $1,440,000, or 79.7%, as compared to the
same period of the prior year. Diluted earnings per share on income from
continuing operations was $0.30, an increase of $0.15, or 100.0%, as compared to
the same period of the prior year.
Net income for the three months ended June 30, 2000 was $3,247,000, an
increase of $1,005,000, or 44.8%, as compared to net income of $2,242,000 for
the three months ended June 30, 1999. Diluted earnings per share of $0.30 for
the three months ended June 30, 2000 exhibited a $0.12, or 66.7% increase over
the $0.18 achieved during the same period of the prior year. The results for the
first quarter of fiscal 2000 included $435,000, or $0.03 per diluted share, in
income from discontinued operations.
Page 11 of 15
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents amounted to $25,872,000 at June 30, 2000, as
compared to $32,773,000 at March 31, 2000. The principal uses of cash and cash
equivalents during the first quarter of fiscal 2001 were $9,168,000 for the
payment of income taxes related to the discontinued operations, $1,415,000 for
the purchase of treasury stock, $354,000 for capital expenditures and $554,000
in dividends paid on common stock. Partially offsetting these cash uses was
$4,634,000 in net cash provided by continuing operating activities. Other
components of changes in cash and cash equivalents are detailed in the
Consolidated Statements of Cash Flows.
Working capital as of June 30, 2000 was $74,300,000, representing a
$259,000 increase from working capital as of March 31, 2000. As of June 30,
2000, the Company's accounts receivable and the current portion of the notes
receivable, excluding the allowance for bad debts, amounted to $154,329,000, a
decrease of $3,123,000, as compared to the March 31, 2000 balance. In the
aggregate, accounts payable, accrued expenses and customer deposits decreased
$2,378,000. The allowance for bad debts as of June 30, 2000 amounted to
$14,725,000, a decrease of $477,000 compared to the March 31, 2000 balance.
During the first quarter of fiscal 2001, the Company charged $1,253,000 to the
provision for bad debts and had charge-offs in excess of recoveries of
$1,730,000.
Capital expenditures for the three months ended June 30, 2000 consisted
primarily of $354,000 for the purchase of computer equipment.
Stockholders' equity amounted to $100,952,000, or $9.34 per share at
June 30, 2000, compared to $99,661,000, or $9.06 per share at March 31, 2000.
This increase of $1,291,000 was due to $3,247,000 in first quarter earnings,
partially offset by the declaration of first quarter cash dividends of $541,000
and $1,415,000 in purchases of treasury stock.
The Company expects to meet its capital investment and working capital
requirements for fiscal 2001 from existing cash, operations and additional
borrowings, as necessary, under its existing line of credit.
The Company's business has been, and will continue to be affected by
the rapid, and sustained increase in fuel prices.
FORWARD-LOOKING STATEMENTS
Except for the historical information contained herein, this document
includes forward-looking statements that involve risk and uncertainties,
including, but not limited to quarterly fluctuations in results; the management
of growth; fluctuations in world oil prices or foreign currency; major changes
in political, economic, regulatory or environmental conditions; the loss of key
customers, suppliers or members of senior management; uninsured losses;
competition; credit risk associated with accounts and notes receivable; and
other risks detailed in this report and in the Company's other Securities and
Exchange Commission filings. Actual results may differ materially from any
forward-looking statements set forth herein.
Page 12 of 15
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has no material changes to the disclosure made on this
matter in the Company's annual report on Form 10-K for the year ended March 31,
2000.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In February and March 2000, two shareholders filed class action
lawsuits against the Company and four of its executive officers in the United
States District Court for the Southern District of Florida. The lawsuits have
since been consolidated. The lawsuit alleges violations of federal securities
laws and seek an unspecified amount of damages arising from the decrease in the
Company's stock price, which occurred on January 31, 2000. On June 30, 2000, the
plaintiffs amended their complaint to delete two of the claims made therein and
to drop two of the Company's officers as defendants. Management of the Company
believes that the claims made in this lawsuit are without merit and is
vigorously defending this action.
In February 2000, the Company filed a lawsuit against American Home
Assurance Company ("AHAC"), a subsidiary of AIG, seeking recovery under the
Company's insurance policies for the Company's loss of product by theft off the
coast of Nigeria. Six of the Company's shipments of marine fuel, with a total
value of approximately $2,683,000, were converted in the course of transhipment
to Nigeria, and were never received by the Company's intended customer. The
Company believes that this loss is covered by insurance which was in effect at
the time of the loss. AHAC is contesting the Company's insurance claim, but has
not yet filed an answer in the pending legal proceedings which sets forth
specific defenses. The Company is vigorously prosecuting its action against
AHAC.
In April 2000, the Company filed arbitration proceedings against
EarthCare to collect approximately $3,827,000 due to the Company pursuant to the
stock purchase agreement between EarthCare and the Company relating to the sale
of the Company's oil recycling segment. In May 2000, EarthCare filed a response
to the Company's action which acknowledges the amounts due to the Company, but
asserts defenses and counterclaims against the Company as a result of alleged
breaches by the Company of certain representations under the purchase agreement.
The Company believes that EarthCare's allegations are without merit and is
vigorously prosecuting its action against EarthCare.
There can be no assurance that the Company will prevail in the above
legal proceedings and management cannot estimate the exposure or recovery to the
Company if it does not prevail in the proceedings and counterclaims pending
against the Company.
The Company is also involved in litigation and administrative
proceedings primarily arising in the normal course of its business. In the
opinion of management, except as set forth above, the Company's liability, if
any, under any pending litigation or administrative proceedings will not
materially affect its financial condition or results of operations.
Page 13 of 15
<PAGE>
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
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) Exhibits.
27.1 Financial Data Schedule for the three months ended June
30, 2000
(b) Reports on Form 8-K.
During the three months ended June 30, 2000, the Company did
not file any reports on Form 8-K.
Page 14 of 15
<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: JULY 25, 2000 WORLD FUEL SERVICES CORPORATION
------------- -------------------------------
/s/ JERROLD BLAIR
------------------------
JERROLD BLAIR
PRESIDENT
/s/ CARLOS A. ABAUNZA
------------------------
CARLOS A. ABAUNZA
CHIEF FINANCIAL OFFICER
(Principal Financial and Accounting Officer)
Page 15 of 15
