(Mark One)
(Mark One) |
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, |
OR |
☐ 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 |
COMMISSION FILE NUMBER 1-9533
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Florida | 59-2459427 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
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(Address of principal executive offices) | 33178 (Zip Code) | |
Registrant’s telephone number, including area code: (305) 428-8000 | ||
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of each class: Common Stock, par value $0.01 per share | Name of each exchange on which registered: | |
| New York Stock Exchange |
☐
$3,275,617,000.
Documents incorporated by reference:
Part III – Specified Portions of the Registrant’s Definitive Proxy Statement for the 2016 Annual Meeting of Shareholders.
Documents incorporated by reference: | ||
Part III - | Specified Portions of the Registrant’s Definitive Proxy Statement for the 2017 Annual Meeting of Shareholders. |
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We have offices throughout the United States and in various foreign jurisdictions, including: Argentina, Australia, Brazil, Canada, Chile, China, Colombia, Costa Rica, Denmark, Finland, France, Germany, Gibraltar, Greece, Hong Kong, India, Indonesia, Ireland, Italy, Japan, Kyrgyzstan, Malaysia, Mexico, the United Kingdom, Denmark,Netherlands, Norway, Russia, Singapore, South Africa, South Korea, Sweden, Switzerland, the Netherlands, Germany, Greece,Taiwan, Turkey, the United Arab Emirates, Russia, Taiwan, South Korea, Singapore, Japan, Hong Kong, Indonesia, Costa Rica, Brazil, Chile, Argentina, Mexico, Colombia, Canada, South Africa, Gibraltar, Indiathe United Kingdom ("U.K.") and Australia.the United States ("U.S."). See “Item 2 – Properties” for a list of principal offices by business segment and “Exhibit 21.1 – Subsidiaries of the Registrant” included in this 20152016 10‑K Report for a list of our subsidiaries.
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purchased at airport locations or shipped via pipelines and held at multiple locations for strategic reasons. We also engage in contract sales, which are sales made pursuant to fuel purchase contracts with customers who commit to purchasing fuel from us over the contract term, andterm. We also conduct spot sales, which are sales that do not involve continuing contractual obligations by our customers to purchase fuel from us. Our cost of fuel is generally tied to market‑based formulas or is government controlled.
We also offer advisory and fulfillment solutions with respect to power, natural gas and other energy products through Kinect, our global energy management solutions business.
programs.
Regulation
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annual emissions thresholds and to regulate emissions from major sources of GHGs under the Clean Air Act. In other countries, proposed regulations include adoption of cap and trade regimes, carbon taxes, restrictive permitting, increased efficiency standards, and incentives or mandates for renewable energy. Although the ultimate impact of these or other future measures is difficult to accurately predict, they could make our products more expensive or reduce demand for petroleum products, as well as shift demand toward relatively lower-carbon sources. This, in turn, could affect our operations, earnings and competitive position.
Forward‑Looking
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Any public statements or disclosures by the Company following this report that modify or impact any of the forward-looking statements contained in or accompanying this 2016 10-K Report will be deemed to modify or supersede such forward-looking statements.
We extend credit to certain of our customers in connection with their purchases of fuel and services from us.
industries within which we primarily do business.
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volatility, coupled with a reduction of business activity generally, increases our risks related to our status as an unsecured creditor of many of our customers.these risks. Credit losses, if significant, wouldcould have a material adverse effect on our business, financial condition, results of operations and cash flows.
us would impact our ability to conduct our operations.
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We also enter into proprietary derivative transactions, primarilywhich are transactions which are not intended to capitalizehedge our own risk but rather to make a profit by capitalizing on arbitrage opportunities associated with basis, time, quality or geographic spreads related to fuel products we sell. Proprietary derivative transactions, by their nature, often entail exposureexpose us to adverse changes in commodity prices in relation to ourthe proprietary positions.positions taken. Although we have established limits on such exposure, any such adverse changes could result in losses. The risks we face because of our use of financial derivativesproprietary positions can be exacerbated by volatility in the financial and other markets. In addition, we may fail to adequately hedgemanage our risks or could otherwise incur losses if our employees fail to comply with our policies and procedures with respect to hedging or proprietary trading by engaging, for example, by engaging in unauthorized trading activity, failing to hedge a specific financialprice risk or failing to observe limits on exposure, which could subject us to financial losses that would have a material adverse effect on our business, financial condition, results of operations and cash flows.
Third parties who
future operating results.
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corruptionanti-corruption laws and trade control regulations. Violations of these regulations are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, as well as criminal fines and imprisonment.
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also subject to cybersecurity attacks including malware, other malicious software, phishing email attacks, attempts to gain unauthorized access to our data, the unauthorized release, corruption or loss of our data, loss or damage to our data delivery systems, and other electronic security breaches. Due to the large number of transactions that run through our systems each day, significant system down-time or slow-down could have a material impact on our ability to conduct business, process and record transactions, as well as make operational and financial decisions.
In addition, as we continue to grow the volume of transactions in our businesses, our existing IT systems infrastructure, applications and related functionality may be unable to effectively support a larger scale operation, which can cause the information being processed to be unreliable and impact our decision-making or damage our reputation with customers.
Businesses we have acquired or may acquire in the future, as well as
risks and uncertainties, which if realized, could result in costs that outweigh the financial benefit of such opportunities.
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•our ability to effectively integrate the operations, financial reporting, and personnel of acquired companies and manage acquired businesses or strategic investments, while maintaining uniform standards and controls;
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If we fail to comply with laws or other government regulations applicable to our operations, we could suffer penalties or costs that could have a material adverse effect on our business.
We are required to comply with extensive and complex laws and other regulations in the countries in which we operate, and at the international, federal, state and local government levels relating to, among other things:
•the transportation, handling and delivery of fuel and fuel products;
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•the operation of fuel storage and distribution facilities;
•workplace safety;
•fuel spillage or seepage;
•environmental protection;
•consumer and data protection;
•payment card industry data security standards;
•government contracting and procurement;
•anti-trust and other applicable competition laws;
•anti-money laundering and statutes and regulations governing the transmission of funds;
•regulatory reporting and licensing requirements; and
•hazardous waste disposal.
Due to the complex and technical nature of these laws and regulations, inadvertent violations may occur. If we fail to comply with these laws or regulations for any reason, we would be required to correct or implement measures to prevent a recurrence of any violations, which could increase our operating costs. If more serious violations were to occur, we could be subject to substantial fines or penalties or to civil or criminal liability. In addition, compliance with existing and future laws regulating the delivery of fuel by barge, truck or railcar, fuel storage terminals and underground storage tanks that we own or operate may require significant capital expenditures and increased operating and maintenance costs. For example, rail incidents in the last several years have led and are likely to continue to lead to additional governmental regulation of rail shipments of crude oil and other fuel products in Canada and the United States and to increased safety standards for the railcars that transport these products, including specifications mandating modified railcar designs, configurations, materials, and equipment. These regulations could result in higher operating costs for us, such as if we are required to pay for the modifications to railcars we lease or such railcars become obsolete, which could adversely affect our operating results.
To the extent that we use third parties in our operations, we are also subject to the risk that we would be held accountable for the failure of these third parties to comply with the laws and regulations of the U.S. and various international jurisdictions. Any significant fines and costs incurred as a result of such regulations could have a material adverse effect on our business and results of operations.
We are subject to unique business risks as a result of selling to government customers and reduced sales to our government customers could adversely affect our profitability.
Historically, fuel prices have been extremely volatile and will likely continue to be volatile in the future.
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•global economic conditions;
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•terrorism, war, civil unrest and natural disasters.
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If we fail to successfully manage the implementation of an upgrade to our global enterprise resource planning (“ERP”) platform, our operations and operating results could be adversely affected.
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Changes in U.S. or foreign tax laws could adversely affect our business and future operating results.
We are affected by various U.S. and foreign taxes, including income taxes and taxes imposed on the purchase and sale of aviation, marine and land fuel products, such as sales, excise, value added tax, energy, environmental and other taxes. From time to time, we may also benefit from special tax concessions in certain jurisdictions. Changes in U.S. and foreign tax laws, our failure to comply with such laws or the loss of tax concessions could adversely affect our business, financial condition, results of operations and cash flows.
Furthermore, significant judgment is required in determining our worldwide provision for income taxes. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. We are regularly under audit by tax authorities and, although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different from our historical income tax provisions and accruals. The results of an audit or litigation could have a material effect on our financial statements in the period or periods for which that determination is made.
Finally, we earn a significant amount of our operating income from outside the U.S., and any repatriation of funds currently held in foreign jurisdictions to the U.S. may result in higher effective income tax rates for the Company. Further, recent developments, including proposals to change U.S. income tax laws regarding how U.S. multinational corporations are taxed on foreign earnings, investigations by the European Commission on illegal state aid, the project by the Organisation for Economic Co-operation and Development on Base Erosion and Profit Shifting and other initiatives, could adversely affect our worldwide effective tax rate, if enacted. Although we cannot predict whether or in what form any changes will be made, if enacted they could have a material adverse impact on our income tax expense, financial condition, results of operations and cash flows.
Fluctuations in foreign exchange rates could materially affect our financial condition and results of operations.
Our cash equivalents
Our cash equivalents, principally consistingkey geographic areas and significantly disrupt trade between the U.K. and the E.U. or other nations as the U.K. pursues independent trade relations. These factors pose a risk to the overall U.K. economy and as a result, our operations in the U.K., particularly in our land segment, as well as our global operations, could be adversely impacted.
financial condition. Furthermore, our hedging activities may not be effective to mitigate volatile fuel prices and may expose us to counterparty risk.
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if any, on our businesses. Furthermore, certainAny such regulations could also subject our derivatives counterparties to limits on commodity positions and thereby have an adverse effect on our ability to hedge risks associated with our business or on the cost of the other requirements under the Act have taken effectour hedging activity.
In addition, variouscertain foreign jurisdictions have adopted or are in the process of adopting, legislation regulatingcould have a material adverse effect on our business. For example, in early 2016, the useE.U. Commission announced that the deadline for two key sets of derivatives, including Singaporederivative regulations schedules to come into effect, the Markets in Financial Instruments Directive II (“MiFID II”) and Europe, wherethe Markets in Financial Instruments Regulation (“MiFIR”), originally set for January 2017, had been postponed to January 2018. As we currently conduct certain derivatives activities.
As regulations are finalized, adoptedapproach the January 2018 MiFID II and implemented,MiFIR regulatory implementation, we will continue to evaluate how legislation willthese E.U. regulations, may impact our ability to conduct our business. In particular, the Act and any
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Location | Principal Use | Lease Expiration | ||||
9800 Northwest 41st Street Miami, FL 33178, USA | Executive, administrative, operations and sales office for corporate, aviation, marine and land segments | May 2021 | ||||
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62 Buckingham Gate | Administrative, operations and sales office for aviation, marine and land segments | June | ||||
238A Thompson Road Novena Square Tower A Singapore 307684 | Administrative, operations and sales office for aviation and marine segments | March 2020 | ||||
Office No. 2003, Swiss Tower Plot No. Y3, Jumeirah Lakes Towers Dubai, United Arab Emirates | Sales and marketing office for aviation and marine segments | March 2017 | ||||
Av. Rio Branco Parte, Centro Rio de Janeiro, Brazil 20040 007 | Administrative, operations and sales office for aviation, marine and land segments |
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Rio de Janeiro, Brazil 22210 030 |
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| Administrative, operations and sales office for aviation, marine and land segments |
| November 2021 | |||
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Paseo de la Reforma 231, Piso 8 Cuauhtémoc Delegacion Cuauhtémoc C.P. 06500, Mexico D.F | Administrative, operations and sales office for aviation segment | January 2020 | ||||
Forum 2, Building N, Level 4, Radial Santa Ana Belén (Lindoral), Pozos, Santa Ana San José, Costa Rica | Administrative, operations and sales office for aviation and marine segments | December 2019 | ||||
605 North Highway 169, Suites 1100 & 1200 Plymouth, MN 55441, USA | Administrative, operations and sales office for land segment |
| June 2018 | |||
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25 Mill Street Parish, NY 13131, USA | Administrative, operations and sales office for aviation segment |
| March 2020 | |||
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Strommen 6 9400 Norresundby, Denmark | Administrative, operations and sales office for aviation and land segments | Month-to-month | ||||
6000 Metcalf Avenue Overland Park, KS 66202, USA | Administrative, operations and sales office for land segment |
| August 2017 | |||
8650 College Boulevard Overland Park, KS 66210, USA | Administrative, operations and sales office for aviation, marine and land segments | August 2017 | ||||
Causeway End, Brinkworth, Chippenham SN15 5DN, United Kingdom | Administrative, operations and sales office for land segment | Owned | ||||
300 Flint Ridge Road Webster, Texas 77598, USA | Administrative, operations and sales office for aviation segment | Owned | ||||
Fantoftvegen 38, 5072 Bergen, Norway | Administrative, operations and sales office for land segment | November 2023 | ||||
2320 Milwaukee Way, Tacoma, Washington 98421, USA | Administrative, operations and sales office for land segment | June 2026 | ||||
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Location | Principal Use | Lease Expiration | ||
4920 Southern Boulevard Virginia Beach, VA 23462, USA | Administrative, operations and sales office for land segment | Owned | ||
Odinsgatan 10, SE-411 03 Göteborg, Sweden | Administrative, operations and sales office for aviation segment | January 2019 | ||
1B North Mole Road (C.P. No. 1360) Gibraltar | Administrative, operations and sales office for marine segment | May 2021 | ||
The Docks, Falmouth, Cornwall, TR11 4NR, United Kingdom | Administrative, operations and sales office for marine segment | February 2037 | ||
Huskisson Dock No.1 Regent Road Liverpool, United Kingdom | Administrative, operations and sales office for marine segment | February 2029 | ||
Between 2013 and 2015, we,accompanying consolidated financial statements for additional details regarding certain of our subsidiaries, DPM and DPTS, along with a number of third parties, were sued in various actions in both the United States and Canada, by multiple third parties seeking economic, compensatory and punitive damages allegedly caused by the Derailment. In addition, in 2013, the Quebec Minister for Sustainable Development, Environment, Wildlife and Parks (the “Minister”) issued an order requiring us to recover the spilled crude oil caused by the incident and to otherwise fully remediate the impact of the incident on the environment.
On June 8, 2015, we entered into a settlement agreement (the “Settlement Agreement”) with the Trustee (the “Trustee”) for the U.S. bankruptcy estate of Montreal, Maine & Atlantic Railway, Ltd., Montreal, Maine and Atlantic Canada Co. (“MMAC”), and the monitor (the “Monitor”) in MMAC’s Canadian bankruptcy (collectively, the “MMA Parties”) resolving all claims arising out of the Derailment. On December 22, 2015,the effective date of the bankruptcy plans filed by the Trustee in the U.S. and by MMAC in Canada (the “U.S. Bankruptcy Plan” and the “CCAA Plan” respectively, each a “Plan” and collectively the “Plans”), the Settlement Agreement became final and effective .
Pursuant to the Settlement Agreement, we contributed US$110 million (the “Settlement Payment”) to a compensation fund established to compensate parties who suffered losses as a result of the Derailment. As part of the settlement, we also assigned to the Trustee and MMAC certain claims we have against third parties arising out of the Derailment. The Settlement Payment, as well as substantially all of the related costs and expenses have been recovered from insurance.
In consideration of the Settlement Payment and the assignment of claims to the Trustee and MMAC, we, as well as our former joint ventures, DPTS Marketing, LLC and Dakota Petroleum Transport Solutions, LLC and each of their affiliates (collectively, the “WFS Parties”), received, and will continue to receive, the benefit of the global releases and injunctions set forth in the Plans. These global releases and injunctions bar all claims which may exist now or in the future against the WFS Parties arising out of the Derailment, other than criminal claims which by law may not be released. Under the terms of the Plans and the Settlement Agreement, all actions pending against us were required to be dismissed. Multiple actions have already been dismissed and we expect all actions currently pending against us to be dismissed in due course.
Other Matters
tax matters.
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PART II
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| Price |
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| High |
| Low | ||
2015 |
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First quarter |
| $ | 58.28 |
| $ | 45.66 |
Second quarter |
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| 57.72 |
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| 47.95 |
Third quarter |
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| 49.29 |
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| 34.44 |
Fourth quarter |
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| 45.63 |
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| 35.96 |
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2014 |
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First quarter |
| $ | 45.66 |
| $ | 41.40 |
Second quarter |
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| 49.23 |
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| 42.75 |
Third quarter |
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| 49.24 |
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| 39.92 |
Fourth quarter |
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| 48.21 |
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| 36.87 |
Price | |||||||
High | Low | ||||||
2016 | |||||||
First quarter | $ | 49.50 | $ | 35.13 | |||
Second quarter | 51.01 | 42.95 | |||||
Third quarter | 49.38 | 44.14 | |||||
Fourth quarter | 47.30 | 38.79 | |||||
2015 | |||||||
First quarter | $ | 58.28 | $ | 45.66 | |||
Second quarter | 57.72 | 47.95 | |||||
Third quarter | 49.29 | 34.44 | |||||
Fourth quarter | 45.63 | 35.96 |
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Our Credit Facility and Term Loans restrict the payment of cash dividends to a maximum of the sum of (i) $50.0$100.0 million plus (ii) 50% of the cumulative consolidated net income for each fiscal quarter beginning with the fiscal quarter ended March 31, 2010,2016, plus (iii) 100% of the net proceeds of all equity issuances made after October 2013. For additional information regarding our Credit Facility and Term Loans, see Note 67 to the accompanying consolidated financial statements, included herein, and “Liquidity and Capital Resources” in “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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Stock Performance
Fiscal year ending December 31.
Copyright© 2016 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.
Copyright© 2016 Russell Investment Group. All rights reserved.
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| (c) Number of securities |
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| remaining available |
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| exercise price of outstanding |
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Plan name or description |
| RSUs and SSAR Awards |
| SSAR Awards |
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| reflected in column (a)) | |
2006 Omnibus Plan (amended and restated) |
| 1.0 |
| $ | 10.43 | (1) |
| 3.2 |
(1) Calculated without taking into account shares of common stock subject to, as well as the RSUs reported in column (a) and that will become issuable following vesting of such RSUs without any cash consideration or other payment required.
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Plan name or description | (a) Maximum number of securities to be issued upon exercise of outstanding RSUs and SSAR Awards | (b) Weighted average exercise price of outstanding RSUs and SSAR Awards(1) | (c) Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in column (a)) | ||||||
2016 Omnibus Plan | — | $ | — | 4.3 | |||||
2006 Omnibus Plan (amended and restated) | 1.5 | $ | 44.97 | — |
(1) | Calculated without taking into account shares of common stock subject to the RSUs reported in column (a) and that will become issuable following vesting of such RSUs without any cash consideration or other payment required. |
Issuer Purchases of Equity Securities
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| Total Number |
| Approximate Dollar | |
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| Value of Shares that | |
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| May Yet Be Purchased | |
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| Average Price |
| Announced Plans or |
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Period |
| Purchased (1) |
| Paid Per Share |
| Programs |
| Programs (2) | ||
10/1/15-10/31/15 |
| — |
| $ | — |
| — |
| $ | 59,524 |
11/1/15-11/30/15 |
| 7 |
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| 45.63 |
| — |
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| 59,524 |
12/1/15-12/31/15 |
| — |
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| — |
| — |
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| 59,524 |
Total |
| 7 |
| $ | 45.63 |
| — |
| $ | 59,524 |
Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) | |||||||||
10/1/16-10/31/16 | — | $ | — | — | $ | 100,000 | |||||||
11/1/16-11/30/16 | 562 | 40.91 | 556 | 77,243 | |||||||||
12/1/16-12/31/16 | — | — | — | 77,243 | |||||||||
Total | 562 | $ | 40.91 | 556 | $ | 77,243 |
(1) | These amounts include shares purchased as part of our publicly announced programs and shares owned and tendered by employees to satisfy the required withholding taxes related to share-based payment awards, which are not deducted from shares available to be purchased under publicly announced programs. |
(2) | In |
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States ("U.S. GAAP").
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| For the Year ended December 31, | |||||||||||||
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| 2015 (1) |
| 2014 (2) |
| 2013 (3) |
| 2012 (4) |
| 2011 (5) | |||||
Revenue |
| $ | 30,379.7 |
| $ | 43,386.4 |
| $ | 41,561.9 |
| $ | 38,945.3 |
| $ | 34,622.9 |
Cost of revenue |
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| 29,519.2 |
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| 42,572.8 |
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| 40,809.1 |
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| 38,271.9 |
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| 33,987.9 |
Gross profit |
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| 860.5 |
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| 813.6 |
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| 752.8 |
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| 673.4 |
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| 635.0 |
Operating expenses (6) |
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| 613.3 |
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| 544.5 |
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| 488.3 |
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| 416.4 |
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| 378.0 |
Income from operations |
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| 247.2 |
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| 269.1 |
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| 264.5 |
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| 257.0 |
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| 257.0 |
Non-operating income (expenses), net (7) |
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| (27.9) |
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| 0.4 |
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| (17.7) |
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| (17.4) |
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| (18.8) |
Income before income taxes |
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| 219.3 |
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| 269.5 |
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| 246.7 |
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| 239.6 |
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| 238.2 |
Provision for income taxes |
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| 36.3 |
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| 51.1 |
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| 39.5 |
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| 38.2 |
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| 39.0 |
Net income including noncontrolling interest |
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| 183.0 |
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| 218.4 |
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| 207.2 |
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| 201.4 |
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| 199.2 |
Net (loss) income attributable to noncontrolling interest |
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| (3.9) |
|
| (3.3) |
|
| 4.1 |
|
| 12.0 |
|
| 5.2 |
Net income attributable to World Fuel (7) |
| $ | 186.9 |
| $ | 221.7 |
| $ | 203.1 |
| $ | 189.4 |
| $ | 194.0 |
Basic earnings per common share (7) |
| $ | 2.66 |
| $ | 3.13 |
| $ | 2.85 |
| $ | 2.66 |
| $ | 2.74 |
Basic weighted average common shares |
|
| 70.2 |
|
| 70.8 |
|
| 71.2 |
|
| 71.2 |
|
| 70.7 |
Diluted earnings per common share (7) |
| $ | 2.64 |
| $ | 3.11 |
| $ | 2.83 |
| $ | 2.64 |
| $ | 2.71 |
Diluted weighted average common shares |
|
| 70.7 |
|
| 71.3 |
|
| 71.8 |
|
| 71.8 |
|
| 71.5 |
Cash dividends declared per common share |
| $ | 0.24 |
| $ | 0.15 |
| $ | 0.15 |
| $ | 0.15 |
| $ | 0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, | |||||||||||||
|
| 2015 (1) |
| 2014 (2) |
| 2013 (3) |
| 2012 (4) |
| 2011 (5) | |||||
Cash, cash equivalents and short-term investments |
| $ | 582.5 |
| $ | 302.3 |
| $ | 292.0 |
| $ | 172.7 |
| $ | 205.4 |
Accounts receivable, net |
|
| 1,812.6 |
|
| 2,306.4 |
|
| 2,538.6 |
|
| 2,193.9 |
|
| 2,160.6 |
Total current assets |
|
| 3,254.6 |
|
| 3,673.4 |
|
| 3,815.5 |
|
| 3,281.4 |
|
| 3,122.2 |
Total assets |
|
| 4,549.4 |
|
| 4,881.0 |
|
| 4,739.3 |
|
| 4,107.8 |
|
| 3,697.2 |
Total current liabilities |
|
| 1,762.8 |
|
| 2,239.3 |
|
| 2,514.5 |
|
| 2,149.3 |
|
| 2,026.1 |
Total long-term liabilities |
|
| 865.2 |
|
| 776.8 |
|
| 545.9 |
|
| 416.8 |
|
| 324.4 |
Total equity (8) |
|
| 1,921.4 |
|
| 1,864.9 |
|
| 1,678.9 |
|
| 1,541.6 |
|
| 1,346.7 |
For the Year ended December 31, | ||||||||||||||||||||
2016 | (1) | 2015 | (2)(3) | 2014 | (2)(4) | 2013 | (2)(5) | 2012 | (2)(6) | |||||||||||
Revenue | $ | 27,015.8 | $ | 30,381.4 | $ | 43,391.8 | $ | 41,559.9 | $ | 38,947.2 | ||||||||||
Cost of revenue | 26,116.8 | 29,520.4 | 42,572.7 | 40,807.8 | 38,277.4 | |||||||||||||||
Gross profit | 899.0 | 861.0 | 819.1 | 752.2 | 669.8 | |||||||||||||||
Operating expenses (7) | 710.1 | 615.3 | 542.4 | 488.5 | 416.4 | |||||||||||||||
Income from operations | 188.9 | 245.7 | 276.7 | 263.7 | 253.4 | |||||||||||||||
Non-operating income (expenses), net (8) | (46.7 | ) | (27.9 | ) | (1.9 | ) | (15.4 | ) | (17.4 | ) | ||||||||||
Income before income taxes | 142.1 | 217.7 | 274.8 | 248.3 | 236.0 | |||||||||||||||
Provision for income taxes | 15.7 | 47.2 | 53.6 | 46.0 | 38.0 | |||||||||||||||
Net income including noncontrolling interest | 126.4 | 170.5 | 221.1 | 202.3 | 198.0 | |||||||||||||||
Net (loss) income attributable to noncontrolling interest | — | (3.9 | ) | (3.3 | ) | 4.4 | 11.7 | |||||||||||||
Net income attributable to World Fuel (8) | $ | 126.5 | $ | 174.5 | $ | 224.5 | $ | 198.0 | $ | 186.3 | ||||||||||
Basic earnings per common share (8) | $ | 1.82 | $ | 2.49 | $ | 3.17 | $ | 2.78 | $ | 2.62 | ||||||||||
Basic weighted average common shares | 69.3 | 70.2 | 70.8 | 71.2 | 71.2 | |||||||||||||||
Diluted earnings per common share (8) | $ | 1.81 | $ | 2.47 | $ | 3.15 | $ | 2.76 | $ | 2.59 | ||||||||||
Diluted weighted average common shares | 69.8 | 70.7 | 71.3 | 71.8 | 71.8 | |||||||||||||||
Cash dividends declared per common share | $ | 0.24 | $ | 0.24 | $ | 0.15 | $ | 0.15 | $ | 0.15 |
As of December 31, | ||||||||||||||||||||
2016 | (1) | 2015 | (2)(3) | 2014 | (2)(4) | 2013 | (2)(5) | 2012 | (2)(6) | |||||||||||
Cash, cash equivalents and short-term investments | $ | 698.6 | $ | 582.5 | $ | 302.3 | $ | 292.1 | $ | 172.7 | ||||||||||
Accounts receivable, net | 2,344.0 | 1,812.6 | 2,308.2 | 2,538.6 | 2,193.9 | |||||||||||||||
Total current assets | 3,836.6 | 3,246.0 | 3,675.2 | 3,815.5 | 3,281.4 | |||||||||||||||
Total assets | 5,412.6 | 4,525.3 | 4,878.1 | 4,735.2 | 4,105.4 | |||||||||||||||
Total current liabilities | 2,182.7 | 1,754.2 | 2,241.9 | 2,518.9 | 2,152.0 | |||||||||||||||
Total long-term liabilities | 1,290.0 | 865.3 | 776.8 | 545.9 | 416.8 | |||||||||||||||
Total equity (9) | 1,940.0 | 1,905.9 | 1,859.4 | 1,670.5 | 1,536.6 |
(1) | In 2016, we acquired the assets of certain ExxonMobil affiliates in Canada and two airports in France on November 1st, and the U.K. and one airport in France on December 1st, as well as all of the outstanding stock of PAPCO, Inc. ("PAPCO") and Associated Petroleum Products, Inc. ("APP") on July 1st. We also completed six additional acquisitions which were not material, individually or in the aggregate. The financial position and results of operations of these acquisitions have been included in our consolidated financial statements since their respective acquisition dates. |
(2) | Certain prior period amounts have been revised to reflect the impact of adjustments made to the company's provision for income taxes. |
(3) | In 2015, we acquired all the outstanding stock of Pester Marketing Company (“Pester”) on September 1st and completed four additional acquisitions which were not material, individually or in the aggregate. The financial position and results of operations of these acquisitions have been included in our consolidated financial statements since their respective acquisition dates. |
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(4) | In 2014, we acquired i) all of the outstanding stock of Watson Petroleum Limited (now known as WFL (UK) Limited) (“Watson Petroleum”) on March 7th, ii) all of the outstanding stock of Colt International, L.L.C. (“Colt”) on July 29th, and iii) completed three additional acquisitions which were not material, individually or in the aggregate. The financial position and results of operations of these acquisitions have been included in our consolidated financial statements since their respective acquisition dates. |
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(5) | In 2013, we completed three acquisitions which were not material individually or in the aggregate. The financial position and results of operations of these acquisitions have been included in our consolidated financial statements since their respective acquisition dates. |
21
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(6) | In 2012, we acquired i) certain assets of CarterEnergy Corporation, including the assets comprising its wholesale motor fuel distribution business (the “CarterEnergy business”) on September 1st, ii) certain assets of Multi Service Corporation, including the assets comprising its transaction management business, and all of the outstanding stock of its foreign subsidiaries (the “Multi Service business”) on December 31st and iii) completed three additional acquisitions which were not material individually or in the aggregate. The financial position and results of operations of these acquisitions have been included in our consolidated financial statements since their respective acquisition dates. |
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(7) |
|
| Included in operating expenses are total non‑cash compensation costs associated with share‑based payment awards of $19.3 million for 2016, $17.0 million for 2015, $15.8 million for 2014, $16.7 million for 2013, and $14.1 million for 2012 and |
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(8) | Included in non-operating income (expenses), net for 2014 is a gain of $18.1 million related to the sale of our crude oil joint venture interests. The after-tax gain, net of certain related operating expenses was $9.9 million, or $0.14 per basic and diluted share. |
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(9) | In 2016, we repurchased 963,217 shares of common stock for an aggregate value of $41.2 million. In 2015, we repurchased 1,584,000 shares of our common stock for an aggregate value of $70.5 |
In our aviation and land segments, we primarily purchase and resell fuel and other products, and we do not act as brokers. Profit from our aviation and land segments is primarily determined by the volume and the gross profit achieved on fuel 2015. $ Change Aviation segment $ $ $ Marine segment Land segment Total $ $ $ Gross $ Change Aviation segment $ $ $ Marine segment Land segment Total $ $ $ $ Change Compensation and employee benefits $ $ $ Provision for bad debt General and administrative Total $ $ $ $ Change Aviation segment $ $ $ Marine segment Land segment Corporate overhead – unallocated Total $ $ $ to 2014. This increase resulted from Net income attributable to World Fuel $ $ Share-based compensation expense, net of income taxes of $4.9 and $4.6 for 2015 and 2014, respectively Intangible asset amortization expense, net of income taxes of $6.0 and $6.6 for 2015 and 2014, respectively Expenses related to acquisitions, net of income taxes of $1.1 and $0.2 for 2015 and 2014, respectively Deferred revenue purchase accounting adjustment, net of income taxes of $ 0.4 — Termination of employment agreement, net of income taxes of $1.5 — Executive non-renewal charge, net of income taxes of $1.7 — Gain on the sale of the crude oil joint venture interests (net of certain related operating expenses), net of income taxes of $6.2 — Non-GAAP net income attributable to World Fuel $ $ Diluted earnings per common share $ $ Share-based compensation expense, net of income taxes Intangible asset amortization expense, net of income taxes Expenses related to acquisitions, net of income taxes Deferred revenue purchase accounting adjustment, net of income taxes — Termination of employment agreement, net of income taxes — Executive non-renewal charge, net of income taxes — Gain on the sale of the crude oil joint venture interests (net of certain related operating expenses), net of income taxes — Non-GAAP diluted earnings per common share $ $ $ Change Aviation segment $ $ $ Marine segment Land segment Total $ $ $ $ Change Aviation segment $ $ $ Marine segment Land segment Total $ $ $ $ Change Compensation and employee benefits $ $ $ Provision for bad debt General and administrative Total $ $ $ $ Change Aviation segment $ $ $ Marine segment Land segment Corporate overhead – unallocated Total $ $ $ Net income attributable to World Fuel $ $ Share-based compensation expense, net of income taxes of $4.6 and $5.5 for 2014 and 2013 respectively Intangible asset amortization expense, net of income taxes of $6.6 and $8.1 for 2014 and 2013 respectively Expenses related to acquisitions, net of income taxes of $.02 for 2014 Executive non-renewal charge, net of income taxes of $1.8 — Gain on the sale of crude oil joint venture interests (net of certain related operating expenses), net of income taxes of $6.2 — Non-GAAP net income attributable to World Fuel $ $ Diluted earnings per common share $ $ Share-based compensation expense, net of income taxes Intangible asset amortization expense, net of income taxes Expenses related to acquisitions, net of income taxes Executive non-renewal charge, net of income taxes — Gain on the sale of crude oil joint venture interests (net of certain related operating expenses), net of income taxes — Non-GAAP diluted earnings per common share $ $ Liquidity and Capital Resources Net cash provided by operating activities $ $ $ Net cash used in investing activities Net cash (used in) provided by financing activities Credit Facility and Term Contractual Obligations Total < 1 year 1-3 years 3-5 years > 5 years Debt and interest obligations $ $ $ $ $ Operating lease obligations Employment agreement obligations — — Derivatives obligations — — Purchase commitment obligations — — Other obligations — — Total $ Debt and Interest Obligations.These obligations include principal and interest payments on fixed‑rate and variable‑rate, fixed‑term debt based on the expected payment dates.Management’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations20152016 10‑K Report. The following discussion may contain forward‑looking statements, and our actual results may differ significantly from the results suggested by these forward‑looking statements. Some factors that may cause our results to differ materially from the results and events anticipated or implied by such forward‑ looking statements are described in “Item 1A – Risk Factors” and under “Forward-Looking Statements.”fuel logistics,energy management company involved in providing energy procurement advisory services, supply fulfillment and transaction management and payment processing company,management solutions to commercial and industrial customers, principally engaged in the distribution of fuel and related products and services in the aviation, marine and land transportation industries. We compete by providing our customers with value‑added benefits, including single‑supplier convenience, competitive pricing, the availability of trade credit, price risk management, logistical support, fuel quality control and fuel procurement outsourcing. We primarily contract with third parties for the delivery and storage of fuel products, however, we also operate storage facilities and transportation assets. third‑third tier airlines, cargo carriers, regional and low cost carriers, airports, fixed based operators, corporate fleets, fractional operators, private aircraft, military fleets and to the U.S. and foreign governments as well as intergovernmental organizations. In our marineland segment, we offer fuel, lubricants, power and natural gas solutions through Kinect, our global energy management services platform, and related products and services to customers including petroleum distributors operating in the land transportation market, retail petroleum operators, and industrial, commercial, residential and government customers. Our marine segment product and service offerings include fuel, lubricants and related products and services to a broad base of marine customers, including international container and tanker fleets, commercial cruise lines, yachts and time‑time charter operators, offshore rig owners and operators, the U.S. and foreign governments as well as other fuel suppliers. In our land segment, we offer fuel, crude oil, lubricants and related products and services to petroleum distributors operating in the land transportation market, retail petroleum operators, and industrial, commercial, residential and government customers. Within each of our segments we may enter into derivative contracts to mitigate the risk of market price fluctuations and also to offer our customers fuel pricing alternatives to meet their needs. In addition, we offer transaction management services which consist of card payment solutions and merchant processing services to customers, primarily in the aviation, marine and land transportation industries.22Corporate expenses are allocated to each segment based on usage, where possible, or on other factors according to the nature of the activity. We evaluate and manage our business segments using the performance measurement of income from operations.The results of operations include the results of (i) Pester commencing on September 1, 2015, (ii) Watson Petroleum commencing on March 7, 2014 and (iii) Colt commencing on July 29, 2014; their respective acquisition dates.Selected financial information with respect to our business segments is provided in Note 11 to the accompanying consolidated financial statements included in this 2015 10‑K Report.Results of Operationsresalessales and a percentage of card payment and processing revenue. In our marine segment, we primarily purchase and resell fuel and also act as brokers for others. Profit from our marine segment is determined primarily by the volume and gross profit achieved on fuel resales and by the volume and commission rate of the brokering business. Profitability in our segments also depends on our operating expenses, which may be significantly affected to the extent that we are required to provide for potential bad debt.worldfuel prices. Our operating results are subject to seasonal variability. Seasonality results from numerous factors, including traditionally higher demand for natural gas and home heating oil during the winter months and gas prices. Significantaviation and land fuel during the summer months, as well as other seasonal weather patterns. Additionally, significant movements in fuel prices during any given financial period can have a significant impact on our gross profit, either positively or negatively depending on the direction, volatility and timing of such price movements.may experience decreasesevaluate and manage our business segments using the performance measurement of income from operations.future sales volumesCanada and margins as a result of further deteriorationFrance, both commencing on November 1, 2016, (ii) the fueling operations acquired from certain ExxonMobil affiliates in the world economy, declinesU.K. and the remaining location in France, both commencing on December 1, 2016, (iii) PAPCO and APP, both commencing on July 1, 2016, (v) Pester commencing on September 1, 2015, however, the transportation industry,Pester retail operations are excluded commencing May 1, 2016, the effective date of the divestment of the retail operations, (vii) Watson Petroleum commencing on March 7, 2014 and (vii) Colt commencing on July 29, 2014; their respective acquisition dates.disastersgas and continued conflictshome heating oil during the winter months, and instability inaviation and land fuel during the Middle East, Asia and Latin America,summer months, as well as potential future terrorist activities and possible military retaliation. In addition, becauseother seasonal weather patterns. Additionally, significant movements in fuel costs representprices during any given financial period can have a significant partimpact on our gross profit, either positively or negatively depending on the direction, volatility and timing of such price movements. 2016 2015 $ Change Aviation segment $ 10,914.4 $ 11,739.8 $ (825.4 ) Marine segment 7,182.5 9,367.2 (2,184.7 ) Land segment 8,918.8 9,274.3 (355.5 ) Total $ 27,015.8 $ 30,381.4 $ (3,365.6 ) customers’ operating expenses, volatile and/aviation segment were $10.9 billion for the year ended 2016, a decrease of $0.8 billion, or high7.0% as compared to 2015. The decline in aviation revenues was driven by lower average jet fuel prices canper gallon sold during the year ended 2016, where the average price per gallon sold was $1.53, as compared to $1.85 in 2015. The overall decline attributable to jet fuel prices was partially offset by increased volume, where volumes for the year ended 2016 were 7.1 billion gallons, an increase of 12.4%, as compared to 2015. 2016 2015 $ Change Aviation segment $ 401.0 $ 361.9 $ 39.1 Marine segment 149.5 189.6 (40.1 ) Land segment 348.5 309.5 39.0 Total $ 899.0 $ 861.0 $ 38.0 affect our customers’ businesses, and, consequently,impacted by the prolonged weakness in the overall maritime industry. The lower fuel price environment combined with lower price volatility, led to decreased demand for our price risk management offerings, which contributed to lower overall unit margins. 2016 2015 $ Change Compensation and employee benefits $ 413.3 $ 365.8 $ 47.5 Provision for bad debt 15.4 7.5 8.0 General and administrative 281.4 242.1 39.3 Total $ 710.1 $ 615.3 $ 94.8 2016 2015 $ Change Aviation segment $ 160.5 $ 132.2 $ 28.3 Marine segment 30.2 73.0 (42.7 ) Land segment 70.8 101.4 (30.6 ) 261.5 306.5 (45.0 ) Corporate overhead - unallocated 72.7 60.9 11.8 Total $ 188.9 $ 245.7 $ (56.8 ) operations.our subsidiaries in tax jurisdictions with different income tax rates.hedging activities may not be effectivenet income for the year ended 2016 was $126.5 million, a decrease of $48.0 million, or 27.5%, as compared to mitigate volatile fuel prices and may expose us2015. Diluted earnings per common share for the year ended 2016 was $1.81 per common share, a decrease of $0.66 per common share, or 26.7%, as compared to counterparty risk. See “Item 1A – Risk Factors” of this 2015 10‑K Report.2015 2014 11,738.2 17,268.8 (5,530.6) 9,367.2 13,843.3 (4,476.1) 9,274.3 12,274.3 (3,000.0) 30,379.7 43,386.4 (13,006.7) 2015 2014 $ Change Aviation segment $ 11,739.8 $ 17,268.8 $ (5,529.0 ) Marine segment 9,367.2 13,843.3 (4,476.1 ) Land segment 9,274.3 12,279.6 (3,005.3 ) Total $ 30,381.4 $ 43,391.8 $ (13,010.4 ) 24.4%24.5%, as compared to 2014. Of the decrease in land segment revenue, $5.0 billion was due to a decrease in the average price per gallon sold as a result of lower average land fuel prices in 2015 as compared to 2014, which was partially offset by $1.6 billion due to increased volume attributable to new and existing customers and $0.4 billion due to revenue from acquired businesses.23Profit.Profit. Our gross profit for 2015 was $860.5$861.0 million, an increase of $46.9$41.9 million, or 5.8%5.1%, as compared to 2014. Our gross profit during these periods was attributable to the following segments (in millions):2015 2014 361.4 321.6 39.8 189.6 205.6 (16.0) 309.5 286.4 23.1 860.5 813.6 46.9 2015 2014 $ Change Aviation segment $ 361.9 $ 323.4 $ 38.5 Marine segment 189.6 207.8 (18.2 ) Land segment 309.5 287.9 21.6 Total $ 861.0 $ 819.1 $ 41.9 $361.4$361.9 million, an increase of $39.8$38.5 million, or 12.4%11.9%, as compared to 2014. Of the increase in aviation segment gross profit, $31.0 million was due to increased volume attributable to new and existing customers and $28.7$27.4 million was due to gross profit from acquired businesses. These increases were partially offset by $19.9 million in lower gross profit per gallon sold due to fluctuations in customer mix.$16.0$18.2 million, or 7.8%8.8%, as compared to 2014. Of the decrease in marine segment gross profit, $71.2 million was due to lower gross profit per metric ton sold in 2015 as compared to 2014 due to fluctuations in customer mix, which was partially offset by $55.2$53.0 million in increased volume attributable to new and existing customers.$23.1$21.6 million, or 8.1%7.5%, as compared to 2014. Of the increase in land segment gross profit, $37.5 million was due to increased volume attributable to new and existing customers and $28.2$26.7 million was due to gross profit from acquired businesses. These increases were partially offset by $42.6 million in lower gross profit per gallon sold due to fluctuations in customer mix.$613.3$615.3 million, an increase of $68.8$72.9 million, or 12.6%13.5%, as compared to 2014. The following table sets forth our expense categories (in millions):2015 2014 365.8 319.8 46.0 7.5 3.8 3.7 240.0 220.9 19.1 613.3 544.5 68.8 2015 2014 $ Change Compensation and employee benefits $ 365.8 $ 319.8 $ 46.0 Provision for bad debt 7.5 3.8 3.7 General and administrative 242.1 218.8 23.3 Total $ 615.3 $ 542.4 $ 72.9 $19.1$23.3 million increase in general and administrative expenses, $17.2$21.4 million was due to the inclusion of expenses from acquired businesses and $1.9 million was due to increased general and administrative expenses to support our growing global business.$247.2$245.7 million, a decrease of $21.9$31.0 million, or 8.1%11.2%, as compared to 2014. Income from operations during these periods was attributable to the following segments (in millions):2015 2014 131.7 142.3 (10.6) 73.0 90.0 (17.0) 103.4 90.3 13.1 308.1 322.6 (14.5) 60.9 53.5 7.4 247.2 269.1 (21.9) 2015 2014 $ Change Aviation segment $ 132.2 $ 144.1 $ (11.9 ) Marine segment 73.0 92.2 (19.2 ) Land segment 101.4 93.9 7.5 306.5 330.2 (23.7 ) Corporate overhead - unallocated 60.9 53.5 7.3 Total $ 245.7 $ 276.7 $ (31.0 ) $131.7$132.2 million, a decrease of $10.6$11.9 million, or 7.4%8.3%, as compared to 2014. This decrease resulted from a $50.4 million increase in operating expenses, which was partially$39.8$38.5 million in higher gross profit. Of the increase in operating expenses, $28.2 million was related to the inclusion of acquired businesses, $3.8 million was related to the termination of the employment agreement of our former Aviation Segment President and $18.4 million was due to increased operating expenses to support our growing global business.$17.0$19.2 million, or 18.9%20.9%, as compared to 2014. This decrease resulted from $16.0$18.2 million in lower gross profit and a $1.0 million increase in operating expenses.$103.4$101.4 million, an increase of $13.1$7.5 million, or 14.5%8.0%, as compared 24$23.1$21.6 million in higher gross profit, which was partially offset by a $10.0$14.2 millionincrease in operating expenses. The increase in operating expenses was principally due to expenses related to acquired businesses.$7.4$7.3 million, or 13.8%13.7%, as compared to 2014. This increase was principally due to increased expenses to support our growing global business.income,expenses, net of $0.4$1.9 million in 2014. This $28.3$26.0 million change was principally due to an $18.1 million gain on the sale of our crude oil joint venture interests in 2014, a $6.7 million reduction of equity earnings in 2015 as compared to 2014 and a $4.7 million increase in interest expense and other financing costs, net, as a result of higher average borrowings in 2015 as compared to 2014. The decrease in earnings from our equity investments is principally related to the sale of our crude oil transloading joint venture in December 2014.16.6%21.7% and our income tax provision was $36.3$47.2 million, as compared to an effective income tax rate of 19.0%19.5% and an income tax provision of $51.1$53.6 million for 2014. The lowerhigher effective income tax rate for 2015 as compared to 2014, resulted principallyprimarily from differences in the results of our subsidiaries in tax jurisdictions with different income tax rates and a 2014 U.S. gain on the sale of the crude oil joint venture interest. Without the gain on the sale of the crude oil joint venture interest, the 2014 effective income tax rate would have been 17.7%.rates.$186.9$174.5 million, a decrease of $34.9$50.0 million, or 15.7%22.3%, as compared to 2014. Diluted earnings per common share for 2015 was $2.64$2.47 per common share, a decrease of $0.47$0.68 per common share, or 15.1%21.6% as compared to 2014.Non‑GAAP Net Income and Non‑GAAP Diluted Earnings per Common Share. Our non‑GAAP net income for 2015 was $225.1 million, a decrease of $23.9 million, or 9.6%, as compared to 2014. Non‑GAAP diluted earnings per common share for 2015 was $3.18 per common share, a decrease of $0.31 per common share, or 8.9%, as compared to 2014. The following table sets forth the reconciliation between our net income and non‑GAAP net income for 2015 and 2014 (in millions):2015 2014 186.9 221.7 11.4 9.9 20.4 22.4 3.0 1.9 1.1 2.3 3.0 (9.9) 225.1 249.0 The following table sets forth the reconciliation between our diluted earnings per common share and our non‑GAAP diluted earnings per common share for 2015 and 2014:2015 2014 2.64 3.11 0.16 0.14 0.29 0.31 0.04 0.03 0.02 0.03 0.04 (0.14) 3.18 3.49 The non-GAAP financial measures exclude costs associated with share-based compensation, amortization of acquired intangible assets, expenses related to acquisitions, deferred revenue purchase accounting adjustments, the termination of employment agreement, the executive non-renewal charge and the gain on the sale of the crude oil joint venture interests (net of certain related operating expenses) primarily because we do not believe they are reflective of the Company’s core operating results. We believe the exclusion of share-based compensation from operating expenses is useful given the variation in expense that can result from changes in the fair value of our common stock, the effect of which is unrelated to the operational conditions that give rise to variations in the components of our operating costs. Also, we believe the exclusion of the amortization of acquired intangible assets, the expenses related to acquisitions, the termination of employment agreement, the executive non-renewal charge and the gain on the sale of the crude oil joint venture interests (net of certain related operating) expenses are useful for purposes of evaluating operating performance of our core operating results and comparing them period over period. In accordance with the fair value provisions applicable to the accounting for business combinations, acquired deferred revenue is often recorded on the opening balance sheet at an amount that is lower than the historical carrying value. Although this acquisition accounting requirement has no impact on our business or cash flows, it adversely impacts our reported GAAP revenue in the reporting periods following an acquisition. We believe that the exclusion of the deferred revenue purchase accounting adjustment is useful to investors as an additional means to reflect trends of our business and provides investors with financial information that facilitates comparison of both historical and future results. We believe that these non-GAAP financial measures, when considered in conjunction with our financial information prepared in accordance with GAAP, are useful to investors to further aid in evaluating the ongoing financial performance of the Company and to provide greater transparency as supplemental information to our GAAP results. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. In addition, our presentation of non-GAAP net income and non-GAAP diluted earnings per common share may not be comparable to the presentation of such metrics by other companies. Non-GAAP diluted earnings per common share is computed by dividing non-GAAP net income attributable to World Fuel and available to common shareholders by the sum of the weighted average number of shares of common stock, stock units, restricted stock entitled to dividends not subject to forfeiture and vested RSUs outstanding during the period and the number of additional shares of common stock that would have been outstanding if our outstanding potentially dilutive securities had been issued. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures.2014 compared to 2013Revenue. Our revenue for 2014 was $43.4 billion, an increase of $1.8 billion, or 4.4%, as compared to 2013. Our revenue during these periods was attributable to the following segments (in millions):2014 2013 17,268.8 16,087.6 1,181.2 13,843.3 14,790.3 (947.0) 12,274.3 10,684.0 1,590.3 43,386.4 41,561.9 1,824.5 Our aviation segment revenue for 2014 was $17.3 billion, an increase of $1.2 billion, or 7.3% as compared to 2013. Of the increase in aviation segment revenue, $2.5 billion was due to increased volume attributable to new and existing customers, which was partially offset by $1.3 billion due to a decrease in the average price per gallon sold as a result of lower average jet fuel prices in 2014 as compared to 2013.26Our marine segment revenue for 2014 was $13.8 billion, a decrease of $0.9 billion, or 6.4% as compared to 2013. Of the decrease in marine segment revenue, $0.5 billion was due to decreased volume and $0.4 billion was due to a decrease in the average price per metric ton sold in 2014 as compared to 2013.Our land segment revenue for 2014 was $12.3 billion, an increase of $1.6 billion, or 14.9%, as compared to 2013. Of the increase in land segment revenue, $2.1 billion was due to revenue from acquired businesses and $0.6 billion was due to increased volume attributable to new and existing customers, which was partially offset by $1.1 billion due to a decrease in the average price per gallon sold as a result of lower average land fuel prices in 2014 as compared to 2013.Gross Profit. Our gross profit for 2014 was $813.6 million, an increase of $60.8 million, or 8.1%, as compared to 2013. Our gross profit during these periods was attributable to the following segments (in millions):2014 2013 321.6 327.2 (5.6) 205.6 177.1 28.5 286.4 248.5 37.9 813.6 752.8 60.8 Our aviation segment gross profit for 2014 was $321.6 million, a decrease of $5.6 million, or 1.7%, as compared to 2013. Of the decrease in aviation segment gross profit, $67.4 million was due to lower gross profit per gallon sold principally due to changes in customer mix. This decrease was partially offset by an increase of $49.4 million due to increased volume attributable to new and existing customers and $12.4 million due to gross profit from acquired businesses.Our marine segment gross profit for 2014 was $205.6 million, an increase of $28.5 million, or 16.1%, as compared to 2013. Of the increase in marine segment gross profit, $35.0 million was due to increased gross profit per metric ton sold principally due to certain higher margin business activity, which was partially offset by $6.5 million due to decreased volume.Our land segment gross profit for 2014 was $286.4 million, an increase of $37.9 million, or 15.3%, as compared to 2013. Of the increase in land segment gross profit, $51.2 million was due to gross profit from acquired businesses and $13.6 million was due to increased volume attributable to new and existing customers. This increase was partially offset by $17.0 million in lower gross profit per gallon sold principally due to fluctuations in customer mix. Additionally, our crude oil transloading joint venture, which was deconsolidated effective December 31, 2013, generated $9.9 million in gross profit in 2013 and is not included in our land segment gross profit in 2014.27Operating Expenses. Total operating expenses for 2014 were $544.5 million, an increase of $56.2 million, or 11.5%, as compared to 2013. The following table sets forth our expense categories (in millions):2014 2013 319.8 288.0 31.8 3.8 11.7 (7.9) 220.9 188.6 32.3 544.5 488.3 56.2 The $31.8 million increase in compensation and employee benefits was principally due to the inclusion of $27.3 million of expenses from acquired businesses and an executive non-renewal charge of $4.8 million related to the non-renewal of the employment agreement of our former Executive Chairman of the Board of Directors. The $7.9 million decrease in provision for bad debt was primarily due to an overall decrease in accounts receivable balances throughout the second half of the year as a result of declining world oil prices. The $32.3 million increase in general and administrative expenses was due to the inclusion of $24.6 million in expenses from acquired businesses and acquisition related expenses and $7.7 million principally due to increased professional fees and general insurance expenses.Income from Operations. Our income from operations for 2014 was $269.1 million, an increase of $4.6 million, or 1.7%, as compared to 2013. Income from operations during these periods was attributable to the following segments (in millions):2014 2013 142.3 150.9 (8.6) 90.0 73.8 16.2 90.3 84.8 5.5 322.6 309.5 13.1 53.5 45.0 8.5 269.1 264.5 4.6 Our aviation segment income from operations for 2014 was $142.3 million, a decrease of $8.6 million, or 5.7%, as compared to 2013. This decrease resulted from $5.6 million in lower gross profit and a $3.0 million increase in operating expenses. Of the increase in aviation segment operating expenses, $9.6 million was due to the inclusion of acquired businesses, which was partially offset by a decrease of $6.6 million principally due to compensation and employee benefits.Our marine segment income from operations for 2014 was $90.0 million, an increase of $16.2 million, or 21.9%, as compared to 2013. This increase resulted from $28.6 million in higher gross profit, which was partially offset by an increase of $12.3 million in operating expenses. The increase in marine segment operating expenses was principally due to compensation and employee benefits.Our land segment income from operations for 2014 was $90.3 million, an increase of $5.5 million, or 6.5%, as compared to 2013. This increase resulted from $37.9 million in higher gross profit which was partially offset by an increase of $32.4 million in operating expenses. Of the increase in land segment operating expenses, $40.0 million was due to the inclusion of acquired businesses, which was partially offset by a decrease of $7.6 million principally due to compensation and employee benefits and provision for bad debt. Corporate overhead costs not charged to the business segments for 2014 were $53.5 million, an increase of $8.5 million, or 18.8%, as compared to 2013. This increase was primarily attributable to the $4.8 million executive non-renewal charge and $3.8 million in increased professional fees.Non‑Operating Income (Expenses), net. For 2014, we had non-operating income, net of $0.4 million, as compared to non-operating expenses, net of $17.7 million in 2013. This $18.1 million change was due to an $18.1 million gain on the sale of our crude oil joint venture interests in December 2014. Also impacting the change was a $8.0 million increase in interest expense and other financing costs, net, as a result of higher average borrowings in 2014 as compared to 2013, offset by a $5.4 million increase in earnings from our equity investments and a $2.6 million decrease in other non-operating expenses. The increase in earnings from our equity investments is principally related to the 2013 deconsolidation of our crude oil transloading joint venture effective December 31, 2013, which thereafter was accounted for under the equity method until its sale in December 2014.28Income Taxes. For 2014, our effective income tax rate was 19.0% and our income tax provision was $51.1 million, as compared to an effective income tax rate of 16.0% and an income tax provision of $39.5 million for 2013. The higher effective income tax rate for 2014 resulted primarily from differences in the results of our subsidiaries in tax jurisdictions with different income tax rates and a U.S. gain on the sale of the crude oil joint venture interests as compared to 2013. Without the gain on the sale of the crude oil joint venture interests, for 2014, our effective income tax rate would have been 17.7%.Net (Loss) Income Attributable to Noncontrolling Interest. For 2014, net loss attributable to noncontrolling interest was $3.3 million as compared to net income attributable to noncontrolling interest of $4.1 million for 2013. This $7.4 million change is primarily related to the deconsolidation of our crude oil transloading joint venture effective December 31, 2013. Prior to the deconsolidation of this joint venture, its results were included in our results of operations and we recorded net income attributable to noncontrolling interest.Net Income and Diluted Earnings per Common Share. Our net income for 2014 was $221.7 million, an increase of $18.7 million, or 9.2%, as compared to 2013. Diluted earnings per common share for 2014 was $3.11 per common share, an increase of $0.28 per common share, or 9.9% as compared to 2013.Non‑GAAP Net Income and Non‑GAAP Diluted Earnings per Common Share. Our non‑GAAP net income for 2014 was $249.1 million, an increase of $18.6 million, or 8.1%, as compared to 2013. Non‑GAAP diluted earnings per common share for 2014 was $3.49 per common share, an increase of $0.27 per common share, or 8.4%, as compared to 2013. The following table sets forth the reconciliation between our net income and non‑GAAP net income for 2014 and 2013 (in millions):2014 2013 221.7 203.1 9.9 11.2 22.4 14.4 1.9 1.8 3.0 (9.8) 249.1 230.5 The following table sets forth the reconciliation between our diluted earnings per common share and our non‑GAAP diluted earnings per common share for 2014 and 2013:2014 2013 3.11 2.83 0.14 0.16 0.31 0.20 0.03 0.03 0.04 (0.14) 3.49 3.22 The non‑GAAP financial measures exclude costs associated with share based compensation, amortization of acquired intangible assets, expenses related to acquisitions, the executive non-renewal charge and the gain on the sale of the crude oil venture interests (net of certain related operating expenses) primarily because we do not believe they are reflective of the Company’s core operating results. We believe the exclusion of share‑based compensation from operating expenses is useful given the variation in expense that can result from changes in the fair value of our common stock, the effect of which is unrelated to the operational conditions that give rise to variations in the components of our operating costs. Also, we believe the exclusion of the amortization of acquired intangible assets, the expenses related to acquisitions, the executive non-renewal charge and the gain on the sale of the crude oil venture interests (net of certain related operating expenses) are useful for purposes of evaluating operating performance of our core operating results and comparing them period‑over‑ period. We believe that these non‑GAAP financial measures, when considered in conjunction with our financial information prepared in accordance with GAAP, are useful to investors to further aid in evaluating the ongoing financial performance of the Company and to provide greater transparency as supplemental information to our GAAP results. Non‑GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information 29prepared in accordance with GAAP. In addition, our presentation of non‑GAAP net income and non‑GAAP diluted earnings per common share may not be comparable to the presentation of such metrics by other companies. Non‑GAAP diluted earnings per common share is computed by dividing non‑GAAP net income attributable to World Fuel and available to common shareholders by the sum of the weighted average number of shares of common stock, stock units, restricted stock entitled to dividends not subject to forfeiture and vested RSUs outstanding during the period and the number of additional shares of common stock that would have been outstanding if our outstanding potentially dilutive securities had been issued. Investors are encouraged to review the reconciliation of these non‑GAAP measures to their most directly comparable GAAP financial measures.2014 and 2013.2014. For additional details, please see the consolidated statements of cash flows in the consolidated financial statements.2015 2014 2013 447.5 141.2 264.3 (144.7) (297.1) (174.5) (17.1) 169.5 29.5 2016 2015 2014 Net cash provided by operating activities $ 205.2 $ 447.5 $ 141.1 Net cash used in investing activities (428.5 ) (144.8 ) (297.1 ) Net cash provided by financing activities 340.9 (17.0 ) 169.5 $141.2$141.1 million for 2014. The $306.3 million increase in operating cash flows was primarily due to year-over-year changes in assets and liabilities, net of acquisitions. Specifically, in 2015 changes in cash collateral with financial counterparties provided cash of $133.3 million as compared to cash used of $288.0 million in 2014. This $421.4 million positive cash flow change was due to the sharp decline in fuel prices in the latter part of 2014, which directly impacted the amount of collateral we were required to post with our financial counterparties in connection with our commodity contracts during 2014, and the subsequent maturation of these contracts in 2015. Additionally, in 2015 changes in short-term derivative assets provided cash of $81.5 million as compared to cash used of $265.8 million in 2014. This $347.2 million positive cash flow change was offset by a $373.3 million negative cash flow change in short-term derivative liabilities, reported within accrued expenses and other current liabilities, both of which primarily related to the decline in fuel prices and, to a lesser extent, an increase in the volume of commodity contracts executed with counterparties. The net positive cash flow changes noted above were partially offset by a $150.9 million cash flow change in inventories due to the continued decline in fuel prices.$144.7$144.8 million as compared to $297.1 million for 2014. The $152.4$152.3 million decrease in cash used in investing activities was principally due to a decrease in the cash used for the acquisition of businesses in 2015 as compared to 2014.$17.1$17.0 million as compared to $169.5 million provided by financing activities for 2014. The $186.6 million decrease in cash provided by financing activities was principally due to a $126.6 $126.5 milliondecrease in net borrowing in 2015 as compared to 2014 and $60.5 million increase of common stock repurchases in 2015 as compared to 2014.2014 compared to 2013Operating Activities. For 2014, net cash provided by operating activities was $141.2 million as compared to $264.3 million for 2013. The $123.1 million decrease in operating cash flows was principally due to unfavorable year‑over‑year changes in assets and liabilities, net of acquisitions.Investing Activities. For 2014, net cash used in investing activities was $297.1 million as compared to $174.5 million for 2013. The $122.6 million increase in cash used in investing activities was principally due to an increase in the cash used for the acquisition of businesses in 2014Financing Activities. For 2014, net cash provided by financing activities was $169.5 million as compared to $29.5 million for 2013. The $140.0 million increase in cash provided by financing activities was principally due to increased net borrowing under our Credit Facility in 2014 compared to 2013.20152016 and 2014,2015, we had cash and cash equivalents of $582.5$698.6 million and $302.3$582.5 million, respectively. Our primary uses of cash and cash equivalents are to fund accounts receivable, purchase inventory and make strategic investments, primarily acquisitions.acquisitions, and to purchase inventory. We are usually extended unsecured trade credit from nearly all of our suppliers for our fuel purchases; however, certaina small number of suppliers require us to either prepay or provide a letter of credit. Increases in oil prices can negatively affect liquidity by increasing the amount of cash needed to fund fuel purchases as well as reducing the amount of fuel which we can purchase on an unsecured basis from our suppliers.In 2015, we committed to undertake a multi-year project designed to drive greater improvement in operating efficiencies and optimize scalability designed to incorporate acquisitions that we may undertake in the future. We will accomplish this 30in part by a global design and deployment of an upgrade to our existing ERP platform. We are currently in the early planning phase and the cost incurred to date is not considered significant. We expect the total cost of the project over the next three years to range between $30.0 million and $40.0 million.Loans.Loans We have a. On October 26, 2016, we amended our Credit Facility which permits borrowing upadded a new $520.0 million Term Loan facility, thereby increasing the aggregate outstanding Term Loans to $1.26 billion with a sublimit of $400.0approximately $840.0 million, for the issuance of letters of credit and bankers’ acceptances. Under the Credit Facility, we have theexpanded our right to request increases in available borrowings up to an additional $150.0$200.0 million, subject to the satisfaction of certain conditions. The amended Credit Facility matures in October 2018.2021. We had outstanding borrowings under our Credit Facility totaling $416.0$325.2 million and $420.0$416.0 million as of December 31, 20152016 and 2014,December 31, 2015, respectively. Our issued letters of credit under the Credit Facility totaled $5.5$8.3 million and $14.8$5.5 million as of December 31, 20152016 and 2014,December 31, 2015, respectively. We also had $333.2$840.0 million and $241.3$333.2 million in Term Loans outstanding as of December 31, 20152016 and 2014,December 31, 2015, respectively. As of December 31, 20152016 and 2014,December 31, 2015, the unused portion of our Credit Facility was $926.5 million and $838.5 million, and $665.2 million, respectively.2015,2016, we were in compliance with all financial and other covenants contained in our Credit Facility and our Term Loans.20152016 and 2014,December 31, 2015, our outstanding letters of credit and bank guarantees under these credit lines totaled $208.4$176.5 million and $211.4$208.4 million, respectively. We also have Receivables Purchase Agreements (“RPAs”) that allow for the sale of up to an aggregate of $499.0$600.0 million of our accounts receivable. As of December 31, 2015,2016, we had sold accounts receivable of $118.4$235.5 million under the RPAs.Short‑Term Debt.Short-Term Debt. As of December 31, 2015,2016, our short‑termshort-term debt of $25.5$15.4 million primarily represents the current maturities (within the next twelve months) of Term Loan borrowing,borrowings, certain promissory notes related to acquisitions and capital lease obligations.20152016 (of which $137.3$176.4 million was available for use by our U.S. subsidiaries without incurring additional costs) and available funds from our Credit Facility, together with cash flows generated by operations, remain sufficient to fund our working capital and capital expenditure requirements for at least the next twelve months. In addition, to further enhance our liquidity profile, we may choose to raise additional funds which may or may not be needed for additional working capital, capital expenditures or other strategic investments. Our opinions concerning liquidity are based on currently available information. To the extent this information proves to be inaccurate, or if circumstances change, future availability of trade credit or other sources of financing may be reduced and our liquidity would be adversely affected. Factors that may affect the availability of trade credit or other forms of financing include our financial performance (as measured by various factors, including cash provided by operating activities), the state of worldwide credit markets, and our levels of outstanding debt. Depending on the severity and direct impact of these factors on us, financing may be limited or unavailable on terms favorable to us.67 and 78 in the notes to the consolidated financial statements in Item 15 of this 20152016 10‑K Report.31As of December 31, 2015, our contractual obligations were as follows (in millions):831.3 46.8 779.5 3.6 1.4 176.2 42.1 54.7 33.9 45.5 7.2 6.0 1.2 75.0 69.6 5.4 65.8 57.7 8.1 7.6 5.3 2.3 1,163.1 227.5 851.2 37.5 46.9
Off‑Balance
Total | < 1 year | 1-3 years | 3-5 years | > 5 years | |||||||||||||||
Debt and interest obligations | $ | 1,353.5 | $ | 50.4 | $ | 132.0 | $ | 1,169.0 | $ | 2.2 | |||||||||
Operating lease obligations | 149.8 | 38.4 | 46.8 | 29.8 | 34.7 | ||||||||||||||
Employment agreement obligations | 1.3 | 1.3 | — | — | — | ||||||||||||||
Derivatives obligations | 369.6 | 323.2 | 46.4 | — | — | ||||||||||||||
Purchase commitment obligations | 143.5 | 137.8 | 5.7 | — | — | ||||||||||||||
Other obligations | 13.5 | 8.5 | 4.1 | 0.7 | 0.2 | ||||||||||||||
Total | $ | 2,031.2 | $ | 559.6 | $ | 235.1 | $ | 1,199.5 | $ | 37.0 |
Although we analyze customers’ payment history and creditworthiness, we cannot predict with certainty that the customers to whom we extend credit will be able to remit payments on a timely basis, or at all. Because we extend credit on an unsecured basis to most of our customers, there is a possibility that any accounts receivable not collected will ultimately need to be written off. Write-offs for the year ended December 31, 2016 did not have a significant impact on our consolidated statement of operations.
32
of current or future credit worthiness of our customers, particularly in these difficult economic and financial markets. AccountsAs a result of the limited predictability inherent in estimating which customers are less likely or unlikely to remit amounts owed to us, our provision for estimated credit losses may not be sufficient. Any write-off of accounts receivable are reduced byin excess of our provision for estimated credit losses would have an allowance for bad debt.
adverse effect on our results of operations.
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Step 1 requires us to compare the fair value of the reporting units to which goodwill was assigned to their respective carrying values. In calculating fair value, we use the income approach as our primary indicator of fair value. Under the income approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows. These estimates are based on a number of factors including industry experience, business expectations and the economic environment. If the fair value exceeds the carrying value, no further work is required and no impairment loss is recognized. If the carrying value exceeds the fair value, the goodwill of the reporting unit is potentially impaired and the Company would then complete step 2 in order to measure the impairment loss.
Our impairment analysis of our intangible assets not subject to amortization (primarily trademarks and/or trade names) generally involves the use of qualitative and quantitative analyses to estimate whether the estimated future cash flows generated as a result of these assets will be greater than or equal to the carrying value assigned to such assets. We have not historically incurred any impairment losses associated with our intangible assets.
We utilize our historical forfeiture rates to calculate future expected forfeitures. These estimates can vary significantly from actual forfeiture rates experienced. Our estimated forfeiture rates have historically approximated actual forfeitures.
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The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of businesses. This standard is effective at the beginning of our 2018 fiscal year. We are currently evaluating whether the adoption of this new guidance will have a significant impact on our consolidated financial statements and related disclosures.
Derivatives
The following describes
Cash Flow Hedges. Includes certain commodityinstruments as either cash flow or fair value hedges. Derivative instruments that are not designated are considered non-designated hedges and are designed to achieve an economic offset of the underlying price risk exposure. Financial instruments and positions affecting the financial statements of the company are described below and are held primarily for hedging purposes. As a result, any changes in income associated with our derivatives contracts we enter intoare substantially offset by corresponding changes in the value of the underlying risk being mitigated.
Fair Value Hedges. Includes derivatives we enter into in order to hedge price risk associated with our inventory and certain firm commitments relating to fixed price purchase and sale contracts.
Non-designated Derivatives. Includes derivatives we primarily enter into in order to mitigate the risk of market price fluctuations in aviation, marine and land fuelchanges in the formprice of swaps or futures as well as certain fixed price purchase and sale contracts and proprietary trading.our inventory in a fair value hedge relationship. In addition, non-designatedwe use derivatives are also entered intoas economic hedges or to hedgeoptimize the riskvalue of currency rate fluctuations.
35
our fuel inventory by engaging in trading activities to capitalize on anticipated market opportunities. As of December 31, 2016, and December 31, 2015, the notional and fair market values of our commodity-based derivative instruments at their respective fair value positionsposition were as follows (in millions, except weighted average fixed pricecontract price):
Commodity Contracts (In millions of BBL) | As of December, 31 2016 | As of December, 31 2015 | ||||||||||||||||||
Hedge Strategy | Derivative Instrument | Settlement Period | Notional Net Long/ (Short) | Weighted Average Contract Price | Fair Value Amount | Notional Net Long/ (Short) | Weighted Average Contract Price | Fair Value Amount | ||||||||||||
Designated hedge | Commodity contracts hedging inventory | 2016 | — | $ | — | $ | — | (3.6 | ) | $ | 60.526 | $ | 29.0 | |||||||
2017 | (3.2 | ) | 68.459 | (10.7 | ) | (0.8 | ) | 62.180 | 7.4 | |||||||||||
2018 | (1.0 | ) | 69.559 | (5.0 | ) | — | — | — | ||||||||||||
$ | (15.7 | ) | $ | 36.4 | ||||||||||||||||
Non-designated hedge | Commodity contracts | 2016 | — | — | — | (0.1 | ) | 49.720 | 15.4 | |||||||||||
2017 | 0.1 | 54.660 | 13.9 | 0.3 | 26.105 | 0.1 | ||||||||||||||
2018 | 0.2 | 62.461 | 5.5 | 0.1 | 10.640 | 1.4 | ||||||||||||||
2019 | — | 71.250 | 0.7 | — | — | — | ||||||||||||||
2020 | — | 17.080 | 0.6 | — | 20.295 | 0.5 | ||||||||||||||
Thereafter | — | 4.340 | 0.1 | — | — | — | ||||||||||||||
$ | 20.8 | $ | 17.4 | |||||||||||||||||
Total commodity derivative contracts | $ | 5.1 | $ | 53.8 |
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| Notional |
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| Price |
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| Amount |
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| Amount |
Fair Value Hedge |
| 2016 |
| Commodity contracts for inventory hedging |
| 2.8 |
| BBL |
| $ | 54.104 |
| $ | 4.929 |
| $ | 13.8 |
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| 2017 |
| Commodity contracts for inventory hedging |
| 0.1 |
| BBL |
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| 57.576 |
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| 5.000 |
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| 0.5 |
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Cash Flow Hedge |
| 2016 |
| Commodity contracts for inventory hedging |
| 9.8 |
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| 66.947 |
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| 0.847 |
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| 8.3 |
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| 2017 |
| Commodity contracts for inventory hedging |
| 0.8 |
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| 66.784 |
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| 8.625 |
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| 6.9 |
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| Commodity contracts (long) |
| 50.9 |
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| 45.030 |
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| (811.1) |
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| 2016 |
| Commodity contracts (short) |
| 41.8 |
| BBL |
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| 54.410 |
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| 19.770 |
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| 826.4 |
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| 2017 |
| Commodity contracts (long) |
| 3.1 |
| BBL |
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| 25.400 |
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| (7.6) |
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| 2017 |
| Commodity contracts (short) |
| 2.3 |
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| 26.810 |
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| 3.348 |
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| 7.7 |
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| Commodity contracts (long) |
| 0.7 |
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| 10.000 |
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| 2.857 |
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| 2.0 |
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| Commodity contracts (short) |
| 0.5 |
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| 11.280 |
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| 2020 |
| Commodity contracts (long) |
| 0.1 |
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| 21.750 |
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| 2020 |
| Commodity contracts (short) |
| 0.1 |
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| 18.840 |
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| 6.000 |
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| 0.6 |
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| 2016 |
| Foreign currency contracts |
| 6.5 |
| AUD |
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| 0.717 |
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| Foreign currency contracts |
| 4.3 |
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| Foreign currency contracts |
| 82.8 |
| CAD |
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| Foreign currency contracts |
| 0.3 |
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| 2016 |
| Foreign currency contracts |
| 4,199.0 |
| CLP |
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| 702.379 |
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|
| 2016 |
| Foreign currency contracts |
| 52,263.5 |
| COP |
|
| 3,064.704 |
|
| — |
|
| 0.1 |
|
| 2016 |
| Foreign currency contracts |
| 73.8 |
| DKK |
|
| 6.854 |
|
| (0.003) |
|
| (0.2) |
|
| 2016 |
| Foreign currency contracts |
| 45.7 |
| EUR |
|
| 1.099 |
|
| 0.033 |
|
| 1.5 |
|
| 2016 |
| Foreign currency contracts |
| 124.7 |
| GBP |
|
| 1.530 |
|
| 0.023 |
|
| 2.9 |
|
| 2016 |
| Foreign currency contracts |
| 111.4 |
| INR |
|
| 66.366 |
|
| — |
|
| — |
|
| 2016 |
| Foreign currency contracts |
| 546.3 |
| JPY |
|
| 120.938 |
|
| — |
|
| — |
|
| 2016 |
| Foreign currency contracts |
| 1,794.6 |
| MXN |
|
| 16.803 |
|
| — |
|
| (0.1) |
|
| 2016 |
| Foreign currency contracts |
| 47.3 |
| NOK |
|
| 8.474 |
|
| 0.004 |
|
| 0.2 |
|
| 2016 |
| Foreign currency contracts |
| 12.6 |
| PLN |
|
| 3.892 |
|
| 0.008 |
|
| 0.1 |
|
| 2016 |
| Foreign currency contracts |
| 42.9 |
| RON |
|
| 4.083 |
|
| 0.014 |
|
| 0.6 |
|
| 2016 |
| Foreign currency contracts |
| 45.6 |
| SEK |
|
| 8.343 |
|
| (0.002) |
|
| (0.1) |
|
| 2016 |
| Foreign currency contracts |
| 23.8 |
| SGD |
|
| 1.411 |
|
| (0.004) |
|
| (0.1) |
|
| 2016 |
| Foreign currency contracts |
| 109.3 |
| ZAR |
|
| 14.245 |
|
| 0.001 |
|
| 0.1 |
|
| 2017 |
| Foreign currency contracts |
| 1.8 |
| EUR |
|
| 1.083 |
|
| — |
|
| — |
|
| 2017 |
| Foreign currency contracts |
| 8.0 |
| GBP |
|
| 1.553 |
|
| 0.063 |
|
| 0.5 |
|
| 2017 |
| Foreign currency contracts |
| 1.7 |
| EUR |
|
| 1.105 |
|
| — |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 24.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December, 31 2016 | |||||||||
Settlement Period | Unit | Notional Net Long/(Short) | Weighted Average Contract Price | Fair Value Amount | |||||
2017 | AUD | (5.0 | ) | 0.760 | $ | 0.2 | |||
2017 | CAD | (64.0 | ) | 1.330 | 1.1 | ||||
2017 | CHF | (0.6 | ) | 0.990 | — | ||||
2017 | CLP | (245.5 | ) | 671.730 | — | ||||
2017 | COP | (20,701.7 | ) | 3,033.920 | — | ||||
2017 | DKK | (130.2 | ) | 6.850 | 0.6 | ||||
2017 | EUR | (32.0 | ) | 1.110 | 2.1 | ||||
2017 | GBP | (7.4 | ) | 1.280 | 4.3 | ||||
2017 | INR | (72.4 | ) | 67.660 | — | ||||
2017 | JPY | (341.4 | ) | 103.330 | 0.4 | ||||
2017 | KRW | (11,735.9 | ) | 1,147.470 | 0.5 | ||||
2017 | MXN | 123.4 | 20.010 | (0.5 | ) | ||||
2017 | NOK | (34.2 | ) | 8.350 | 0.2 | ||||
2017 | NZD | (0.9 | ) | 0.710 | — | ||||
2017 | PHP | (8.0 | ) | 49.410 | — | ||||
2017 | PLN | (9.7 | ) | 3.980 | 0.1 | ||||
2017 | RON | (3.9 | ) | 4.070 | 0.1 | ||||
2017 | SEK | 30.3 | 8.630 | (0.2 | ) | ||||
2017 | SGD | (15.6 | ) | 1.390 | 0.4 | ||||
2017 | ZAR | 1.0 | 14.130 | — | |||||
2018 | EUR | (1.7 | ) | 1.110 | 0.1 | ||||
2018 | GBP | (1.4 | ) | 1.370 | 0.2 | ||||
2019 | GBP | (0.6 | ) | 1.400 | 0.1 | ||||
Total foreign currency exchange derivative contracts | $ | 9.6 |
Foreign Currency
We analyzed our assets and liabilities denominated in currencies other than their respective functional currencies to identify consolidated currency exposures as of December 31, 2015, including derivatives utilized to hedge such exposures. For these assets and liabilities, we then assessed the effect of a hypothetical uniform 10% strengthening in the value of the U.S. dollar relative to these other currencies. This analysis indicated that the effect on our income before income taxes would not be significant.
36
2016.
2016.
The most significant of the acquisitions, representing 3.1% and 2.3% of consolidated total assets and consolidated total revenues, were PAPCO and APP, respectively.As of December 31, 2015, we have included the Watson Petroleum and Colt businesses, which were acquired in 2014, in our assessment of the effectiveness of our internal control over financial reporting.
37
There were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the quarter ended December 31, 2015.
2016.
38
PART III
2016.
2016.
2016.
2016.
39
PART IV
(a)(1) | The following consolidated financial statements are filed as a part of this | |||||
(a)(2) | Consolidated financial statement schedules have been omitted either because the required information is set forth in the consolidated financial statements or notes thereto, or the information called for is not required. | |||||
| ||||||
(b) | The exhibits set forth in the following index of exhibits are filed or incorporated by reference as a part of this |
40
|
| |||
| Description | |||
3.1 | Restated Articles of Incorporation (incorporated by reference herein to Exhibit 99.2 to our Current Report on Form 8‑K filed on February 3, 2005). | |||
3.2 | Articles of Amendment to Restated Articles of Incorporation (incorporated by reference herein to Exhibit 3.1 to our Current Report on Form 8‑K filed on November 23, 2009). | |||
3.3 | By‑Laws, amended and restated as of August 26, 2011 (incorporated by reference herein to Exhibit 3.1 to our Current Report on Form 8‑K filed on August 29, 2011). | |||
10.1 |
| |||
|
| |||
|
| |||
| Agreement between World Fuel Services Corporation and Michael J. Kasbar, dated March 14, 2008 (incorporated by reference herein to Exhibit 10.2 to our Current Report on Form 8‑K filed on March 20, 2008). * | |||
| Amendment No. 1, dated August 26, 2011, to Agreement between World Fuel Services Corporation and Michael J. Kasbar (incorporated by reference herein to Exhibit 10.1 to our Current Report on Form 8‑K filed on August 29, 2011). * | |||
| Amendment No. 2, dated April 9, 2012, to Agreement between World Fuel Services Corporation and Michael J. Kasbar (incorporated by reference herein to Exhibit 10.1 to our Current Report on Form 8‑K filed on April 13, 2012). * | |||
| Amendment No. 3, dated April 11, 2014, to Agreement between World Fuel Services Corporation and Michael J. Kasbar (incorporated by reference herein to Exhibit 10.2 to our Current Report on Form 8‑K filed on April 11, 2014). * | |||
| Executive Severance Agreement between World Fuel Services Corporation and Ira M. Birns, dated April 16, 2007 (incorporated by reference herein to Exhibit 10.2 to our Current Report on Form 8‑K filed on April 16, 2007). * | |||
|
| |||
|
| |||
|
| |||
|
| |||
| 2001 Omnibus Plan, as amended and restated (incorporated by reference herein to Exhibit 4.2 to our Registration Statement on Form S‑8 (Registration No. 333-130528) filed on December 20, 2005). * | |||
| 2006 Omnibus Plan (incorporated by reference herein to Appendix A to the | |||
| 2016 Omnibus Plan (incorporated by reference herein to Exhibit 10.1 to our Current Report on Form 8-K filed on June 2, 2016).* | |||
10.9 | World Fuel Services Corporation 2013 Executive Incentive Plan (incorporated by reference herein to Exhibit 10.1 to our Current Report on Form 8‑K filed on June 4, 2013). * | |||
| Form of Named Executive Officer Restricted Stock Unit Grant Agreement under the 2006 Omnibus Plan (incorporated by reference herein to Exhibit 10.4 to our Quarterly Report on Form 10‑Q for the quarter ended June 30, 2011 filed on August 2, 2011). * | |||
| Form of Named Executive Officer Restricted Stock Grant Agreement under the 2006 Omnibus Plan (incorporated by reference herein to Exhibit 10.5 to our Quarterly Report on Form 10‑Q for the quarter ended June 30, 2011 filed on August 2, 2011). * | |||
| Form of Stock‑Settled Stock Appreciation Right Agreement in connection with the 2006 Omnibus Plan (incorporated by reference herein to Exhibit 10.3 to our Current Report on Form 8‑K filed on November 7, 2006). * | |||
| Form of Named Executive Officer Performance‑Based Restricted Stock Grant Agreement under the 2006 Omnibus Plan (incorporated by reference herein to Exhibit 10.1 to our Quarterly Report on Form 10‑Q for the quarter ended September 30, 2012 filed on November 1, 2012). * |
41
|
| |
| Form of Michael J. Kasbar Stock-Settled Stock Appreciation Right Agreement under the 2006 Omnibus Plan (incorporated by reference herein to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 filed on July 30, 2014). * | |
| Form of Michael J. Kasbar Stock-Settled Stock Appreciation Right Agreement (3-year Cliff Vesting) under the 2006 Omnibus Plan. * | |
10.16 | Form of Ira M. Birns Stock-Settled Stock Appreciation Right Agreement under the 2006 Omnibus Plan (incorporated by reference herein to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 filed on July 30, 2014). * | |
| Form of Named Executive Officer Long-Term Incentive Restricted Stock Unit Grant Agreement under the 2006 Omnibus Plan (incorporated by reference herein to Exhibit 10.1 to our Quarterly Report on Form 10‑Q for the quarter ended June 30, 2015 filed on July 30, 2015). * | |
| Form of | |
10.19 | Form of 2013 and 2014 Non-Employee Director Restricted Stock Units Grant Agreement under the 2006 Omnibus Plan (incorporated by reference herein to Exhibit |
|
| |
| Description | |
10.20 | Form of Amendment to 2013 and 2014 Non-Employee Director Restricted Stock Unit Grant Agreements, dated November 24, | |
| Form of Non-Employee Director Restricted Stock | |
| Fourth Amended and Restated Credit Agreement, dated as of October 10, 2013, among World Fuel Services Corporation, World Fuel Services Europe, Ltd. and World Fuel Services (Singapore) Pte Ltd, as borrowers, Bank of America, N.A., as administrative agent, and the financial institutions named therein as lenders (incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on October 11, 2013).* | |
|
| |
| Amendment No. 2 to the Fourth Amended and Restated Credit Agreement, dated as of October 26, 2016, among World Fuel Services Corporation, World Fuel Services Europe, Ltd. and World Fuel Services (Singapore) Pte Ltd, as borrowers, Bank of America, N.A., as administrative agent, and the financial institutions named therein as lenders (incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on October 27, 2016). | |
21.1 | Subsidiaries of the Registrant. | |
23.1 | Consent of Independent Registered Certified Public Accounting Firm. | |
31.1 | Certification of the Chief Executive Officer pursuant to Rule 13a‑14(a) or Rule 15d‑14(a). | |
31.2 | Certification of the Chief Financial Officer pursuant to Rule 13a‑14(a) or Rule 15d‑14(a). | |
32.1 | Statement of Chief Executive Officer and Chief Financial Officer under Section 906 of the Sarbanes‑Oxley Act of 2002 (18 U.S.C. Section 1350). | |
101 | The following materials from World Fuel Services Corporation’s Annual Report on Form 10‑K for the year ended December 31, |
42
2016
. The most significant of the acquisitions, representing 3.1% and 2.3% of consolidated total assets and consolidated total revenues, were PAPCO, Inc. and Associated Petroleum Products, Inc., respectively.43
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
|
|
|
|
|
|
|
|
| As of December 31, | ||||
|
| 2015 |
| 2014 | ||
Assets: |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 582.5 |
| $ | 302.3 |
Accounts receivable, net |
|
| 1,812.6 |
|
| 2,306.4 |
Inventories |
|
| 359.1 |
|
| 437.6 |
Prepaid expenses |
|
| 57.9 |
|
| 76.9 |
Short-term derivative assets, net |
|
| 227.2 |
|
| 303.6 |
Other current assets |
|
| 209.8 |
|
| 246.6 |
Current assets held for sale |
|
| 5.5 |
|
| — |
Total current assets |
|
| 3,254.6 |
|
| 3,673.4 |
Property and equipment, net |
|
| 225.6 |
|
| 203.4 |
Goodwill |
|
| 675.8 |
|
| 653.3 |
Identifiable intangible and other non-current assets |
|
| 356.9 |
|
| 350.9 |
Non-current assets held for sale |
|
| 36.5 |
|
| — |
Total assets |
| $ | 4,549.4 |
| $ | 4,881.0 |
Liabilities: |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Short-term debt |
| $ | 25.5 |
| $ | 17.9 |
Accounts payable |
|
| 1,349.6 |
|
| 1,850.1 |
Customer deposits |
|
| 118.3 |
|
| 138.8 |
Accrued expenses and other current liabilities |
|
| 263.8 |
|
| 232.5 |
Current liabilities held for sale |
|
| 5.6 |
|
| — |
Total current liabilities |
|
| 1,762.8 |
|
| 2,239.3 |
Long-term debt |
|
| 746.7 |
|
| 672.0 |
Non-current income tax liabilities, net |
|
| 87.7 |
|
| 85.5 |
Other long-term liabilities |
|
| 25.8 |
|
| 19.3 |
Non-current liabilities held for sale |
|
| 5.0 |
|
| — |
Total liabilities |
|
| 2,628.0 |
|
| 3,016.1 |
Commitments and contingencies |
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
World Fuel shareholders’ equity: |
|
|
|
|
|
|
Preferred stock, $1.00 par value; 100 shares authorized, none issued |
|
| — |
|
| — |
Common stock, $0.01 par value; 100,000 shares authorized, 70,788 and 72,082 shares issued and outstanding as of December 31, 2015 and 2014 respectively |
|
| 0.7 |
|
| 0.7 |
Capital in excess of par value |
|
| 435.3 |
|
| 496.4 |
Retained earnings |
|
| 1,588.6 |
|
| 1,418.5 |
Accumulated other comprehensive loss |
|
| (113.2) |
|
| (60.2) |
Total World Fuel shareholders’ equity |
|
| 1,911.4 |
|
| 1,855.4 |
Noncontrolling interest equity |
|
| 10.0 |
|
| 9.5 |
Total equity |
|
| 1,921.4 |
|
| 1,864.9 |
Total liabilities and equity |
| $ | 4,549.4 |
| $ | 4,881.0 |
As of December 31, | |||||||
2016 | 2015 | ||||||
Assets: | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 698.6 | $ | 582.5 | |||
Accounts receivable, net | 2,344.0 | 1,812.6 | |||||
Inventories | 458.0 | 359.1 | |||||
Prepaid expenses | 46.5 | 57.9 | |||||
Short-term derivative assets, net | 58.9 | 220.4 | |||||
Other current assets | 230.6 | 208.0 | |||||
Current assets held for sale | — | 5.5 | |||||
Total current assets | 3,836.6 | 3,246.0 | |||||
Property and equipment, net | 311.2 | 225.6 | |||||
Goodwill | 835.8 | 675.8 | |||||
Identifiable intangible and other non-current assets | 429.1 | 341.4 | |||||
Non-current assets held for sale | — | 36.5 | |||||
Total assets | $ | 5,412.6 | $ | 4,525.3 | |||
Liabilities: | |||||||
Current liabilities: | |||||||
Short-term debt | $ | 15.4 | $ | 25.5 | |||
Accounts payable | 1,770.4 | 1,349.6 | |||||
Customer deposits | 90.8 | 118.3 | |||||
Accrued expenses and other current liabilities | 306.0 | 255.2 | |||||
Current liabilities held for sale | — | 5.6 | |||||
Total current liabilities | 2,182.7 | 1,754.2 | |||||
Long-term debt | 1,170.8 | 746.7 | |||||
Non-current income tax liabilities, net | 84.6 | 87.7 | |||||
Other long-term liabilities | 34.5 | 25.8 | |||||
Non-current liabilities held for sale | — | 5.0 | |||||
Total liabilities | 3,472.6 | 2,619.4 | |||||
Commitments and contingencies | |||||||
Equity: | |||||||
World Fuel shareholders' equity: | |||||||
Preferred stock, $1.00 par value; 0.1 shares authorized, none issued | — | — | |||||
Common stock, $0.01 par value; 100.0 shares authorized, 69.9 and 70.8 issued and outstanding as of December 31, 2016 and December 31, 2015, respectively | 0.7 | 0.7 | |||||
Capital in excess of par value | 399.9 | 435.3 | |||||
Retained earnings | 1,679.3 | 1,569.4 | |||||
Accumulated other comprehensive loss | (154.8 | ) | (109.5 | ) | |||
Total World Fuel shareholders' equity | 1,925.0 | 1,895.9 | |||||
Noncontrolling interest equity | 15.0 | 10.0 | |||||
Total equity | 1,940.0 | 1,905.9 | |||||
Total liabilities and equity | $ | 5,412.6 | $ | 4,525.3 |
44
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
| For the Year ended December 31, | |||||||
|
| 2015 |
| 2014 |
| 2013 | |||
Revenue |
| $ | 30,379.7 |
| $ | 43,386.4 |
| $ | 41,561.9 |
Cost of revenue |
|
| 29,519.2 |
|
| 42,572.8 |
|
| 40,809.1 |
Gross profit |
|
| 860.5 |
|
| 813.6 |
|
| 752.8 |
Operating expenses: |
|
|
|
|
|
|
|
|
|
Compensation and employee benefits |
|
| 365.8 |
|
| 319.8 |
|
| 288.0 |
Provision for bad debt |
|
| 7.5 |
|
| 3.8 |
|
| 11.7 |
General and administrative |
|
| 240.0 |
|
| 220.9 |
|
| 188.6 |
|
|
| 613.3 |
|
| 544.5 |
|
| 488.3 |
Income from operations |
|
| 247.2 |
|
| 269.1 |
|
| 264.5 |
Non-operating (expenses) income, net: |
|
|
|
|
|
|
|
|
|
Interest expense and other financing costs, net |
|
| (29.9) |
|
| (25.2) |
|
| (17.3) |
Other income (expense), net |
|
| 2.0 |
|
| 25.6 |
|
| (0.4) |
|
|
| (27.9) |
|
| 0.4 |
|
| (17.7) |
Income before income taxes |
|
| 219.3 |
|
| 269.5 |
|
| 246.7 |
Provision for income taxes |
|
| 36.3 |
|
| 51.1 |
|
| 39.5 |
Net income including noncontrolling interest |
|
| 183.0 |
|
| 218.4 |
|
| 207.2 |
Net (loss) income attributable to noncontrolling interest |
|
| (3.9) |
|
| (3.3) |
|
| 4.1 |
Net income attributable to World Fuel |
| $ | 186.9 |
| $ | 221.7 |
| $ | 203.1 |
Basic earnings per common share |
| $ | 2.66 |
| $ | 3.13 |
| $ | 2.85 |
Basic weighted average common shares |
|
| 70.2 |
|
| 70.8 |
|
| 71.2 |
Diluted earnings per common share |
| $ | 2.64 |
| $ | 3.11 |
| $ | 2.83 |
Diluted weighted average common shares |
|
| 70.7 |
|
| 71.3 |
|
| 71.8 |
Comprehensive income: |
|
|
|
|
|
|
|
|
|
Net income including noncontrolling interest |
| $ | 183.0 |
| $ | 218.4 |
| $ | 207.2 |
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
| (49.6) |
|
| (30.9) |
|
| (13.2) |
Cash Flow hedges, net of income tax of $0.8 for 2015 |
|
| 0.6 |
|
| — |
|
| (0.1) |
|
|
| (49.0) |
|
| (30.9) |
|
| (13.3) |
Comprehensive income including noncontrolling interest |
|
| 134.0 |
|
| 187.5 |
|
| 193.9 |
Comprehensive income (loss) attributable to noncontrolling interest |
|
| 0.1 |
|
| (3.3) |
|
| 4.1 |
Comprehensive income attributable to World Fuel |
| $ | 133.9 |
| $ | 190.8 |
| $ | 189.8 |
For the Year ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Revenue | $ | 27,015.8 | $ | 30,381.4 | $ | 43,391.8 | |||||
Cost of revenue | 26,116.8 | 29,520.4 | 42,572.7 | ||||||||
Gross profit | 899.0 | 861.0 | 819.1 | ||||||||
Operating expenses: | |||||||||||
Compensation and employee benefits | 413.3 | 365.8 | 319.8 | ||||||||
Provision for bad debt | 15.4 | 7.5 | 3.8 | ||||||||
General and administrative | 281.4 | 242.1 | 218.8 | ||||||||
710.1 | 615.3 | 542.4 | |||||||||
Income from operations | 188.9 | 245.7 | 276.7 | ||||||||
Non-operating expenses, net: | |||||||||||
Interest expense and other financing costs, net | (39.2 | ) | (29.9 | ) | (25.2 | ) | |||||
Other (expense) income, net | (7.5 | ) | 2.0 | 23.3 | |||||||
(46.7 | ) | (27.9 | ) | (1.9 | ) | ||||||
Income before income taxes | 142.1 | 217.7 | 274.8 | ||||||||
Provision for income taxes | 15.7 | 47.2 | 53.6 | ||||||||
Net income including noncontrolling interest | 126.4 | 170.5 | 221.1 | ||||||||
Net loss attributable to noncontrolling interest | — | (3.9 | ) | (3.3 | ) | ||||||
Net income attributable to World Fuel | $ | 126.5 | $ | 174.5 | $ | 224.5 | |||||
Basic earnings per common share | $ | 1.82 | $ | 2.49 | $ | 3.17 | |||||
Basic weighted average common shares | 69.3 | 70.2 | 70.8 | ||||||||
Diluted earnings per common share | $ | 1.81 | $ | 2.47 | $ | 3.15 | |||||
Diluted weighted average common shares | 69.8 | 70.7 | 71.3 | ||||||||
Comprehensive income: | |||||||||||
Net income including noncontrolling interest | $ | 126.4 | $ | 170.5 | $ | 221.1 | |||||
Other comprehensive (loss): | |||||||||||
Foreign currency translation adjustments | (40.4 | ) | (45.4 | ) | (30.8 | ) | |||||
Cash Flow hedges, net of income tax benefit of $4.1 for the twelve months ended December 31, 2016 | (6.6 | ) | (0.8 | ) | — | ||||||
Other comprehensive (loss) | (47.0 | ) | (46.2 | ) | (30.8 | ) | |||||
Comprehensive income including noncontrolling interest | 79.5 | 124.3 | 190.4 | ||||||||
Comprehensive income (loss) attributable to noncontrolling interest | 1.6 | (2.2 | ) | (1.1 | ) | ||||||
Comprehensive income attributable to World Fuel | $ | 77.9 | $ | 126.4 | $ | 191.4 |
45
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capital |
|
|
|
| Accumulated |
| Total |
|
|
|
|
| ||||
|
|
|
|
|
|
| in |
|
|
|
| Other |
| World Fuel |
| Noncontrolling |
|
|
| ||||
|
| Common Stock |
| Excess of |
| Retained |
| Comprehensive |
| Shareholders’ |
| Interest |
| Total | |||||||||
|
| Shares |
| Amount |
| Par Value |
| Earnings |
| Loss |
| Equity |
| Equity |
| Equity | |||||||
Balance as of December 31, 2012 |
| 72.1 |
| $ | 0.7 |
| $ | 517.6 |
| $ | 1,014.8 |
| $ | (16.0) |
| $ | 1,517.1 |
| $ | 24.5 |
| $ | 1,541.6 |
Net income |
| — |
|
| — |
|
| — |
|
| 203.1 |
|
| — |
|
| 203.1 |
|
| 4.1 |
|
| 207.2 |
Cash dividends declared |
| — |
|
| — |
|
| — |
|
| (10.6) |
|
| — |
|
| (10.6) |
|
| — |
|
| (10.6) |
Investment by noncontrolling interest |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 17.5 |
|
| 17.5 |
Distribution of noncontrolling interest |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (15.5) |
|
| (15.5) |
Deconsolidation of crude oil transloading joint venture |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (25.6) |
|
| (25.6) |
Amortization of share-based payment awards |
| — |
|
| — |
|
| 16.1 |
|
| — |
|
| — |
|
| 16.1 |
|
| — |
|
| 16.1 |
Issuance of common stock related to share-based payment awards including income tax benefit of $3.3 |
| 0.7 |
|
| — |
|
| 3.3 |
|
| — |
|
| — |
|
| 3.3 |
|
| — |
|
| 3.3 |
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards |
| — |
|
| — |
|
| (6.8) |
|
| — |
|
| — |
|
| (6.8) |
|
| — |
|
| (6.8) |
Purchases of common stock |
| (0.9) |
|
| — |
|
| (35.0) |
|
| — |
|
| — |
|
| (35.0) |
|
| — |
|
| (35.0) |
Other comprehensive loss |
| — |
|
| — |
|
| — |
|
| — |
|
| (13.3) |
|
| (13.3) |
|
| — |
|
| (13.3) |
Balance as of December 31, 2013 |
| 71.9 |
|
| 0.7 |
|
| 495.2 |
|
| 1,207.3 |
|
| (29.3) |
|
| 1,673.9 |
|
| 5.0 |
|
| 1,678.9 |
Net income |
| — |
|
| — |
|
| — |
|
| 221.7 |
|
| — |
|
| 221.7 |
|
| (3.3) |
|
| 218.4 |
Cash dividends declared |
| — |
|
| — |
|
| — |
|
| (10.5) |
|
| — |
|
| (10.5) |
|
| — |
|
| (10.5) |
Initial noncontrolling interest upon acquisition of businesses |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 19.4 |
|
| 19.4 |
Distribution of noncontrolling interest |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (11.6) |
|
| (11.6) |
Amortization of share-based payment awards |
| — |
|
| — |
|
| 15.3 |
|
| — |
|
| — |
|
| 15.3 |
|
| — |
|
| 15.3 |
Issuance of common stock related to share-based payment awards including income tax benefit of $1.0 |
| 0.5 |
|
| — |
|
| 1.0 |
|
| — |
|
| — |
|
| 1.0 |
|
| — |
|
| 1.0 |
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards |
| (0.1) |
|
| — |
|
| (5.1) |
|
| — |
|
| — |
|
| (5.1) |
|
| — |
|
| (5.1) |
Purchases of common stock |
| (0.2) |
|
| — |
|
| (10.0) |
|
| — |
|
| — |
|
| (10.0) |
|
| — |
|
| (10.0) |
Other comprehensive loss |
| — |
|
| — |
|
| — |
|
| — |
|
| (30.9) |
|
| (30.9) |
|
| — |
|
| (30.9) |
Balance as of December 31, 2014 |
| 72.1 |
|
| 0.7 |
|
| 496.4 |
|
| 1,418.5 |
|
| (60.2) |
|
| 1,855.4 |
|
| 9.5 |
|
| 1,864.9 |
Net income (loss) |
| — |
|
| — |
|
| — |
|
| 186.9 |
|
| — |
|
| 186.9 |
|
| (3.9) |
|
| 183.0 |
Cash dividends declared |
| — |
|
| — |
|
| — |
|
| (16.8) |
|
| — |
|
| (16.8) |
|
| — |
|
| (16.8) |
Investment by noncontrolling interest |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 0.5 |
|
| 0.5 |
Distribution of noncontrolling interest |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (0.2) |
|
| (0.2) |
Amortization of share-based payment awards |
| — |
|
| — |
|
| 16.8 |
|
| — |
|
| — |
|
| 16.8 |
|
| — |
|
| 16.8 |
Issuance of common stock related to share-based payment awards |
| 0.4 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards |
| (0.1) |
|
| — |
|
| (7.3) |
|
| — |
|
| — |
|
| (7.3) |
|
| — |
|
| (7.3) |
Purchases of common stock |
| (1.6) |
|
| — |
|
| (70.5) |
|
| — |
|
| — |
|
| (70.5) |
|
| — |
|
| (70.5) |
Other comprehensive (loss) income |
| — |
|
| — |
|
| — |
|
| — |
|
| (53.0) |
|
| (53.0) |
|
| 4.0 |
|
| (49.0) |
Other |
| — |
|
| — |
|
| (0.1) |
|
| — |
|
| — |
|
| (0.1) |
|
| 0.1 |
|
| — |
Balance as of December 31, 2015 |
| 70.8 |
| $ | 0.7 |
| $ | 435.3 |
| $ | 1,588.6 |
| $ | (113.2) |
| $ | 1,911.4 |
| $ | 10.0 |
| $ | 1,921.4 |
Common Stock | Capital in Excess of Par Value | Accumulated Other Comprehensive Loss | Total World Fuel Shareholders’ Equity | Noncontrolling Interest Equity | ||||||||||||||||||||||||||
Shares | Amount | Retained Earnings | Total Equity | |||||||||||||||||||||||||||
Balance as of December 31, 2013 | 71.9 | $ | 0.7 | $ | 495.2 | $ | 1,198.1 | $ | (28.5 | ) | $ | 1,665.5 | $ | 5.0 | $ | 1,670.5 | ||||||||||||||
Net income | — | — | — | 224.5 | — | 224.5 | (3.3 | ) | 221.1 | |||||||||||||||||||||
Cash dividends declared | — | — | — | (10.6 | ) | — | (10.6 | ) | — | (10.6 | ) | |||||||||||||||||||
Initial noncontrolling interest upon acquisition of businesses | — | 19.4 | 19.4 | |||||||||||||||||||||||||||
Distribution of noncontrolling interest | — | — | — | — | — | — | (11.6 | ) | (11.6 | ) | ||||||||||||||||||||
Amortization of share-based payment awards | — | — | 15.3 | — | — | 15.3 | — | 15.3 | ||||||||||||||||||||||
Issuance of common stock related to share-based payment awards including income tax benefit of $1.0 million | 0.5 | — | 1.0 | — | — | 1.0 | — | 1.0 | ||||||||||||||||||||||
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards | (0.1 | ) | — | (5.1 | ) | — | — | (5.1 | ) | — | (5.1 | ) | ||||||||||||||||||
Purchases of common stock | (0.2 | ) | — | (10.0 | ) | — | — | (10.0 | ) | — | (10.0 | ) | ||||||||||||||||||
Other comprehensive loss | — | — | — | (30.8 | ) | (30.8 | ) | (30.8 | ) | |||||||||||||||||||||
Balance as of December 31, 2014 | 72.1 | 0.7 | 496.4 | 1,412.0 | (59.2 | ) | 1,849.9 | 9.5 | 1,859.4 | |||||||||||||||||||||
Net income | — | — | — | 174.5 | — | 174.5 | (3.9 | ) | 170.5 | |||||||||||||||||||||
Cash dividends declared | — | — | — | (16.8 | ) | — | (16.8 | ) | — | (16.8 | ) | |||||||||||||||||||
Investment by noncontrolling interest | — | 0.5 | 0.5 | |||||||||||||||||||||||||||
Distribution of noncontrolling interest | — | — | — | — | — | — | (0.2 | ) | (0.2 | ) | ||||||||||||||||||||
Amortization of share-based payment awards | — | — | 16.9 | — | — | 16.9 | — | 16.9 | ||||||||||||||||||||||
Issuance of common stock related to share-based payment awards | 0.4 | — | — | — | — | — | — | — | ||||||||||||||||||||||
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards | (0.1 | ) | — | (7.3 | ) | — | — | (7.3 | ) | — | (7.3 | ) | ||||||||||||||||||
Purchases of common stock | (1.6 | ) | — | (70.5 | ) | — | — | (70.5 | ) | — | (70.5 | ) | ||||||||||||||||||
Other comprehensive (loss) income | — | — | — | — | (50.3 | ) | (50.3 | ) | 4.0 | (46.2 | ) | |||||||||||||||||||
Other | — | (0.1 | ) | (0.3 | ) | (0.4 | ) | 0.1 | (0.3 | ) | ||||||||||||||||||||
Balance as of December 31, 2015 | 70.8 | 0.7 | 435.3 | 1,569.4 | (109.5 | ) | 1,895.9 | 10.0 | 1,905.9 | |||||||||||||||||||||
Net income | — | — | — | 126.5 | — | 126.5 | — | 126.4 | ||||||||||||||||||||||
Cash dividends declared | — | — | — | (16.6 | ) | — | (16.6 | ) | — | (16.6 | ) | |||||||||||||||||||
Distribution of noncontrolling interest | — | — | — | — | — | — | (0.5 | ) | (0.5 | ) | ||||||||||||||||||||
Amortization of share-based payment awards | — | — | 19.7 | — | — | 19.7 | — | 19.7 | ||||||||||||||||||||||
Issuance of common stock related to share-based payment awards including income tax benefit of $1.6 million | 0.1 | — | 1.6 | — | — | 1.6 | — | 1.6 | ||||||||||||||||||||||
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards | (0.1 | ) | — | (4.6 | ) | — | — | (4.6 | ) | — | (4.6 | ) | ||||||||||||||||||
Purchases of common stock | (1.0 | ) | — | (41.2 | ) | — | — | (41.2 | ) | — | (41.2 | ) | ||||||||||||||||||
Acquisition of remaining 49% equity interest | — | — | (10.9 | ) | — | — | (10.9 | ) | 7.2 | (3.7 | ) | |||||||||||||||||||
Other comprehensive (loss) | — | — | — | — | (45.4 | ) | (45.4 | ) | (1.6 | ) | (47.0 | ) | ||||||||||||||||||
Other | — | — | (0.1 | ) | — | — | (0.1 | ) | — | — | ||||||||||||||||||||
Balance as of December 31, 2016 | 69.9 | $ | 0.7 | $ | 399.9 | $ | 1,679.3 | $ | (154.8 | ) | $ | 1,925.0 | $ | 15.0 | $ | 1,940.0 |
46
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
| |||||||||||
|
| For the Year ended December 31, | For the Year ended December 31, | |||||||||||||||||
|
| 2015 |
| 2014 |
| 2013 | 2016 | 2015 | 2014 | |||||||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
| |||||||||||
Net income including noncontrolling interest |
| $ | 183.0 |
| $ | 218.4 |
| $ | 207.2 | $ | 126.4 | $ | 170.5 | $ | 221.1 | |||||
Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
| |||||||||||
Depreciation and amortization |
|
| 63.4 |
|
| 59.4 |
|
| 44.7 | 82.3 | 65.5 | 57.3 | ||||||||
Provision for bad debt |
|
| 7.5 |
|
| 3.8 |
|
| 11.7 | 15.4 | 7.5 | 3.8 | ||||||||
Gain on the sale of crude oil joint venture interests |
|
| — |
|
| (18.1) |
|
| — | |||||||||||
Gain on sale of held for sale assets and liabilities | (3.8 | ) | — | (18.1 | ) | |||||||||||||||
Share-based payment award compensation costs |
|
| 17.0 |
|
| 15.8 |
|
| 16.7 | 19.2 | 17.0 | 15.8 | ||||||||
Deferred income tax (benefit) provision |
|
| (7.2) |
|
| 10.4 |
|
| (8.2) | |||||||||||
Extinguishment of liabilities |
|
| (8.2) |
|
| (5.2) |
|
| (8.5) | |||||||||||
Foreign currency losses, net |
|
| (5.9) |
|
| (7.0) |
|
| 0.1 | |||||||||||
Deferred income tax provision (benefit) | (36.0 | ) | 5.3 | 10.8 | ||||||||||||||||
Extinguishment of liabilities, net | (7.0 | ) | (8.2 | ) | (5.3 | ) | ||||||||||||||
Foreign currency (gains), net | (11.8 | ) | (7.3 | ) | (7.8 | ) | ||||||||||||||
Other |
|
| 3.2 |
|
| (5.3) |
|
| 2.0 | 3.3 | 3.2 | (5.3 | ) | |||||||
Changes in assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|
| |||||||||||
Accounts receivable, net |
|
| 483.2 |
|
| 462.5 |
|
| (328.9) | (506.8 | ) | 485.0 | 460.7 | |||||||
Inventories |
|
| 81.4 |
|
| 232.3 |
|
| (77.7) | (49.5 | ) | 81.4 | 232.3 | |||||||
Prepaid expenses |
|
| 10.8 |
|
| 46.5 |
|
| 30.7 | 7.7 | 10.8 | 46.5 | ||||||||
Short-term derivative assets, net |
|
| 74.7 |
|
| (265.8) |
|
| 3.5 | 163.7 | 81.5 | (265.8 | ) | |||||||
Other current assets |
|
| 32.2 |
|
| (30.2) |
|
| (22.6) | (20.4 | ) | 34.0 | (38.0 | ) | ||||||
Cash collateral with financial counterparties |
|
| 133.3 |
|
| (288.0) |
|
| 9.9 | 149.2 | 133.3 | (288.0 | ) | |||||||
Other non-current assets |
|
| (1.9) |
|
| 2.9 |
|
| (19.6) | 4.4 | (1.9 | ) | 13.7 | |||||||
Accounts payable |
|
| (481.5) |
|
| (585.7) |
|
| 385.4 | 423.4 | (481.5 | ) | (587.8 | ) | ||||||
Customer deposits |
|
| (17.5) |
|
| 12.8 |
|
| 13.8 | (26.3 | ) | (17.5 | ) | 12.8 | ||||||
Accrued expenses and other current liabilities |
|
| (131.0) |
|
| 266.3 |
|
| (3.5) | (121.9 | ) | (141.9 | ) | 267.0 | ||||||
Non-current income tax, net and other long-term liabilities |
|
| 11.0 |
|
| 15.4 |
|
| 7.6 | (6.4 | ) | 11.0 | 15.4 | |||||||
Total adjustments |
|
| 264.5 |
|
| (77.2) |
|
| 57.1 | 78.8 | 276.9 | (80.0 | ) | |||||||
Net cash provided by operating activities |
|
| 447.5 |
|
| 141.2 |
|
| 264.3 | 205.2 | 447.5 | 141.1 | ||||||||
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
| |||||||||||
Acquisitions of businesses, net of cash acquired and other investments |
|
| (96.9) |
|
| (273.6) |
|
| (76.9) | |||||||||||
Acquisition of businesses, net of cash acquired and other investments | (430.8 | ) | (96.9 | ) | (273.6 | ) | ||||||||||||||
Proceeds from sale of business | 29.0 | — | — | |||||||||||||||||
Capital expenditures |
|
| (51.0) |
|
| (50.2) |
|
| (82.7) | (36.1 | ) | (51.0 | ) | (50.2 | ) | |||||
Proceeds from the sale of fixed assets |
|
| 5.3 |
|
| — |
|
| — | 7.3 | 5.3 | — | ||||||||
Escrow payment related to an assumed obligation of an acquired business |
|
| — |
|
| (21.7) |
|
| — | — | — | (21.7 | ) | |||||||
Proceeds from the sale of crude oil joint venture interests |
|
| — |
|
| 43.0 |
|
| — | — | — | 43.0 | ||||||||
Purchase of investments |
|
| (2.4) |
|
| (2.1) |
|
| (21.6) | |||||||||||
Proceeds from the sale of short-term investments |
|
| — |
|
| — |
|
| 21.6 | |||||||||||
Issuances of notes receivable |
|
| — |
|
| — |
|
| (8.0) | |||||||||||
Repayment of notes receivable |
|
| 0.3 |
|
| 7.5 |
|
| — | |||||||||||
Decrease in cash due to deconsolidation of crude oil transloading joint venture |
|
| — |
|
| — |
|
| (6.9) | |||||||||||
Purchase of (COLI) investments | (1.0 | ) | (1.0 | ) | (2.1 | ) | ||||||||||||||
Issuance of Note Receivable | (3.5 | ) | (1.4 | ) | — | |||||||||||||||
Repayment of Note Receivable | 6.5 | 0.3 | 7.5 | |||||||||||||||||
Net cash used in investing activities |
|
| (144.7) |
|
| (297.1) |
|
| (174.5) | (428.5 | ) | (144.8 | ) | (297.1 | ) | |||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
| |||||||||||
Borrowings of debt |
|
| 4,831.2 |
|
| 5,757.3 |
|
| 4,556.6 | 4,688.0 | 4,831.2 | 5,757.3 | ||||||||
Repayments of debt |
|
| (4,752.0) |
|
| (5,551.5) |
|
| (4,476.3) | (4,280.3 | ) | (4,752.0 | ) | (5,551.5 | ) | |||||
Payments of senior revolving credit facility and senior term loan facility loan costs |
|
| (3.4) |
|
| — |
|
| (3.6) | (5.7 | ) | (3.4 | ) | — | ||||||
Dividends paid on common stock |
|
| (15.3) |
|
| (10.6) |
|
| (10.7) | (16.6 | ) | (15.3 | ) | (10.6 | ) | |||||
Investment by noncontrolling interest |
|
| 0.5 |
|
| — |
|
| 17.5 | — | 0.5 | — | ||||||||
Distribution of noncontrolling interest |
|
| (0.3) |
|
| (11.6) |
|
| (15.5) | (0.3 | ) | (0.3 | ) | (11.6 | ) | |||||
Purchases of common stock |
|
| (70.5) |
|
| (10.0) |
|
| (35.0) | (41.2 | ) | (70.5 | ) | (10.0 | ) | |||||
Federal and state tax benefits resulting from tax deductions in excess of the compensation cost recognized for share-based payment awards |
|
| — |
|
| 1.0 |
|
| 3.3 | 1.6 | — | 1.0 | ||||||||
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards |
|
| (7.3) |
|
| (5.1) |
|
| (6.8) | (4.6 | ) | (7.3 | ) | (5.1 | ) | |||||
Net cash (used in) provided by financing activities |
|
| (17.1) |
|
| 169.5 |
|
| 29.5 | |||||||||||
Net cash provided by (used in) financing activities | 340.9 | (17.0 | ) | 169.5 | ||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
|
| (5.5) |
|
| (3.4) |
|
| 0.1 | (1.5 | ) | (5.5 | ) | (3.4 | ) | |||||
Net increase in cash and cash equivalents |
|
| 280.2 |
|
| 10.2 |
|
| 119.4 | 116.1 | 280.2 | 10.2 | ||||||||
Cash and cash equivalents, as of beginning of year |
|
| 302.3 |
|
| 292.1 |
|
| 172.7 | |||||||||||
Cash and cash equivalents, as of end of year |
| $ | 582.5 |
| $ | 302.3 |
| $ | 292.1 | |||||||||||
Cash and cash equivalents, as of beginning of period | 582.5 | 302.3 | 292.1 | |||||||||||||||||
Cash and cash equivalents, as of end of period | $ | 698.6 | $ | 582.5 | $ | 302.3 |
The accompanying notes are an integral part of these consolidated financial statements.
47
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
| For the Year ended December 31, | |||||||
|
| 2015 |
| 2014 |
| 2013 | |||
Supplemental Disclosures of Cash Flow Information |
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Cash paid during the year for: |
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Interest, net of capitalized interest |
| $ | 33.1 |
| $ | 29.1 |
| $ | 19.1 |
Income taxes |
| $ | 44.0 |
| $ | 40.8 |
| $ | 34.6 |
For the Year ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Supplemental Disclosures of Cash Flow Information | |||||||||||
Cash paid during the year for: | |||||||||||
Interest, net of capitalized interest | $ | 40.7 | $ | 33.1 | $ | 29.1 | |||||
Income taxes | $ | 37.5 | $ | 44.0 | $ | 40.8 |
2015.
In 2013, due to a change in the operational control of our crude oil transloading joint venture from us to our joint venture partner, we recorded a reduction of $44.2 million and $25.6 million in net assets and noncontrolling interest equity, respectively, and an increase of $25.6 million in other investments. The aforementioned joint venture was subsequently sold in December 2015.
In connection with an equity investment, we recorded a current liability and other investment of £10.0 million ($16.3 million) in 2012 and £2.0 million ($2.8 million) in 2013 related to contingent consideration. The aggregate amount of £12.0 million ($19.1 million) was paid in 2013.
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| For the Year ended December 31, | |||||||
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| 2015 |
| 2014 |
| 2013 | |||
Assets acquired, net of cash |
| $ | 154.3 |
| $ | 611.0 |
| $ | 77.1 |
Liabilities assumed |
| $ | 61.8 |
| $ | 314.8 |
| $ | 36.8 |
In connection with our acquisitions, we issued promissory notes totaling $0.2 million, $9.0 million and $3.0 million in 2015, 2014 and 2013, respectively.
For the Year ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Assets acquired, net of cash | $ | 508.8 | $ | 154.3 | $ | 611.0 | |||||
Liabilities assumed | $ | 64.5 | $ | 61.8 | $ | 314.8 |
48
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES NOTESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
World Fuel Services Corporation (the “Company”) was incorporated in Florida in July 1984 and along with its consolidated subsidiaries is referred to collectively in this Annual Report on Form 10‑K (“2015 10‑K Report”) as “World Fuel,” “we,” “our” and “us.”
We are a global fuel logistics, transaction management and payment processing company, which provides energy management solutions to the aviation, marine and land transportation industries. We compete by providing our customers with value‑added benefits, including single‑supplier convenience, competitive pricing, the availability of trade credit, price risk management, logistical support, fuel quality control and fuel procurement outsourcing. We primarily contract with third parties for the delivery and storage of fuel products, however, we also operate storage facilities and transportation assets. We operate in three reportable segments consisting of aviation, marine and land. In our aviation segment, we offer fuel and related products and services to major commercial airlines, second and third tier airlines, cargo carriers, regional and low cost carriers, airports, fixed based operators, corporate fleets, fractional operators, private aircraft, military fleets and to the United States (“U.S.”) and foreign governments as well as intergovernmental organizations. Our marine segment product and service offerings include fuel, lubricants and related products and services to a broad base of customers, including international container and tanker fleets, commercial cruise lines, yachts and time charter operators, offshore rig owners and operators, the U.S. and foreign governments as well as other fuel suppliers. In our land segment, we offer fuel, crude oil, lubricants, natural gas and related products and services to customers including petroleum distributors operating in the land transportation market, retail petroleum operators, and industrial, commercial, residential and government customers.
2015 Acquisitions
On September 1, 2015, we completed the acquisition of all of the outstanding stock of Pester Marketing Company (“Pester”), a leading distributor, transporter, and blender of branded motor fuels and lubricants to wholesale, industrial, commercial and agricultural customers. Pester is headquartered in Denver, Colorado and is also a leading operator of retail convenience stores in the Rocky Mountain region.
In addition to the above acquisition, in 2015 we completed three acquisitions in our land segment and one acquisition in our aviation segment which were not material individually or in the aggregate.
The estimated aggregate purchase price for the 2015 acquisitions was 3 million, and is subject to change based on the final value of the net assets acquired. The following reconciles the estimated aggregate purchase price for the 2015 acquisitions to the cash paid for the acquisitions, net of cash acquired (in millions):
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The estimated purchase price of the 2015 acquisitions was allocated to the assets acquired and liabilities assumed based on their estimated fair value as of the acquisition date. Since the valuations of the assets acquired and liabilities assumed in connection with the 2015 acquisitions have not been finalized, the allocation of the purchase price of these acquisitions may change. The estimated purchase price allocation for the 2015 acquisitions is as follows (in millions):
49
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In connection with the 2015 acquisitions, we recorded goodwill of $39.4 million of which $1.7 million is anticipated to be deductible for tax purposes. The identifiable intangible assets consisted of $18.1 million of customer relationships, $4.8 million of supplier relationships and $2.1 million of other identifiable intangible assets with weighted average lives of 5.3 years, 6.2 years and 3.4 years, respectively, as well as $0.9 million of indefinite-lived trademark/trade name rights.
The following presents the unaudited pro forma results for 2015 and 2014 as if the 2015 and 2014 acquisitions had been completed on January 1, 2014 (in millions, except per share data):
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| 2015 |
| 2014 | ||
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| (pro forma) |
| (pro forma) | ||
Revenue |
| $ | 30,952.0 |
| $ | 44,432.0 |
Net income attributable to World Fuel |
| $ | 190.6 |
| $ | 231.1 |
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Earnings per common share: |
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Basic |
| $ | 2.71 |
| $ | 3.26 |
Diluted |
| $ | 2.70 |
| $ | 3.24 |
The financial position, results of operations and cash flows of the 2015 acquisitions have been included in our consolidated financial statements since their respective acquisition dates and did not have a significant impact on our revenue and net income for the 2015.
2014 Acquisitions
On March 7, 2014, we completed the acquisition of all of the outstanding stock of Watson Petroleum Limited (now known as WFL (UK) Limited) (“Watson Petroleum”) a leading distributor of gasoline, diesel, heating oil, lubricants and other products and related services. Watson Petroleum is headquartered in Brinkworth, England and is one of the largest fuel distributors in the United Kingdom. The purchase price of Watson Petroleum was $164.3 million.
On July 29, 2014, we completed the acquisition of all of the outstanding stock of Colt International, L.L.C. (“Colt”) a leading provider of contract fuel and international trip planning services in the general aviation marketplace. Colt is headquartered in Houston, Texas and offers services at more than 3,000 locations. The purchase price of Colt was $72.9 million.
In addition to the above acquisitions, in 2014, we completed two acquisitions in our aviation segment and one acquisition in our marine segment, which were not material individually or in the aggregate.
The financial position, results of operations and cash flows of the 2014 acquisitions have been included in our consolidated financial statements since their respective acquisition dates.
50
The following reconciles the aggregate purchase price for the 2014 acquisitions to the cash paid for the acquisitions, net of cash acquired (in millions):
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The purchase price for each of the 2014 acquisitions was allocated to the assets acquired and liabilities assumed based on their estimated fair value at the acquisition date. On an aggregate basis, the purchase price allocation for the 2014 acquisitions is as follows (in millions):
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In connection with the acquisition of Watson Petroleum, we made a payment of £13.0 million ($21.7 million) to an escrow account related to an estimated assumed pension exit obligation and amounts due to sellers. During 2015, we completed the pension buy-out and the remaining escrow account balance of £3.4 million ($5.1 million) was paid to the sellers. As of December 31, 2015 we had an additional amount due to sellers of £2.1 million ($3.0 million) which is included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.
For our 2014 acquisitions, we recorded goodwill of $177.8 million, of which $22.4 million is anticipated to be deductible for tax purposes. The aggregate identifiable intangible assets consisted of $55.5 million of customer relationships and $16.5 million of other identifiable intangible assets with weighted average lives of 4.9 years and 5.0 years, respectively, as well as $11.5 million of indefinite-lived trademark/trade name rights.
The following presents the unaudited pro forma results for 2014 and 2013, as if the 2014 acquisitions had been completed on January 1, 2013 (in millions, except per share data):
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| 2014 |
| 2013 | ||
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| (pro forma) |
| (pro forma) | ||
Revenue |
| $ | 44,071.8 |
| $ | 44,098.8 |
Net income attributable to World Fuel |
| $ | 226.6 |
| $ | 216.4 |
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Earnings per common share: |
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Basic |
| $ | 3.20 |
| $ | 3.04 |
Diluted |
| $ | 3.18 |
| $ | 3.01 |
In the aggregate, the 2014 acquisitions did not have a significant impact on our revenue and net income for 2014.
51
2013 Acquisitions
In 2013, we completed three acquisitions in our land segment, which were not material individually or in the aggregate. The financial position, results of operations and cash flows of the 2013 acquisitions have been included in our consolidated financial statements since their respective acquisition dates.
The following reconciles the aggregate purchase price for the 2013 acquisitions to the cash paid for the acquisitions, net of cash acquired (in millions):
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During 2014, we completed the valuation of the assets acquired and liabilities assumed for the 2013 acquisitions. As a result, during 2014, we completed the purchase price allocation which primarily resulted in a $0.4 million increase to goodwill and a $0.5 million reduction in identifiable intangible assets. Additionally, in 2014, we paid $0.1 million of the amounts due to sellers that were outstanding as of December 31, 2013.
The purchase price for each of the 2013 acquisitions was allocated to the assets acquired and liabilities assumed based on their estimated fair value at the acquisition date. On an aggregate basis, the purchase price allocation for the 2013 acquisitions is as follows (in millions):
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Significant Accounting Policies
A. Basis of Consolidation
Presentation
Usecurrently evaluating whether the adoption of this new guidance will have a significant impact on our consolidated financial statements and related disclosures.
and Assumptions
Fair Value of Financial Instruments
The carrying amounts of cash, cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value based on the short maturities of these instruments.
52
We measure our cash surrender value of life insurance contracts, derivative contracts and related hedged items at their fair value in accordance with accounting guidance for fair value measurement. We believe the carrying value of our debt approximates fair value since these obligations bear interest at variable rates or fixed rates which are not significantly different than market rates.
The accounting guidance on fair value measurements and disclosures establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:
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The availability of observable inputs can vary and is affected by a wide variety of factors. To the extent that valuation is based on inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by us in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value of a specific asset or liability may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Fair value is a market‑based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity‑specific measure. Therefore, even when market assumptions are not readily available, our own assumptions are set to reflect those that we feel market participants would use in pricing the asset or liability at the measurement date.
Assets and liabilities that are recorded at fair value have been categorized based upon the fair value hierarchy. Our Level 1 items consist of exchange traded futures. Our Level 2 items consist of commodity swaps, commodity collars, non‑designated derivatives in the form of physical forward purchase or sales commitments, hedged inventories and hedged physical forward purchase or sales commitments. Our Level 3 items consist of physical forward purchase or sales commitments, foreign currency forward contracts and the Earn‑out liability. Realized and unrealized gains and losses of our physical forward purchase or sales commitments measured at fair value on a recurring basis that utilized Level 3 inputs are recognized as a component of either revenue or cost of revenue (based on the underlying transaction type). Realized and unrealized gains and losses of our foreign currency forward contracts which were not treated as cash flow hedges, measured at fair value on a recurring basis that utilized Level 3 inputs are recognized as other expense/income. Realized and unrealized gains and losses of our short‑term investments measured at fair value on a recurring basis that utilized Level 3 inputs are recognized as other expense/income.
Derivative instruments can have bid and ask prices that may be observed in the marketplace. Bid prices reflect the highest price that a market participant is willing to pay and ask prices reflect the lowest price that a market participant is willing to accept. Our policy is to consistently apply mid‑ market pricing for valuation of our derivative instruments.
Fair value of derivative commodity contracts and hedged item commitments is derived using forward prices that take into account commodity prices, interest rates, credit risk ratings, option volatility and currency rates. In accordance with the guidance on fair value measurements and disclosures, the impact of our credit risk rating is also considered when measuring the fair value of liabilities. The fair value of derivative instruments may be based on a combination of valuation inputs that are on different hierarchy levels. The fair value disclosures are determined based on the lowest level input that is significant to the fair value measurement in its entirety. The nature of inputs that are considered Level 3 are model inputs. Commodity contracts categorized in Level 3 are due to the significance of the unobservable model inputs to their respective fair values. The unobservable model inputs, such as basis differentials, are based on the difference between the historical prices of our prior transactions and the underlying observable data as well as certain risks related to non-performance. The effect on our income before income taxes of a 10% change in the model input for non-performance risk would not be significant. Fair
53
value of hedged item inventories is derived using spot commodity prices and basis differentials. Fair value of foreign currency contracts is derived using forward prices that take into account interest rates, credit risk ratings and currency rates. Factors that could warrant a Level 2 input to move to a Level 3 input may include lack of observable market data because of a decrease in market activity, a degradation of a short‑term investment which requires us to value the investment based on a Level 3 input, or a change in significance of a Level 3 input to the fair value measurement in its entirety. Our policy is to recognize transfers between Level 1, 2 or 3 as of the beginning of the reporting period in which the event or change in circumstances caused the transfer to occur.
There were no significant changes to our valuation techniques during 2015 and 2014.
D. Cash and Cash Equivalents
Although we analyze customers’ payment history and creditworthiness, we cannot predict with certainty that the customers to whom we extend credit will be able to remit payments on a timely basis, or at all. Because we extend credit on an unsecured basis to most of our customers, there is a possibility that any accounts receivable not collected will ultimately need to be written off. Write-offs for the year ended December 31, 2016 did not have a significant impact on our consolidated statement of operations.
adverse effect on our results of operations.
54
hedge accounting is discontinued, then any cash flows subsequent to the date of discontinuance shallwill be classified in a manner consistent with the nature of the instrument.
For more information on our derivatives, see Note 3.
4.
analysis described below.
Our impairment analysis of our intangible assets not subject to amortization (primarily trademarks and/or trade names) generally involves the use of qualitative and quantitative analyses to estimate whether the estimated future cash flows generated as a result of these assets will be greater than or equal to the carrying value assigned to such assets. We have not historically incurred any impairment losses associated with our intangible assets.
Extinguishment of Liabilities
In the normal course of business, we accrue liabilities for fuel and services received for which invoices have not yet been received. These liabilities are derecognized, or extinguished, if either (i) payment is made to relieve our obligation for the
55
liability or (ii) we are legally released from our obligation for the liability, such as when our legal obligations with respect to such liabilities lapse or otherwise no longer exist. We derecognized vendor liability accruals due to the legal release of our obligations in the amount of $8.2 million, $5.2 million and $8.5 million during 2015, 2014 and 2013, respectively, which is reflected as a reduction of cost of revenue in the accompanying consolidated statements of income and comprehensive income.
M. Revenue Recognition
Vendor and Customer Rebates and Branding Allowances
We receive vendor rebates and branding allowances from a number of our fuel suppliers. Typically, a portion of
Some of these vendor rebate and branding allowance arrangements require that we make assumptions and judgments regarding, for example, the likelihood of attaining specified levels of purchases or selling specified volume of products. We routinely review the relevant, significant factors and make adjustments when the facts and circumstances dictate that an adjustment is warranted.
Vendor volume rebates are recognized as a reduction of cost of revenue in the period earned when realization is probable and estimatablebeen performed and when certain other conditions are met. The rebates passed ontitle and risk of loss passes to our customers are recognized as a reduction of revenue in the period earned in accordance with the applicable customer agreements. The rebate terms of the customer agreements are the factors we take into consideration in deciding when to recognize revenue. These factors are readily determinable and consistently applied throughout our business. Therefore, we generally similarhave not needed to those of the vendor agreements. We also receive branding allowances from fuel suppliersmake significant estimates or assumptions with respect to defray the costs of branding and enhancing certain of our customer locations. The branding allowances received are recorded as a reduction of cost of revenue. The amounts recorded as a reduction of revenue related to volume rebates and branding allowance arrangements paid to our customers and the amounts recorded as a reduction to cost of revenue related to volume rebates received from vendors were not significant during each of the years presented on the consolidated statements of income and comprehensive income.
recognition.
We utilize our historical forfeiture rates to calculate future expected forfeitures. These estimates can vary significantly from actual forfeiture rates experienced. Our estimated forfeiture rates have historically approximated actual forfeitures.
56
determine the estimated fair value of stock‑settled stock appreciation rights (“SSAR Awards”), we use the Black‑Scholes option pricing model. The estimation of the fair value of SSAR Awards on the date of grant using an option‑pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk‑ free interest rates and expected dividends. The expected term of SSAR Awards represents the estimated period of time from grant until exercise or conversion and is based on vesting schedules and expected post‑vesting, exercise and employment termination behavior. Expected volatility is based on the historical volatility of our common stock over the period that is equivalent to the award’s expected life. Any adjustment to the historical volatility as an indicator of future volatility would be based on the impact to historical volatility of significant non‑recurring events that would not be expected in the future. Risk‑free interest rates are based on the U.S. Treasury yield curve at the time of grant for the period that is equivalent to the award’s expected life. Dividend yields are based on the historical dividends of World Fuel over the period that is equivalent to the award’s expected life, as adjusted for stock splits.
Cash
57
Q. Earnings per Common Share
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| 2014 |
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Numerator: |
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Net income attributable to World Fuel |
| $ | 186.9 |
| $ | 221.7 |
| $ | 203.1 |
Denominator: |
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Weighted average common shares for basic earnings per common share |
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| 70.2 |
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| 70.8 |
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| 71.2 |
Effect of dilutive securities |
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| 0.5 |
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| 0.5 |
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| 0.6 |
Weighted average common shares for diluted earnings per common share |
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| 70.7 |
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| 71.3 |
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| 71.8 |
Weighted average securities which are not included in the calculation of diluted earnings per common share because their impact is anti-dilutive or their performance conditions have not been met |
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| 1.0 |
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| 0.9 |
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| 0.6 |
Basic earnings per common share |
| $ | 2.66 |
| $ | 3.13 |
| $ | 2.85 |
Diluted earnings per common share |
| $ | 2.64 |
| $ | 3.11 |
| $ | 2.83 |
Recent Accounting Pronouncements
Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. In January 2016, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The ASU supersedes the guidance to classify equity securities with readily determinable fair values into different categories, and requires equity securities (except those that are accounted for under the equity method or those that result in consolidation of the investee) to be measured at fair value with changes in the fair value recognized through net income. It also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring assessment for impairment qualitatively at each reporting period. This update is effective at the beginning of our 2018 fiscal year. We are currently evaluating whether the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.
Income Taxes: Balance Sheet Classification of Deferred Taxes.In November 2015, the FASB issued an ASU that changes how deferred taxes are classified on organizations’ balance sheets. The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. The adoption of this ASU (pursuant to early adoption provisions) resulted in our deferred tax assets and liabilities being presented as non-current as of December 31, 2015. The guidance has been applied prospectively; therefore, the accompanying consolidated balance sheet as of December 31, 2014 was not adjusted.
Business Combinations: Simplifying the Accounting for Measurement – Period Adjustments. In September 2015, FASB issued an ASU, to simplify the accounting for adjustments made to provisional amounts recognized in a business combination; the amendments eliminate the requirement to retrospectively account for those adjustments. The ASU will require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. It also requires that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. This update is effective at the beginning of our 2016 fiscal year. We do not believe the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.
58
2016 | 2015 | 2014 | |||||||||
Numerator: | |||||||||||
Net income attributable to World Fuel | $ | 126.5 | $ | 174.5 | $ | 224.5 | |||||
Denominator: | |||||||||||
Weighted average common shares for basic earnings per common share | 69.3 | 70.2 | 70.8 | ||||||||
Effect of dilutive securities | 0.5 | 0.5 | 0.5 | ||||||||
Weighted average common shares for diluted earnings per common share | 69.8 | 70.7 | 71.3 | ||||||||
Weighted average securities which are not included in the calculation of diluted earnings per common share because their impact is anti-dilutive or their performance conditions have not been met | 1.3 | 1.0 | 0.9 | ||||||||
Basic earnings per common share | $ | 1.82 | $ | 2.49 | $ | 3.17 | |||||
Diluted earnings per common share | $ | 1.81 | $ | 2.47 | $ | 3.15 |
Inventory: Simplifying the Measurement of Inventory. In July 2015, the FASB issued an ASU which simplifies the guidance on the subsequent measurement of inventory by requiring inventory within the scope of this update to be measured at the lower of cost or net realizable value rather than the lower of cost or market. This update is effective at the beginning of our 2017 fiscal year. We are currently evaluating whether the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.
Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. In April 2015, the FASB issued an ASU which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. This update is effective at the beginning of our 2016 fiscal year. We do not believe the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.
Consolidation: Amendments to the Consolidation Analysis. In February 2015, the FASB issued an ASU which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures. This update is effective at the beginning of our 2016 fiscal year. We do not believe the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.
Income Statement-Extraordinary and Unusual Items: Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. In January 2015, the FASB issued an ASU which eliminates from generally accepted accounting principles in the United States the concept of extraordinary items. This update is effective at the beginning of our 2016 fiscal year. We do not believe the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.
Derivatives and Hedging: Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. In November 2014, the FASB issued an ASU which clarifies how current generally accepted accounting principles in the United States should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. This update is effective at the beginning of our 2016 fiscal year. We do not believe the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.
Presentation of Financial Statements-Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. In August 2014, the FASB issued an ASU which requires management of the Company to evaluate whether there is substantial doubt about the Company’s ability to continue as a going concern. This update is effective at the beginning of our 2017 fiscal year. We do not believe the adoption of this new guidance will have an impact on our financial statement disclosures.
Compensation-Stock Compensation. Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. In June 2014, the FASB issued an ASU which includes guidance that requires a performance target that affects vesting and that could be achieved after the requisite service period to be treated as a performance condition. This update is effective at the beginning of our 2016 fiscal year. We do not believe the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.
Transfers and Servicing: Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. In June 2014, the FASB issued an ASU which changes the accounting for repurchase-to-maturity transactions and repurchase financing arrangements. It also requires additional disclosures about repurchase agreements and other similar transactions. This update became effective at the beginning of our 2015 fiscal year. The adoption of this ASU did not have a significant impact on our consolidated financial statements and disclosures.
Revenue from Contracts with Customers. In May 2014, the FASB issued an ASU which provides guidance for revenue recognition for any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets. The ASU will replace most existing revenue recognition guidance in generally accepted accounting principles in the United States when it becomes effective. This update is effective at the beginning of our 2018 fiscal year. We are currently evaluating whether the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.
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Presentation of Financial Statements and Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. In April 2014, the FASB issued an ASU which changes the criteria for reporting discontinued operations and enhances disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance. This update became effective at the beginning of our 2015 fiscal year. The adoption of this ASU did not have a significant impact on our consolidated financial statements and disclosures.
2. Accounts Receivable
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| 2015 |
| 2014 |
| 2013 | |||
Balance as of beginning of period |
| $ | 25.7 |
| $ | 29.1 |
| $ | 23.7 |
Charges to provision for bad debt |
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| 7.5 |
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| 3.8 |
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| 11.7 |
Write-off of uncollectible accounts receivable |
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| (8.3) |
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| (8.0) |
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| (6.9) |
Recoveries of bad debt |
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| 0.5 |
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| 0.8 |
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| 0.6 |
Translation Adjustments |
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| (0.4) |
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| — |
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| — |
Balance as of end of period |
| $ | 25.0 |
| $ | 25.7 |
| $ | 29.1 |
2016 | 2015 | 2014 | |||||||||
Balance as of beginning of period | $ | 25.0 | $ | 25.7 | $ | 29.2 | |||||
Charges to provision for bad debt | 15.4 | 7.5 | 3.8 | ||||||||
Write-off of uncollectible accounts receivable | (15.9 | ) | (8.3 | ) | (8.0 | ) | |||||
Recoveries of bad debt | 0.3 | 0.5 | 0.8 | ||||||||
Translation Adjustments | 0.2 | (0.4 | ) | — | |||||||
Balance as of end of period | $ | 24.9 | $ | 25.0 | $ | 25.7 |
Estimated purchase price | $ | 446.9 | |
Less: Cash acquired | 2.6 | ||
Estimated purchase price, net of cash acquired | 444.3 | ||
Less: Amounts due to sellers and promissory notes issued | 20.0 | ||
Cash paid for acquisition of businesses | $ | 424.3 |
Assets acquired: | |||
Cash and cash equivalents | $ | 2.6 | |
Accounts receivable | 62.8 | ||
Inventories | 39.0 | ||
Property and equipment | 100.3 | ||
Other current assets | 11.9 | ||
Goodwill and identifiable intangible assets | 291.9 | ||
Other long-term assets | 2.9 | ||
Liabilities assumed: | |||
Accounts payable | (38.1 | ) | |
Accrued expenses and other current liabilities | (22.9 | ) | |
Non-current income tax liabilities and other long term liabilities | (3.5 | ) | |
Estimated purchase price | $ | 446.9 |
2016 | 2015 | ||||||
(pro forma) | (pro forma) | ||||||
Revenue | $ | 27,925.0 | $ | 32,604.4 | |||
Net income attributable to World Fuel | $ | 146.1 | $ | 202.0 | |||
Earnings per common share: | |||||||
Basic | $ | 2.11 | $ | 2.88 | |||
Diluted | $ | 2.09 | $ | 2.86 |
Purchase price | $ | 102.3 | |
Less: Cash acquired | 8.7 | ||
Purchase price, net of cash acquired | 93.6 | ||
Less: Amounts due to sellers and promissory notes issued | 0.5 | ||
Cash paid for acquisition of businesses | $ | 93.1 |
Assets acquired: | |||
Cash and cash equivalents | $ | 8.7 | |
Accounts receivable | 8.9 | ||
Inventories | 7.4 | ||
Property and equipment | 40.7 | ||
Identifiable intangible assets | 25.9 | ||
Goodwill | 39.4 | ||
Other current and long-term assets | 31.1 | ||
Liabilities assumed: | |||
Short-term debt | (0.5 | ) | |
Accounts payable | (10.7 | ) | |
Customer Deposits | (1.5 | ) | |
Accrued expenses and other current liabilities | (38.6 | ) | |
Non-current income tax liabilities and other long term liabilities | (8.5 | ) | |
Purchase price | $ | 102.3 |
3. Derivatives
2014 as if the 2015 and 2014 acquisitions had been completed on January 1, 2014 (in millions, except per share data):
2015 | 2014 | ||||||
(pro forma) | (pro forma) | ||||||
Revenue | $ | 30,952.0 | $ | 44,432.0 | |||
Net income attributable to World Fuel | $ | 190.6 | $ | 231.1 | |||
Earnings per common share: | |||||||
Basic | $ | 2.71 | $ | 3.26 | |||
Diluted | $ | 2.70 | $ | 3.24 |
Purchase price | $ | 295.8 | |
Less: Cash acquired | 20.2 | ||
Purchase price, net of cash acquired | 275.6 | ||
Less: Promissory notes issued | 9.0 | ||
Less: Amounts due to sellers | 3.4 | ||
Cash paid for acquisition of businesses | $ | 263.2 |
Assets acquired: | |||
Cash and cash equivalents | $ | 20.2 | |
Accounts receivable | 257.9 | ||
Inventories | 14.4 | ||
Property and equipment | 55.9 | ||
Identifiable intangible assets | 83.5 | ||
Goodwill | 177.8 | ||
Other current and long-term assets | 22.5 | ||
Liabilities assumed: | |||
Accounts payable | (247.6 | ) | |
Accrued expenses and other current liabilities | (50.7 | ) | |
Other long-term liabilities | (18.7 | ) | |
Initial noncontrolling interest upon acquisition of businesses | (19.4 | ) | |
Purchase price | $ | 295.8 |
For additional information on our derivatives accounting policy, see Note 1.
60
As of December 31, 2015, our derivative instruments, at their respective fair value positions were as follows (in millions, except weighted average fixed price and weighted average mark‑to‑market amount):
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| Weighted |
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| Weighted |
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| Average |
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| Average |
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| Mark-to- |
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| Fair |
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| Settlement |
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| Fixed |
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| Market |
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| Value |
Hedge Strategy |
| Period |
| Derivative Instrument |
| Notional |
| Unit |
|
| Price |
|
| Amount |
|
| Amount |
Fair Value Hedge |
| 2016 |
| Commodity contracts for inventory hedging |
| 2.8 |
| BBL |
| $ | 54.104 |
| $ | 4.929 |
| $ | 13.8 |
|
| 2017 |
| Commodity contracts for inventory hedging |
| 0.1 |
| BBL |
|
| 57.576 |
|
| 5.000 |
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| 0.5 |
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| $ | 14.3 |
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Cash Flow Hedge |
| 2016 |
| Commodity contracts for inventory hedging |
| 9.8 |
| BBL |
|
| 66.947 |
|
| 0.847 |
|
| 8.3 |
|
| 2017 |
| Commodity contracts for inventory hedging |
| 0.8 |
| BBL |
|
| 66.784 |
|
| 8.625 |
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| 6.9 |
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| $ | 15.2 |
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Non-Designated |
| 2016 |
| Commodity contracts (long) |
| 50.9 |
| BBL |
|
| 45.030 |
|
| (15.935) |
|
| (811.1) |
|
| 2016 |
| Commodity contracts (short) |
| 41.8 |
| BBL |
|
| 54.410 |
|
| 19.770 |
|
| 826.4 |
|
| 2017 |
| Commodity contracts (long) |
| 3.1 |
| BBL |
|
| 25.400 |
|
| (2.452) |
|
| (7.6) |
|
| 2017 |
| Commodity contracts (short) |
| 2.3 |
| BBL |
|
| 26.810 |
|
| 3.348 |
|
| 7.7 |
|
| 2018 |
| Commodity contracts (long) |
| 0.7 |
| BBL |
|
| 10.000 |
|
| 2.857 |
|
| 2.0 |
|
| 2018 |
| Commodity contracts (short) |
| 0.5 |
| BBL |
|
| 11.280 |
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| (1.200) |
|
| (0.6) |
|
| 2020 |
| Commodity contracts (long) |
| 0.1 |
| BBL |
|
| 21.750 |
|
| (1.000) |
|
| (0.1) |
|
| 2020 |
| Commodity contracts (short) |
| 0.1 |
| BBL |
|
| 18.840 |
|
| 6.000 |
|
| 0.6 |
|
| 2016 |
| Foreign currency contracts |
| 6.5 |
| AUD |
|
| 0.717 |
|
| (0.031) |
|
| (0.2) |
|
| 2016 |
| Foreign currency contracts |
| 4.3 |
| BRL |
|
| 3.881 |
|
| — |
|
| — |
|
| 2016 |
| Foreign currency contracts |
| 82.8 |
| CAD |
|
| 1.335 |
|
| 0.025 |
|
| 2.1 |
|
| 2016 |
| Foreign currency contracts |
| 0.3 |
| CHF |
|
| 0.964 |
|
| — |
|
| — |
|
| 2016 |
| Foreign currency contracts |
| 4,199.0 |
| CLP |
|
| 702.379 |
|
| — |
|
| — |
|
| 2016 |
| Foreign currency contracts |
| 52,263.5 |
| COP |
|
| 3,064.704 |
|
| — |
|
| 0.1 |
|
| 2016 |
| Foreign currency contracts |
| 73.8 |
| DKK |
|
| 6.854 |
|
| (0.003) |
|
| (0.2) |
|
| 2016 |
| Foreign currency contracts |
| 45.7 |
| EUR |
|
| 1.099 |
|
| 0.033 |
|
| 1.5 |
|
| 2016 |
| Foreign currency contracts |
| 124.7 |
| GBP |
|
| 1.530 |
|
| 0.023 |
|
| 2.9 |
|
| 2016 |
| Foreign currency contracts |
| 111.4 |
| INR |
|
| 66.366 |
|
| — |
|
| — |
|
| 2016 |
| Foreign currency contracts |
| 546.3 |
| JPY |
|
| 120.938 |
|
| — |
|
| — |
|
| 2016 |
| Foreign currency contracts |
| 1,794.6 |
| MXN |
|
| 16.803 |
|
| — |
|
| (0.1) |
|
| 2016 |
| Foreign currency contracts |
| 47.3 |
| NOK |
|
| 8.474 |
|
| 0.004 |
|
| 0.2 |
|
| 2016 |
| Foreign currency contracts |
| 12.6 |
| PLN |
|
| 3.892 |
|
| 0.008 |
|
| 0.1 |
|
| 2016 |
| Foreign currency contracts |
| 42.9 |
| RON |
|
| 4.083 |
|
| 0.014 |
|
| 0.6 |
|
| 2016 |
| Foreign currency contracts |
| 45.6 |
| SEK |
|
| 8.343 |
|
| (0.002) |
|
| (0.1) |
|
| 2016 |
| Foreign currency contracts |
| 23.8 |
| SGD |
|
| 1.411 |
|
| (0.004) |
|
| (0.1) |
|
| 2016 |
| Foreign currency contracts |
| 109.3 |
| ZAR |
|
| 14.245 |
|
| 0.001 |
|
| 0.1 |
|
| 2017 |
| Foreign currency contracts |
| 1.8 |
| EUR |
|
| 1.083 |
|
| — |
|
| — |
|
| 2017 |
| Foreign currency contracts |
| 8.0 |
| GBP |
|
| 1.553 |
|
| 0.063 |
|
| 0.5 |
|
| 2017 |
| Foreign currency contracts |
| 1.7 |
| EUR |
|
| 1.105 |
|
| — |
|
| — |
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| $ | 24.7 |
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61
The following table presents information aboutthe gross fair value of our derivative instruments measured at fair value at their gross amounts and their locations on the consolidated balance sheets (in millions):
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| As of December 31, | ||||
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| Balance Sheet Location |
| 2015 |
| 2014 | ||
Derivative assets: |
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Derivatives designated as hedging instruments |
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Commodity contracts |
| Short-term derivative assets, net |
| $ | 114.0 |
| $ | 18.8 |
Commodity contracts |
| Long-term derivative assets, net |
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| 7.4 |
|
| — |
Commodity contracts |
| Accrued expenses and other current liabilities |
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| 6.3 |
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| 4.7 |
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| 127.7 |
|
| 23.5 |
Derivatives not designated as hedging instruments |
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Commodity contracts |
| Short-term derivative assets, net |
|
| 241.4 |
|
| 399.0 |
Commodity contracts |
| Identifiable intangible and other non-current assets |
|
| 17.0 |
|
| 12.1 |
Commodity contracts |
| Accrued expenses and other current liabilities |
|
| 120.4 |
|
| 234.1 |
Commodity contracts |
| Other long-term liabilities |
|
| 4.0 |
|
| 4.8 |
Foreign currency contracts |
| Short-term derivative assets, net |
|
| 10.9 |
|
| 21.3 |
Foreign currency contracts |
| Identifiable intangible and other non-current assets |
|
| 0.7 |
|
| 0.5 |
Foreign currency contracts |
| Accrued expenses and other current liabilities |
|
| 0.8 |
|
| — |
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|
| 395.2 |
|
| 671.8 |
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| $ | 522.9 |
| $ | 695.3 |
Derivative liabilities: |
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|
Derivatives designated as hedging instruments |
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| ||
Commodity contracts |
| Short-term derivative assets, net |
| $ | 95.3 |
| $ | 1.0 |
Commodity contracts |
| Accrued expenses and other current liabilities |
|
| 2.9 |
|
| 0.7 |
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| 98.2 |
|
| 1.7 |
Derivatives not designated as hedging instruments |
|
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| ||
Commodity contracts |
| Short-term derivative assets, net |
|
| 26.6 |
|
| 76.0 |
Commodity contracts |
| Identifiable intangible and other non-current assets |
|
| 4.8 |
|
| 0.6 |
Commodity contracts |
| Accrued expenses and other current liabilities |
|
| 319.9 |
|
| 530.0 |
Commodity contracts |
| Other long-term liabilities |
|
| 14.2 |
|
| 29.3 |
Foreign currency contracts |
| Short-term derivative assets, net |
|
| 3.3 |
|
| 12.0 |
Foreign currency contracts |
| Accrued expenses and other current liabilities |
|
| 1.7 |
|
| — |
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|
| 370.5 |
|
| 647.9 |
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| $ | 468.7 |
| $ | 649.6 |
Gross Derivative Assets | Gross Derivative Liabilities | ||||||||||||||
As of December 31, | As of December 31, | ||||||||||||||
Derivative Instruments | Balance Sheet Location | 2016 | 2015 | 2016 | 2015 | ||||||||||
Derivatives designated as hedging instruments | |||||||||||||||
Commodity contracts | Short-term derivative assets, net | $ | 2.2 | $ | 120.6 | $ | 5.4 | $ | 95.0 | ||||||
Identifiable intangible and other non-current assets | — | 7.4 | — | — | |||||||||||
Accrued expenses and other current liabilities | 86.0 | 6.3 | 93.5 | 2.9 | |||||||||||
Other long-term liabilities | 5.1 | — | 10.1 | — | |||||||||||
Total derivatives designated as hedging instruments | $ | 93.3 | $ | 134.3 | $ | 108.9 | $ | 97.9 | |||||||
Derivatives not designated as hedging instruments | |||||||||||||||
Commodity contracts | Short-term derivative assets, net | $ | 160.3 | $ | 241.4 | $ | 86.7 | 26.6 | |||||||
Identifiable intangible and other non-current assets | 17.1 | 17.0 | 6.2 | 4.8 | |||||||||||
Accrued expenses and other current liabilities | 52.5 | 120.4 | 112.2 | 319.9 | |||||||||||
Other long-term liabilities | 8.1 | 4.0 | 12.1 | 14.2 | |||||||||||
$ | 238.0 | $ | 382.9 | $ | 217.2 | $ | 365.5 | ||||||||
Foreign currency contracts | Short-term derivative assets, net | $ | 13.5 | $ | 10.8 | $ | 3.4 | $ | 3.3 | ||||||
Identifiable intangible and other non-current assets | 0.9 | 0.7 | 0.1 | 0.1 | |||||||||||
Accrued expenses and other current liabilities | 1.6 | 0.8 | 2.8 | 1.7 | |||||||||||
Total derivatives not designated as hedging instruments | $ | 16.0 | $ | 12.4 | $ | 6.4 | $ | 5.0 | |||||||
Total derivatives | $ | 347.2 | $ | 529.6 | $ | 332.5 | $ | 468.5 |
11.
As of December 31, | |||||
Derivative Instruments | Units | 2016 | |||
Commodity contracts | |||||
Long | BBL | 62.7 | |||
Short | BBL | (66.7 | ) | ||
Foreign currency exchange contracts | |||||
Long | AUD | 0.2 | |||
Short | AUD | (5.2 | ) | ||
Long | CAD | 51.9 | |||
Short | CAD | (115.9 | ) | ||
Long | CHF | — | |||
Short | CHF | (0.6 | ) | ||
Long | CLP | 1,769.6 | |||
Short | CLP | (2,015.1 | ) | ||
Long | COP | 27,753.2 | |||
Short | COP | (48,454.9 | ) | ||
Long | DKK | 5.5 | |||
Short | DKK | (135.7 | ) | ||
Long | EUR | 5.0 | |||
Short | EUR | (38.7 | ) | ||
Long | GBP | 72.0 | |||
Short | GBP | (81.4 | ) | ||
Long | INR | 20.3 | |||
Short | INR | (92.7 | ) | ||
Long | JPY | 1,167.9 | |||
Short | JPY | (1,509.2 | ) | ||
Short | KRW | (11,735.9 | ) | ||
Long | MXN | 1,229.1 | |||
Short | MXN | (1,105.6 | ) | ||
Long | NOK | 9.6 | |||
Short | NOK | (43.8 | ) | ||
Short | NZD | (0.9 | ) | ||
Short | PHP | (8.0 | ) | ||
Long | PLN | — | |||
Short | PLN | (9.7 | ) | ||
Short | RON | (3.9 | ) | ||
Long | SEK | 36.7 | |||
Short | SEK | (6.4 | ) | ||
Long | SGD | 15.9 | |||
Short | SGD | (31.6 | ) | ||
Long | ZAR | 16.4 | |||
Short | ZAR | (15.4 | ) |
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Derivative |
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| Realized and Unrealized |
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| Realized and Unrealized | ||||||||||||||
Instruments |
| Location |
| Gain (Loss) |
| Hedged Items |
| Location |
| Gain (Loss) | ||||||||||||||
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| For the year ended December 31, |
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| For the year ended December 31, | ||||||||||||||||
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| 2015 |
| 2014 |
| 2013 |
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| 2015 |
| 2014 |
| 2013 | ||||||
Commodity contracts |
| Revenue |
| $ | 49.3 |
| $ | — |
| $ | — |
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Commodity contracts |
| Cost of revenue |
|
| 37.5 |
|
| 132.2 |
|
| 2.7 |
| Inventories |
| Cost of revenue |
| $ | (70.7) |
| $ | (150.9) |
| $ | 3.1 |
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| $ | 86.8 |
| $ | 132.2 |
| $ | 2.7 |
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| $ | (70.7) |
| $ | (150.9) |
| $ | 3.1 |
Realized and Unrealized Gain (Loss) | Realized and Unrealized Gain (Loss) | |||||||||||||||||||||
for the Year ended December 31, | for the Year ended December 31, | |||||||||||||||||||||
Derivative Instruments | Location of Gain (Loss) | 2016 | 2015 | 2014 | Hedged Items | Location of Gain (Loss) | 2016 | 2015 | 2014 | |||||||||||||
Commodity contracts | Inventories | |||||||||||||||||||||
Revenue | $ | — | $ | 49.3 | $ | — | Revenue | $ | — | $ | — | $ | — | |||||||||
Cost of revenue | (25.3 | ) | 37.5 | 132.2 | Cost of revenue | 10.8 | (70.7 | ) | (150.9 | ) | ||||||||||||
Total gain (loss) | $ | (25.3 | ) | $ | 86.8 | $ | 132.2 | Total gain (loss) | $ | 10.8 | $ | (70.7 | ) | $ | (150.9 | ) |
62
The following table presents the effect and financial statement location of our derivative instruments in cash flow hedging relationships on our accumulated other comprehensive income and consolidated statements of income and comprehensive income (in millions):
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| Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Effective Portion) |
| Location of Realized Gain (Loss) |
| Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Effective Portion) |
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| Amount of Gain (Loss) Recognized in Income (Ineffective Portion) | ||||||||||
Derivative Instruments |
|
| 2015 | 2014 |
| (Effective Portion) |
| 2015 |
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| 2014 |
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| 2015 |
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| 2014 | |||
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Commodity Contracts |
| $ | 106.2 |
| $ | — |
| Revenue |
| $ | 6.1 |
| $ | — |
| $ | 28.6 |
| $ | — |
Commodity Contracts |
|
| (105.6) |
|
| — |
| Cost of revenue |
|
| (5.7) |
|
| — |
|
| (17.8) |
|
| — |
Total |
| $ | 0.6 |
| $ | — |
|
|
| $ | 0.4 |
| $ | — |
| $ | 10.8 |
| $ | — |
In the event forecasted cash outflows are less than the hedged amounts, a
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Effective Portion) | Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion) | |||||||||||||||||||
Derivative | for the Year ended December 31, | Location of | for the Year ended December 31, | |||||||||||||||||
Instruments | 2016 | 2015 | 2014 | Gain (Loss) | 2016 | 2015 | 2014 | |||||||||||||
Commodity contracts | $ | (145.8 | ) | $ | 106.5 | $ | — | Revenue | $ | 18.1 | $ | 7.2 | $ | — | ||||||
Commodity contracts | 178.1 | (105.4 | ) | — | Cost of revenue | 20.8 | (5.3 | ) | — | |||||||||||
Total gain (loss) | $ | 32.3 | $ | 1.0 | $ | — | Total gain (loss) | $ | 38.8 | $ | 1.8 | $ | — |
Amount of Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing) | |||||||||
for the Year ended December 31, | |||||||||
Location of Gain (Loss) | 2016 | 2015 | 2014 | ||||||
Revenue | $ | (13.7 | ) | $ | 28.6 | $ | — | ||
Cost of revenue | 9.4 | (17.8 | ) | — | |||||
Total gain (loss) | $ | (4.4 | ) | $ | 10.8 | $ | — |
future transaction affects earnings.
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Derivatives |
| Location | Realized and Unrealized Gain (Loss) | ||||||||
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| For the Year ended December 31, | |||||||
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|
| 2015 |
| 2014 |
| 2013 | |||
Commodity contracts |
| Revenue |
| $ | 171.7 |
| $ | 64.5 |
| $ | 25.4 |
Commodity contracts |
| Cost of revenue |
|
| (139.0) |
|
| 2.2 |
|
| (5.4) |
Foreign currency contracts |
| Revenue |
|
| 4.1 |
|
| 4.3 |
|
| — |
Foreign currency contracts |
| Other income (expense), net |
|
| 9.5 |
|
| 12.6 |
|
| (4.0) |
|
|
|
| $ | 46.3 |
| $ | 83.6 |
| $ | 16.0 |
Amount of Realized and Unrealized Gain (Loss) | ||||||||||
for the Year ended December 31, | ||||||||||
Derivative Instruments - Non-designated | Location of Gain (Loss) | 2016 | 2015 | 2014 | ||||||
Commodity contracts | ||||||||||
Revenue | $ | 29.7 | $ | 171.7 | $ | 64.5 | ||||
Cost of revenue | (31.6 | ) | (139.0 | ) | 2.2 | |||||
$ | (1.9 | ) | $ | 32.7 | $ | 66.7 | ||||
Foreign currency contracts | ||||||||||
Revenue | $ | 10.0 | $ | 4.1 | $ | 4.3 | ||||
Other (expense) income, net | (0.8 | ) | 9.5 | 12.6 | ||||||
$ | 9.2 | $ | 13.6 | $ | 16.9 | |||||
Total gain (loss) | $ | 7.3 | $ | 46.3 | $ | 83.6 |
4.5. Property and Equipment
|
|
|
|
|
|
|
|
|
|
| As of December 31, |
| Estimated | ||||
|
| 2015 |
| 2014 |
| Useful Lives | ||
Land |
| $ | 31.6 |
| $ | 17.7 |
| Indefinite |
Buildings and leasehold improvements |
|
| 41.2 |
|
| 43.7 |
| 3 - 40 years |
Office equipment, furniture and fixtures |
|
| 14.1 |
|
| 13.6 |
| 3 - 10 years |
Computer equipment and software costs |
|
| 118.9 |
|
| 102.7 |
| 3 - 10 years |
Machinery, equipment and vehicles |
|
| 160.1 |
|
| 132.5 |
| 3 - 40 years |
|
|
| 365.9 |
|
| 310.2 |
|
|
Accumulated depreciation and amortization |
|
| 140.3 |
|
| 106.8 |
|
|
|
| $ | 225.6 |
| $ | 203.4 |
|
|
As of December 31, | Estimated | |||||||||
2016 | 2015 | Useful Lives | ||||||||
Land | $ | 27.4 | $ | 31.6 | Indefinite | |||||
Buildings and leasehold improvements | 87.3 | 41.2 | 3 - 40 years | |||||||
Office equipment, furniture and fixtures | 15.4 | 14.1 | 3 - 10 years | |||||||
Computer equipment and software costs | 140.7 | 118.9 | 3 - 10 years | |||||||
Machinery, equipment and vehicles | 217.5 | 160.1 | 3 - 40 years | |||||||
488.3 | 365.9 | |||||||||
Accumulated depreciation and amortization | 177.1 | 140.3 | ||||||||
$ | 311.2 | $ | 225.6 |
|
|
|
|
|
|
|
|
| As of December 31, | ||||
|
| 2015 |
| 2014 | ||
Computer software costs |
| $ | 91.4 |
| $ | 76.8 |
Accumulated amortization |
|
| 55.8 |
|
| 45.2 |
Computer software costs, net |
| $ | 35.6 |
| $ | 31.6 |
As of December 31, | |||||||
2016 | 2015 | ||||||
Computer software costs | $ | 94.5 | $ | 91.4 | |||
Accumulated amortization | 69.5 | 55.8 | |||||
Computer software costs, net | $ | 25.0 | $ | 35.6 |
|
|
|
|
|
|
|
|
| As of December 31, | ||||
|
| 2015 |
| 2014 | ||
Capital leases |
| $ | 23.0 |
| $ | 17.7 |
Accumulated amortization |
|
| 11.0 |
|
| 5.5 |
Capital leases, net |
| $ | 12.0 |
| $ | 12.2 |
5.
As of December 31, | |||||||
2016 | 2015 | ||||||
Capital leases | $ | 24.4 | $ | 23.0 | |||
Accumulated amortization | 8.2 | 11.0 | |||||
Capital leases, net | $ | 16.2 | $ | 12.0 |
64
Goodwill
The following table provides information regarding changes in goodwill (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aviation |
| Marine |
| Land |
|
|
| |||
|
| Segment |
| Segment |
| Segment |
| Total | ||||
As of December 31, 2013 |
| $ | 115.5 |
| $ | 69.1 |
| $ | 299.0 |
| $ | 483.6 |
2014 acquisitions |
|
| 58.9 |
|
| 4.7 |
|
| 114.3 |
|
| 177.9 |
Adjustment of purchase price allocations – 2013 acquisitions |
|
| — |
|
| — |
|
| 0.4 |
|
| 0.4 |
Foreign currency translation of non-USD functional currency subsidiary goodwill |
|
| (0.1) |
|
| (0.7) |
|
| (7.8) |
|
| (8.6) |
As of December 31, 2014 |
|
| 174.3 |
|
| 73.1 |
|
| 405.9 |
|
| 653.3 |
2015 acquisitions |
|
| 1.7 |
|
| — |
|
| 37.7 |
|
| 39.4 |
Goodwill classified as held for sale |
|
| — |
|
| — |
|
| (5.9) |
|
| (5.9) |
Foreign currency translation of non-USD functional currency subsidiary goodwill |
|
| (2.3) |
|
| (1.7) |
|
| (7.0) |
|
| (11.0) |
As of December 31, 2015 |
| $ | 173.7 |
| $ | 71.4 |
| $ | 430.7 |
| $ | 675.8 |
Aviation Segment | Marine Segment | Land Segment | Total | ||||||||||||
As of December 31, 2014 | $ | 174.3 | $ | 73.1 | $ | 405.9 | $ | 653.3 | |||||||
2015 acquisitions | $ | 1.7 | $ | — | $ | 37.7 | $ | 39.4 | |||||||
Goodwill classified as held for sale | — | — | (5.9 | ) | (5.9 | ) | |||||||||
Foreign currency translation of non-USD functional currency subsidiary goodwill | (2.3 | ) | (1.7 | ) | (7.0 | ) | (11.0 | ) | |||||||
As of December 31, 2015 | 173.7 | 71.4 | 430.7 | 675.8 | |||||||||||
2016 acquisitions(a) | 95.6 | — | 77.7 | 173.3 | |||||||||||
Adjustment of purchase price allocations(b) | 1.3 | 0.1 | 5.5 | 6.9 | |||||||||||
Foreign currency translation of non-USD functional currency subsidiary goodwill | (3.7 | ) | 0.7 | (17.3 | ) | (20.3 | ) | ||||||||
As of December 31, 2016 | $ | 266.8 | $ | 72.3 | $ | 496.7 | $ | 835.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2015 |
| As of December 31, 2014 | ||||||||||||||
|
| Gross |
|
|
|
|
|
|
| Gross |
|
|
|
|
|
| ||
|
| Carrying |
| Accumulated |
|
|
|
| Carrying |
| Accumulated |
|
|
| ||||
|
| Amount |
| Amortization |
| Net |
| Amount |
| Amortization |
| Net | ||||||
Intangible assets subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships |
| $ | 255.5 |
| $ | 125.4 |
| $ | 130.1 |
| $ | 243.1 |
| $ | 104.4 |
| $ | 138.7 |
Supplier agreements |
|
| 38.5 |
|
| 10.7 |
|
| 27.8 |
|
| 33.7 |
|
| 9.1 |
|
| 24.6 |
Others |
|
| 37.2 |
|
| 16.1 |
|
| 21.1 |
|
| 33.7 |
|
| 11.3 |
|
| 22.4 |
|
|
| 331.2 |
|
| 152.2 |
|
| 179.0 |
|
| 310.5 |
|
| 124.8 |
|
| 185.7 |
Intangible assets not subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademark/trade name rights |
|
| 31.9 |
|
| — |
|
| 31.9 |
|
| 31.9 |
|
| — |
|
| 31.9 |
|
| $ | 363.1 |
| $ | 152.2 |
| $ | 210.9 |
| $ | 342.4 |
| $ | 124.8 |
| $ | 217.6 |
As of December 31, 2016 | As of December 31, 2015 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization (1) | Net | Gross Carrying Amount | Accumulated Amortization (1) | Net | ||||||||||||||||||
Intangible assets subject to amortization: | |||||||||||||||||||||||
Customer relationships | $ | 353.8 | $ | 155.5 | $ | 198.3 | $ | 255.5 | $ | 125.4 | $ | 130.1 | |||||||||||
Supplier agreements | 38.7 | 13.3 | 25.4 | 38.5 | 10.7 | 27.8 | |||||||||||||||||
Others | 37.2 | 20.2 | 17.0 | 37.2 | 16.1 | 21.1 | |||||||||||||||||
429.7 | 189.1 | 240.7 | 331.2 | 152.2 | 179.0 | ||||||||||||||||||
Intangible assets not subject to amortization: | |||||||||||||||||||||||
Trademark/trade name rights | 41.7 | — | 41.7 | 31.9 | — | 31.9 | |||||||||||||||||
$ | 471.4 | $ | 189.1 | $ | 282.3 | $ | 363.1 | $ | 152.2 | $ | 210.9 |
|
|
|
|
Year Ended December 31, |
|
|
|
2016 |
| $ | 32.3 |
2017 |
|
| 27.5 |
2018 |
|
| 23.8 |
2019 |
|
| 19.6 |
2020 |
|
| 16.8 |
Thereafter |
|
| 59.0 |
|
| $ | 179.0 |
6.
Year Ended December 31, | |||
2017 | $ | 41.1 | |
2018 | 38.1 | ||
2019 | 32.5 | ||
2020 | 27.8 | ||
2021 | 24.4 | ||
Thereafter | 76.7 | ||
$ | 240.7 |
65
Our issued letters of credit under the Credit Facility totaled $5.5$8.3 million and $14.8$5.5 million as of December 31, 20152016 and 2014,2015, respectively. We also had $333.2$840.0 million and $241.3$333.2 million in Term Loans outstanding as of December 31, 20152016 and 2014,2015, respectively. As of December 31, 20152016 and 2014,2015, the unused portion of our Credit Facility was $926.5 million and $838.5 million, respectively. Availability under our Credit Facility is also limited by, among other things our financial leverage ratio, which limits the total amount of indebtedness we may incur, and $665.2 million, respectively.
may therefore fluctuate from period to period.
2016.
|
|
|
|
|
|
|
|
| As of December 31, | ||||
|
| 2015 |
| 2014 | ||
Credit Facility |
| $ | 416.0 |
| $ | 420.0 |
Term Loans |
|
| 333.2 |
|
| 241.3 |
Capital leases |
|
| 12.0 |
|
| 11.4 |
Other |
|
| 11.0 |
|
| 17.2 |
Total debt |
|
| 772.2 |
|
| 689.9 |
Short-term debt |
|
| 25.5 |
|
| 17.9 |
Long-term debt |
| $ | 746.7 |
| $ | 672.0 |
As of December 31, | |||||||
2016 | 2015 | ||||||
Credit Facility | $ | 325.2 | $ | 416.0 | |||
Term Loans | 840.0 | 333.2 | |||||
Capital leases | 12.6 | 12.0 | |||||
Other | 8.5 | 11.0 | |||||
Total debt | $ | 1,186.3 | $ | 772.2 | |||
Short-term debt | $ | 15.4 | $ | 25.5 | |||
Long-term debt | $ | 1,170.8 | $ | 746.7 |
|
|
|
|
Year Ended December 31, |
|
|
|
2016 |
| $ | 25.5 |
2017 |
|
| 27.5 |
2018 |
|
| 715.6 |
2019 |
|
| 1.4 |
2020 |
|
| 0.9 |
Thereafter |
|
| 1.3 |
|
| $ | 772.2 |
66
Year Ended December 31, | |||
2017 | $ | 15.4 | |
2018 | 24.1 | ||
2019 | 39.5 | ||
2020 | 56.1 | ||
2021 | 1,049.0 | ||
Thereafter | 2.1 | ||
$ | 1,186.3 |
The following table provides additional information about our interest income and expense and other financing costs, net (in millions):
|
|
|
|
|
|
|
|
|
|
|
| 2015 |
| 2014 |
| 2013 | |||
Interest income |
| $ | 5.0 |
| $ | 6.0 |
| $ | 3.9 |
Interest expense and other financing costs |
|
| (34.9) |
|
| (31.2) |
|
| (21.2) |
|
| $ | (29.9) |
| $ | (25.2) |
| $ | (17.3) |
7.
2016 | 2015 | 2014 | |||||||||
Interest income | $ | 4.5 | $ | 5.0 | $ | 6.0 | |||||
Interest expense and other financing costs | (43.7 | ) | (34.9 | ) | (31.2 | ) | |||||
$ | (39.2 | ) | $ | (29.9 | ) | $ | (25.2 | ) |
|
|
|
|
Year Ended December 31, |
|
|
|
2016 |
| $ | 42.1 |
2017 |
|
| 31.3 |
2018 |
|
| 23.4 |
2019 |
|
| 18.8 |
2020 |
|
| 15.1 |
Thereafter |
|
| 45.5 |
|
| $ | 176.2 |
Year Ended December 31, | |||
2017 | $ | 38.4 | |
2018 | 25.9 | ||
2019 | 20.9 | ||
2020 | 17.0 | ||
2021 | 12.8 | ||
Thereafter | 34.7 | ||
$ | 149.8 |
Additionally, asin connection with the ExxonMobil transaction, we have certain purchase contracts, under which we agreed to purchase between 1.69 million barrels and 2.02 million barrels of December 31, 2015, we had entered into certain other fixed price sales commitments with corresponding fixed price purchase commitments, the majorityaviation fuel at future market prices. The term of which were satisfied within one week. These salesthose agreement are for 10 years and purchase commitments were made in the normal course of business.
have a 5-year renewal option, exercisable by mutual agreement.
67
All of Mr. Kasbar’s outstanding SSAR Awards, restricted stock and RSUs (collectively, “outstanding equity awards”) will immediately vest in each scenario described in (a) and (b) above following a change of control, except for awards assumed or substituted by a successor company, in which case, such awards shall continue to vest in accordance with their applicable terms. In each scenario described in (a), (b) or (c) above where there has not been a change of control, Mr. Kasbar’s outstanding equity awards will generally vest over a two year period following termination of his employment, with any remaining unvested awards vesting on the last day of such two year period. For each scenario described above, awards with multiple annual performance conditions must satisfy certain other requirements in order to have their vesting terms accelerated.
|
|
|
|
Year Ended December 31, |
|
|
|
2016 |
| $ | 6.0 |
2017 |
|
| 1.2 |
|
| $ | 7.2 |
Year Ended December 31, | |||
2017 | $ | 1.3 |
On
68
We offer a non-qualified deferred compensation (“NQDC”) plan to certain eligible employees, excluding our named executive officers, whereby the participants may defer a portion of their compensation. We do not match any participant deferrals under the NQDC plan. Participants can elect from a variety of investment choices for their deferred compensation and gains and losses on these investments are credited to their respective accounts. The deferred compensation payable amount under this NQDC plan is subject to the claims of our general creditors and was $3.3$4.3 million and $2.3$3.3 million as of December 31, 20152016 and December 31, 2014,2015, respectively, which was included in other long-term liabilities in the accompanying consolidated balance sheets.
In connection with our acquisition of Watson Petroleum, we assumed their defined benefit pension plan (the “Watson Plan”), which provides participants benefits based on salary at retirement or an earlier date of leaving service. As part of the allocation of the estimated purchase price to assets acquired and liabilities assumed for Watson Petroleum, we recorded an assumed pension exit obligation of £9.6 million ($16.0 million). During 2015, we completed the pension buy-out, therefore, as of December 31, 2015 there are no other assets or liabilities on our consolidated balance sheet related to the Watson Plan. Additionally, the expenses for the Watson Plan recorded in our consolidated statements of income and comprehensive income for 2015 were not significant.
Lac‑Mégantic, Quebec
We, on behalf of DPTS Marketing, LLC (“DPM”), a crude oil marketing joint venture in which we previously owned a 50% membership interest, purchased crude oil from various producers in the Bakken region of North Dakota. Dakota Petroleum Transport Solutions, LLC (“DPTS”), a crude oil transloading joint venture in which we also previously owned a 50% membership interest, arranged for the transloading of the crude oil for DPM into tank cars at its facility in New Town, North Dakota (the “Pioneer Terminal”). We leased the tank cars used in the transloading from a number of third party lessors and subleased these tank cars to DPM (the “Railcar Subleases”). We, on behalf of DPM, contracted with Canadian Pacific Railway (“CPR”) for the transportation of the tank cars and the crude oil from New Town, North Dakota to a customer in New Brunswick, Canada. CPR subcontracted a portion of that route to Montreal, Maine and Atlantic Railway (“MMA”). On July 6, 2013, the freight train operated by MMA with tank cars carrying approximately 50,000 barrels of crude oil derailed in Lac-Mégantic, Quebec (the “Derailment”). The Derailment resulted in significant loss of life, damage to the environment from spilled crude oil and extensive property damage.
Between 2013 and 2015, we, certain of our subsidiaries, DPM and DPTS, along with a number of third parties, were sued in various actions in both the United States and Canada, by multiple third parties seeking economic, compensatory and
69
punitive damages allegedly caused by the Derailment. In addition, in 2013, the Quebec Minister for Sustainable Development, Environment, Wildlife and Parks (the “Minister”) issued an order requiring us to recover the spilled crude oil caused by the incident and to otherwise fully remediate the impact of the incident on the environment.
On June 8, 2015, we entered into a settlement agreement (the “Settlement Agreement”) with the Trustee (the “Trustee”) for the U.S. bankruptcy estate of Montreal, Maine & Atlantic Railway, Ltd., Montreal, Maine and Atlantic Canada Co. (“MMAC”), and the monitor (the “Monitor”) in MMAC’s Canadian bankruptcy (collectively, the “MMA Parties”) resolving all claims arising out of the Derailment. On December 22, 2015, the effective date of the bankruptcy plans filed by the Trustee in the U.S. and by MMAC in Canada (the “U.S. Bankruptcy Plan” and the “CCAA Plan” respectively, each a “Plan” and collectively the “Plans”), the Settlement Agreement became final and effective. Pursuant to the Settlement Agreement, we contributed US$110 million (the “Settlement Payment”) to a compensation fund established to compensate parties who suffered losses as a result of the Derailment. As part of the settlement, we also assigned to the Trustee and MMAC certain claims we have against third parties arising out of the Derailment.
In consideration of the Settlement Payment and the assignment of claims to the Trustee and MMAC, we, as well as our former joint ventures, DPTS Marketing, LLC and Dakota Petroleum Transport Solutions, LLC and each of their affiliates (collectively, the “WFS Parties”), received, and will continue to receive, the benefit of the global releases and injunctions set forth in the Plans. These global releases and injunctions bar all claims which may exist now or in the future against the WFS Parties arising out of the Derailment, other than criminal claims which by law may not be released.
Substantially all of the liabilities incurred in connection with the incident have been recovered from insurance through December 31, 2015. As of December 31, 2015, the remaining outstanding amounts are not significant.
Other Matters
In connection with a theft of fuel product valued at approximately $18.0 million, we recorded an insurance receivable for the full amount of the loss, which is included in other current assets in the accompanying consolidated balance sheet.sheets. On July 31, 2014, our insurer, AGCS Marine Insurance Company (“AGCS”), filed a declaratory judgment action against us in the United States District Court for the Southern District of New York (“District Court”) seeking a court ruling that the loss is not covered under our policy. DuringIn May 2016, the quarter ended December 31, 2014, we filedDistrict Court entered an answer to the AGCS complaint and counterclaims against AGCS for declaratoryorder granting summary judgment and breach of contract seeking a court rulingin our favor holding that the loss is covered under the AGCS policy and entered a final order and judgment in November 2016, requiring AGCS to pay us damages and interest in the amount of approximately $24.5 million (the "Judgment").
70
8.9. Shareholders’ Equity
Share‑Based
Furthermore, any employee’s shares usedcanceled (e.g., due to the recipient's failure to satisfy the withholding taxes due upon vestingapplicable service or performance conditions) after May 2016. As of anyDecember 31, 2016, approximately 3,108,258 shares of common stock were subject to outstanding awards granted under the 2006 plan or exercisePlan (assuming maximum achievement of performance goals for restricted stock options are added to the maximum numberand target achievement of shares authorizedperformance goals for issuance under the 2006 Plan.
71
The following table summarizes the outstanding awards issued pursuant to the 20062016 Plan described above as of December 31, 20152016 and the remaining shares of common stock available for future issuance (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Remaining |
|
|
|
|
|
|
|
| shares of |
|
|
|
|
|
|
|
| common stock |
|
| Restricted |
|
|
| SSAR |
| available for |
Plan name |
| Stock |
| RSUs |
| Awards |
| future issuance |
2006 Plan (1) |
| 1.4 |
| 0.7 |
| 0.2 |
| 3.2 |
|
|
Plan name | Restricted Stock | RSUs | SSAR Awards | Remaining shares of common stock available for future issuance | |||||||
2016 Plan (1) | — | — | — | 4.3 | |||||||
2006 Plan (amended and restated) (2) | 1.2 | 1.2 | 0.3 | — |
|
|
|
|
|
|
|
|
|
|
|
Unvested Restricted Stock Outstanding | ||||||||||
|
|
|
|
|
|
|
|
|
| Weighted |
|
|
|
| Weighted |
|
|
|
| Average | |
|
|
|
| Average |
|
|
|
| Remaining | |
|
| Unvested |
| Grant-date |
|
| Aggregate |
| Vesting | |
|
| Restricted |
| Fair Value |
|
| Intrinsic |
| Term | |
|
| Stock |
| Price |
|
| Value |
| (in Years) | |
As of December 31, 2012 |
| 1.1 |
| $ | 39.38 |
| $ | 45.3 |
| 3.4 |
Granted |
| 0.3 |
|
| 41.83 |
|
|
|
|
|
Vested |
| — |
|
| 37.00 |
|
|
|
|
|
Forfeited |
| — |
|
| 38.89 |
|
|
|
|
|
As of December 31, 2013 |
| 1.4 |
|
| 40.07 |
|
| 59.3 |
| 2.7 |
Granted |
| 0.3 |
|
| 44.18 |
|
|
|
|
|
Vested |
| (0.2) |
|
| 38.00 |
|
|
|
|
|
Forfeited |
| — |
|
| 39.58 |
|
|
|
|
|
As of December 31, 2014 |
| 1.5 |
|
| 41.18 |
|
| 70.2 |
| 2.1 |
Granted |
| 0.2 |
|
| 49.95 |
|
|
|
|
|
Vested |
| (0.2) |
|
| 39.63 |
|
|
|
|
|
Forfeited |
| (0.1) |
|
| 41.84 |
|
|
|
|
|
As of December 31, 2015 |
| 1.4 |
| $ | 42.69 |
| $ | 54.9 |
| 1.4 |
Unvested Restricted Stock | Weighted Average Grant date Fair Value Price | Aggregate Intrinsic Value | Weighted Average Remaining Vesting Term (in Years) | |||||||||
As of December 31, 2013 | 1.4 | $ | 40.07 | $ | 59.3 | 2.7 | ||||||
Granted | 0.3 | 44.18 | ||||||||||
Vested | (0.2 | ) | 38.00 | |||||||||
Forfeited | — | 39.58 | ||||||||||
As of December 31, 2014 | 1.5 | 41.18 | 70.2 | 2.1 | ||||||||
Granted | 0.2 | 49.95 | ||||||||||
Vested | (0.2 | ) | 39.63 | |||||||||
Forfeited | (0.1 | ) | 41.84 | |||||||||
As of December 31, 2015 | 1.4 | 42.69 | 54.9 | 1.4 | ||||||||
Granted | 0.1 | 42.92 | ||||||||||
Vested | (0.2 | ) | 40.40 | |||||||||
Forfeited | (0.1 | ) | 43.30 | |||||||||
As of December 31, 2016 | 1.2 | $ | 43.10 | $ | 55.7 | 0.8 |
72
RSU Awards
|
|
|
|
|
|
|
|
|
|
|
RSUs Outstanding | ||||||||||
|
|
|
|
|
|
|
|
|
| Weighted |
|
|
|
|
|
|
|
|
|
| Average |
|
|
|
| Weighted |
|
|
|
| Remaining | |
|
|
|
| Average |
|
| Aggregate |
| Contractual | |
|
|
|
| Grant-date |
|
| Intrinsic |
| Life | |
|
| RSUs |
| Fair Value |
|
| Value |
| (in Years) | |
As of December 31, 2012 |
| 1.0 |
| $ | 34.06 |
| $ | 39.9 |
| 1.5 |
Granted |
| — |
|
| 40.59 |
|
|
|
|
|
Issued |
| (0.3) |
|
| 32.00 |
|
|
|
|
|
Forfeited |
| — |
|
| 35.92 |
|
|
|
|
|
As of December 31, 2013 |
| 0.7 |
|
| 35.61 |
|
| 31.8 |
| 1.3 |
Granted |
| 0.3 |
|
| 44.34 |
|
|
|
|
|
Issued |
| (0.2) |
|
| 36.67 |
|
|
|
|
|
Forfeited |
| - |
|
| 40.25 |
|
|
|
|
|
As of December 31, 2014 |
| 0.8 |
|
| 38.55 |
|
| 36.9 |
| 1.5 |
Granted |
| 0.2 |
|
| 51.00 |
|
|
|
|
|
Issued |
| (0.3) |
|
| 38.80 |
|
|
|
|
|
Forfeited |
| — |
|
| 42.65 |
|
|
|
|
|
As of December 31, 2015 |
| 0.7 |
| $ | 43.10 |
| $ | 28.0 |
| 1.7 |
RSUs Outstanding | ||||||||||||
RSUs | Weighted Average Grant date Fair Value Price | Aggregate Intrinsic Value | Weighted Average Remaining Contractual Life (in Years) | |||||||||
As of December 31, 2013 | 0.7 | $ | 35.61 | $ | 31.8 | 1.3 | ||||||
Granted | 0.3 | 44.34 | ||||||||||
Issued | (0.2 | ) | 36.67 | |||||||||
Forfeited | — | 40.25 | ||||||||||
As of December 31, 2014 | 0.8 | 38.55 | 36.9 | 1.5 | ||||||||
Granted | 0.2 | 51.00 | ||||||||||
Issued | (0.3 | ) | 38.80 | |||||||||
Forfeited | — | 42.65 | ||||||||||
As of December 31, 2015 | 0.7 | 43.10 | 28.0 | 1.7 | ||||||||
Granted | 0.7 | 44.23 | ||||||||||
Vested | (0.1 | ) | 42.78 | |||||||||
Forfeited | (0.1 | ) | 44.78 | |||||||||
As of December 31, 2016 | 1.2 | $ | 43.28 | $ | 55.7 | 1.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| SSAR Awards Outstanding |
| SSAR Awards Exercisable | ||||||||||||||||
|
|
|
|
|
|
|
| Weighted |
|
|
|
|
|
|
| Weighted | ||||
|
|
|
|
|
|
|
| Average |
|
|
|
|
|
|
| Average | ||||
|
|
|
| Weighted |
|
|
| Remaining |
|
|
| Weighted |
|
|
| Remaining | ||||
|
|
|
| Average |
| Aggregate |
| Contractual |
|
|
| Average |
| Aggregate |
| Contractual | ||||
|
| SSAR |
| Exercise |
| Intrinsic |
| Life |
| SSAR |
| Exercise |
| Intrinsic |
| Life | ||||
|
| Awards |
| Price |
| Value |
| (in Years) |
| Awards |
| Price |
| Value |
| (in Years) | ||||
As of December 31, 2012 |
| 0.4 |
| $ | 15.30 |
| $ | 10.9 |
| 0.6 |
| 0.3 |
|
| 16.02 |
|
| 8.1 |
| 0.7 |
Granted |
| 0.2 |
|
| 41.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised |
| (0.4) |
|
| 14.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited |
| — |
|
| 37.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2013 |
| 0.2 |
|
| 37.69 |
|
| 1.5 |
| 3.6 |
| — |
|
| 23.25 |
|
| 1.1 |
| 1.0 |
Exercised |
| — |
|
| 22.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited |
| — |
|
| 40.91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2014 |
| 0.2 |
|
| 40.06 |
|
| 1.5 |
| 3.0 |
| — |
| $ | 35.81 |
| $ | 0.6 |
| 2.2 |
Granted |
| — |
|
| 57.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised |
| — |
|
| 25.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2015 |
| 0.2 |
| $ | 42.91 |
| $ | — |
| 2.5 |
| — |
| $ | 42.06 |
| $ | — |
| 2.2 |
SSAR Awards Outstanding | SSAR Awards Exercisable | |||||||||||||||||
SSAR Awards | Weighted Average Exercise Price | Aggregate Intrinsic Value | Weighted Average Remaining Contractual Life (in Years) | SSAR Awards | Weighted Average Exercise Price | Aggregate Intrinsic Value | Weighted Average Remaining Contractual Life (in Years) | |||||||||||
As of December 31, 2013 | 0.2 | $ | 37.69 | $ | 1.5 | 3.6 | — | $ | 23.25 | $ | 1.1 | 1.0 | ||||||
Exercised | — | 22.26 | ||||||||||||||||
Forfeited | — | 40.91 | ||||||||||||||||
As of December 31, 2014 | 0.2 | 40.06 | 1.5 | 3.0 | — | 35.81 | 0.6 | 2.2 | ||||||||||
Granted | — | 57.48 | ||||||||||||||||
Exercised | — | 25.08 | ||||||||||||||||
As of December 31, 2015 | 0.2 | 42.91 | — | 2.5 | — | 42.06 | — | 2.2 | ||||||||||
Granted | 0.1 | 48.58 | ||||||||||||||||
Exercised | — | 40.91 | ||||||||||||||||
As of December 31, 2016 | 0.3 | $ | 44.97 | $ | 0.3 | 2.4 | 0.2 | $ | 42.15 | $ | 0.7 | 1.3 |
73
weighted average fair value of the SSAR Awards for 2013 was $11.65 and the assumptions used to determine such fair value were as follows: expected term of 4.1 years, volatility of 38.0%, dividend yields of 0.4% and risk‑free interest rates of 0.6%.
Unrecognized Compensation Cost
|
|
|
|
Year Ended December 31, |
|
|
|
2016 |
| $ | 14.6 |
2017 |
|
| 10.8 |
2018 |
|
| 5.7 |
2019 |
|
| 1.3 |
2020 |
|
| 0.2 |
|
| $ | 32.6 |
Year Ended December 31, | |||
2017 | $ | 20.0 | |
2018 | 14.8 | ||
2019 | 5.7 | ||
2020 | 1.8 | ||
2021 | 0.4 | ||
$ | 42.6 |
|
|
|
|
|
|
|
|
|
|
|
| Foreign |
|
|
|
| Accumulated | ||
|
| Currency |
|
|
|
| Other | ||
|
| Translation |
| Cash |
| Comprehensive | |||
|
| Adjustments |
| Flow Hedges |
| Loss | |||
Balance as of December 31, 2013 |
| $ | (29.3) |
| $ | — |
| $ | (29.3) |
Other comprehensive loss |
|
| (30.9) |
|
| — |
|
| (30.9) |
Balance as of December 31, 2014 |
|
| (60.2) |
|
| — |
|
| (60.2) |
Other comprehensive loss |
|
| (49.6) |
|
| 0.6 |
|
| (49.0) |
Less: Net other comprehensive income attributable to noncontrolling interest |
|
| 4.0 |
|
| — |
|
| 4.0 |
Balance as of December 31, 2015 |
| $ | (113.8) |
| $ | 0.6 |
| $ | (113.2) |
Foreign Currency Translation Adjustments | Cash Flow Hedges | Accumulated Other Comprehensive Loss | |||||||||
Balance as of December 31, 2014 | $ | (59.2 | ) | $ | — | $ | (59.2 | ) | |||
Other comprehensive loss | (45.4 | ) | (0.8 | ) | (46.2 | ) | |||||
Less: Net other comprehensive income attributable to noncontrolling interest | (4.0 | ) | — | (4.0 | ) | ||||||
Balance as of December 31, 2015 | (108.7 | ) | (0.8 | ) | (109.5 | ) | |||||
Other comprehensive loss | (40.4 | ) | (6.6 | ) | (47.0 | ) | |||||
Less: Net other comprehensive income attributable to noncontrolling interest | 1.6 | — | 1.6 | ||||||||
Balance as of December 31, 2016 | $ | (147.5 | ) | $ | (7.4 | ) | $ | (154.8 | ) |
9.
|
|
|
|
|
|
|
|
|
|
|
| 2015 |
| 2014 |
| 2013 | |||
United States |
| $ | 1.2 |
| $ | 56.5 |
| $ | 31.8 |
Foreign |
|
| 218.1 |
|
| 213.0 |
|
| 214.9 |
|
| $ | 219.3 |
| $ | 269.5 |
| $ | 246.7 |
74
2016 | 2015 | 2014 | |||||||||
United States | $ | (85.4 | ) | $ | 3.5 | $ | 59.7 | ||||
Foreign | 227.5 | 214.2 | 215.1 | ||||||||
$ | 142.1 | $ | 217.7 | $ | 274.8 |
The income tax provision (benefit) related to income before income taxes consists of the following components (in millions):
|
|
|
|
|
|
|
|
|
|
|
| 2015 |
| 2014 |
| 2013 | |||
Current: |
|
|
|
|
|
|
|
|
|
U.S. federal statutory tax |
| $ | (10.7) |
| $ | 14.8 |
| $ | 8.2 |
State |
|
| 0.6 |
|
| 2.5 |
|
| 1.8 |
Foreign |
|
| 29.6 |
|
| 22.0 |
|
| 36.2 |
|
|
| 19.5 |
|
| 39.3 |
|
| 46.2 |
Deferred: |
|
|
|
|
|
|
|
|
|
U.S. federal statutory tax |
|
| 4.6 |
|
| 10.7 |
|
| 2.2 |
State |
|
| 3.0 |
|
| 2.7 |
|
| 0.6 |
Foreign |
|
| (14.8) |
|
| (3.0) |
|
| (11.0) |
|
|
| (7.2) |
|
| 10.4 |
|
| (8.2) |
Non-current tax expense (income) |
|
| 24.0 |
|
| 1.4 |
|
| 1.5 |
|
| $ | 36.3 |
| $ | 51.1 |
| $ | 39.5 |
Non‑current
2016 | 2015 | 2014 | |||||||||
Current: | |||||||||||
U.S. federal statutory tax | $ | 7.5 | $ | (9.9 | ) | $ | 13.9 | ||||
State | 0.8 | 0.7 | 2.5 | ||||||||
Foreign | 30.4 | 27.0 | 23.5 | ||||||||
38.7 | 17.8 | 39.9 | |||||||||
Deferred: | |||||||||||
U.S. federal statutory tax | (29.3 | ) | 4.6 | 10.7 | |||||||
State | (4.2 | ) | 3.0 | 2.7 | |||||||
Foreign | (2.5 | ) | (2.3 | ) | (2.6 | ) | |||||
(36.0 | ) | 5.3 | 10.8 | ||||||||
Non-current tax expense (income) | 13.0 | 24.1 | 2.9 | ||||||||
$ | 15.7 | $ | 47.2 | $ | 53.6 |
|
|
|
|
|
|
|
|
|
| 2015 |
| 2014 |
| 2013 |
|
U.S. federal statutory tax rate |
| 35.0 | % | 35.0 | % | 35.0 | % |
Foreign earnings, net of foreign taxes |
| (28.2) |
| (18.1) |
| (18.7) |
|
State income taxes, net of U.S. federal income tax benefit |
| 1.1 |
| 1.3 |
| 0.6 |
|
U.S. tax on deemed dividends |
| 6.1 |
| 1.0 |
| 1.4 |
|
Brazil foreign currency effect on other comprehensive income |
| (5.4) |
| (1.5) |
| (1.4) |
|
Other permanent differences |
| 8.0 |
| 1.3 |
| (0.9) |
|
Effective income tax rate |
| 16.6 | % | 19.0 | % | 16.0 | % |
2016 | 2015 | 2014 | ||||||
U.S. federal statutory tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
Foreign earnings, net of foreign taxes | (42.4 | ) | (28.3 | ) | (18.2 | ) | ||
State income taxes, net of U.S. federal income tax benefit | (1.5 | ) | 1.1 | 1.3 | ||||
U.S. tax on deemed dividends | 1.3 | 1.7 | 1.2 | |||||
Sale of subsidiary | 3.8 | — | — | |||||
Uncertain tax positions | 9.2 | 10.3 | 1.1 | |||||
Other permanent differences | 5.6 | 1.9 | (0.9 | ) | ||||
Effective income tax rate | 11.0 | % | 21.7 | % | 19.5 | % |
rates.
For 2013, our effective income tax rate was 16.0%19.5%, for an income tax provision of $39.5$53.6 million, as compared to an effective income tax rate of 16.0%18.5% and an income tax provision of $38.2$46.0 million for 2012.2013. The effective income tax rate for 20132014 remained relatively flat compared to 2012.2013. However, there were underlying differences in the actual results of our subsidiaries in tax jurisdictions with different income tax rates as compared to 2012 and differences in outstanding uncertain tax positions net of certain nonrecurring discrete tax items including statute lapses, audit settlements, and a change in estimate.
2013.
75
The temporary differences which comprise our net deferred tax liabilities are as follows (in millions):
|
|
|
|
|
|
|
|
| As of December 31, | ||||
|
| 2015 |
| 2014 | ||
Gross Deferred Tax Assets: |
|
|
|
|
|
|
Bad debt reserve |
| $ | 5.0 |
| $ | 5.5 |
Net operating loss |
|
| 13.0 |
|
| 4.8 |
Accrued and other share-based compensation |
|
| 20.6 |
|
| 21.6 |
Accrued expenses |
|
| — |
|
| 8.6 |
U.S. foreign income tax credits |
|
| 5.3 |
|
| — |
Other income tax credits |
|
| 0.7 |
|
| — |
Customer deposits |
|
| 5.7 |
|
| 6.1 |
Installment sale |
|
| 6.7 |
|
| 6.6 |
Cash flow hedges |
|
| 0.8 |
|
| — |
Unrealized foreign exchange |
|
| 18.2 |
|
| 7.6 |
Total gross deferred tax assets |
|
| 76.0 |
|
| 60.8 |
Less: Valuation allowance |
|
| 2.9 |
|
| — |
Gross deferred tax assets, net of valuation allowance |
|
| 73.1 |
|
| 60.8 |
Deferred Tax Liabilities: |
|
|
|
|
|
|
Depreciation |
|
| (20.8) |
|
| (13.1) |
Goodwill and intangible assets |
|
| (56.2) |
|
| (45.3) |
Prepaid expenses, deductible for tax purposes |
|
| (4.4) |
|
| (4.5) |
Accrued expenses |
|
| (2.5) |
|
| — |
Unrealized derivatives |
|
| (5.1) |
|
| (8.2) |
Other |
|
| — |
|
| (1.2) |
Total gross deferred tax liabilities |
|
| (89.0) |
|
| (72.3) |
Net deferred tax liability |
| $ | (15.9) |
| $ | (11.5) |
Reported on the consolidated balance sheets as: |
|
|
|
|
|
|
Other current assets for deferred tax assets, current |
| $ | — |
| $ | 22.8 |
Identifiable intangible and other non-current assets for deferred tax assets, non-current |
| $ | 20.7 |
| $ | 15.6 |
Accrued expenses and other current liabilities for deferred tax liabilities, current |
| $ | — |
| $ | 0.4 |
Non-current income tax liabilities, net for deferred tax liabilities, non-current |
| $ | 36.6 |
| $ | 49.4 |
As of December 31, | |||||||
2016 | 2015 | ||||||
Gross Deferred Tax Assets: | |||||||
Bad debt reserve | $ | 4.5 | $ | 5.0 | |||
Net operating loss | 38.6 | 13.0 | |||||
Accrued and other share-based compensation | 26.2 | 20.6 | |||||
Accrued expenses | 5.0 | — | |||||
U.S. foreign income tax credits | 7.8 | 5.3 | |||||
Other income tax credits | 0.2 | 0.7 | |||||
Customer deposits | 6.3 | 5.7 | |||||
Installment sale | — | 6.7 | |||||
Cash flow hedges | 4.6 | 0.8 | |||||
Unrealized foreign exchange | — | 2.7 | |||||
Total gross deferred tax assets | 93.2 | 60.5 | |||||
Less: Valuation allowance | 7.1 | 2.9 | |||||
Gross deferred tax assets, net of valuation allowance | 86.1 | 57.6 | |||||
Deferred Tax Liabilities: | |||||||
Depreciation | (8.5 | ) | (20.8 | ) | |||
Goodwill and intangible assets | (56.1 | ) | (56.2 | ) | |||
Unrealized foreign exchange | (8.0 | ) | — | ||||
Prepaid expenses, deductible for tax purposes | (5.8 | ) | (4.4 | ) | |||
Accrued expenses | — | (2.5 | ) | ||||
Unrealized derivatives | (2.4 | ) | (5.1 | ) | |||
Other | (0.7 | ) | — | ||||
Total gross deferred tax liabilities | (81.5 | ) | (89.0 | ) | |||
Net deferred tax liability | $ | — | $ | (31.4 | ) | ||
Net deferred tax asset | 4.6 | — | |||||
Reported on the consolidated balance sheets as: | |||||||
Identifiable intangible and other non-current assets for deferred tax assets, non-current | $ | 20.6 | $ | 5.2 | |||
Non-current income tax liabilities, net for deferred tax liabilities, non-current | $ | 16.0 | $ | 36.6 |
| |||
|
| ||
|
| ||
| |||
| |||
| |||
| |||
| |||
| |||
| |||
| |||
| |||
| |||
| |||
|
|
76
Expiration Date | Deferred Tax Asset | ||
December 31, 2021 | $ | 0.1 | |
December 31, 2022 | 0.1 | ||
December 31, 2023 | 0.3 | ||
December 31, 2024 | 0.6 | ||
December 31, 2025 | 0.9 | ||
December 31, 2036 | 31.8 | ||
Indefinite | 4.8 | ||
Total | $ | 38.6 |
We assessed the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. On the basis of this evaluation, as of December 31, 2015,2016, a valuation allowance of $2.9$7.1 million has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income during the carryforward period change or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as growth projections.
In addition, as a result of certain realization requirements of accounting guidance on stock compensation, the table of deferred tax assets and liabilities shown above does not include certain deferred tax assets as of December 31, 2015 and 2014 that arose directly from income tax deductions related to equity compensation in excess of compensation recognized for financial reporting. As of December 31, 2015 and 2014, we had no foreign tax credits related to the excess stock compensation deductions that resulted in an income tax deduction or credit before the realization of the income tax benefit from the deduction or credit. We use the “with and without” method for purposes of determining when excess income tax benefits have been realized.
As of December 31, 2015 and 2014, our annual capital in excess of par value pool of windfall income tax benefits related to employee compensation was estimated to be nil and $1.0 million, respectively. As of December 31, 2015, we had unrecognized U.S. NOLs of $4.5 million related to the exercise of stock awards. When realized, the U.S. NOL will result in a benefit recorded in additional paid in capital of $1.6 million, with a corresponding decrease in income tax payable.
We recorded a decrease of $2.1 million of liabilities related to unrecognized income tax benefits (“Unrecognized Tax Liabilities”) and a decrease of $4.5 million of assets related to unrecognized income tax benefits (“Unrecognized Tax Assets”) during 2014. In addition, during 2014, we recorded a decrease of $0.5 million to our Unrecognized Tax Liabilities related to a foreign currency translation gain, which is included in other income (expense), net, in the accompanying consolidated statements of income and comprehensive income. As of December 31, 2014, our Unrecognized Tax Liabilities, including penalties and interest, were $33.0 million and our Unrecognized Tax Assets were $2.3 million.
|
|
|
|
|
|
|
|
|
|
|
| 2015 |
| 2014 |
| 2013 | |||
Unrecognized Tax Liabilities – opening balance |
| $ | 24.3 |
| $ | 26.5 |
| $ | 22.3 |
Gross increases – tax positions in prior period |
|
| 9.2 |
|
| — |
|
| 2.6 |
Gross decreases – tax positions in prior period |
|
| (4.8) |
|
| (2.8) |
|
| — |
Gross increases – tax positions in current period |
|
| 20.9 |
|
| 6.6 |
|
| 5.0 |
Gross decreases – tax positions in current period |
|
| — |
|
| — |
|
| — |
Settlements |
|
| — |
|
| (3.6) |
|
| — |
Lapse of statute of limitations |
|
| (2.9) |
|
| (2.4) |
|
| (3.4) |
Unrecognized Tax Liabilities – ending balance |
| $ | 46.7 |
| $ | 24.3 |
| $ | 26.5 |
2016 | 2015 | 2014 | |||||||||
Unrecognized Tax Liabilities – opening balance | $ | 46.7 | $ | 24.3 | $ | 26.5 | |||||
Gross increases – tax positions in prior period | 18.0 | 9.2 | — | ||||||||
Gross decreases – tax positions in prior period | (15.4 | ) | (4.8 | ) | (2.8 | ) | |||||
Gross increases – tax positions in current period | 11.3 | 20.9 | 6.6 | ||||||||
Gross decreases – tax positions in current period | — | — | — | ||||||||
Settlements | — | — | (3.6 | ) | |||||||
Lapse of statute of limitations | (2.8 | ) | (2.9 | ) | (2.4 | ) | |||||
Unrecognized Tax Liabilities – ending balance | $ | 57.8 | $ | 46.7 | $ | 24.3 |
77
income tax rate by 20.7%39.8%. As of December 31, 2015,2016, it does not appear that the total amount of our unrecognized income tax benefits will significantly increase or decrease within the next twelve months.
are appealing.
Open Tax Year | |||||||
Jurisdiction | Examination in progress |
| Examination not yet initiated | ||||
| 2011 - 2012 |
|
| ||||
| 2011 - 2014 |
| |||||
Singapore | None |
| 2011 - | ||||
United Kingdom | 2014 |
| 2012 - | ||||
Brazil | None |
| |||||
Chile | None |
|
| ||||
Denmark | None |
|
|
10.
78
The following table presents information about our gross assets and liabilities that are measured at fair value on a recurring basis as of December 31, 20152016 and 20142015 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Netting and |
|
|
| |
|
| Level 1 |
| Level 2 |
| Level 3 |
| Sub-Total |
| Collateral |
| Total | ||||||
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| �� |
Commodity contracts |
| $ | 255.4 |
| $ | 251.9 |
| $ | 3.2 |
| $ | 510.5 |
| $ | (279.0) |
| $ | 231.5 |
Foreign currency contracts |
|
| — |
|
| 12.4 |
|
| — |
|
| 12.4 |
|
| (4.1) |
|
| 8.3 |
Cash surrender value of life insurance |
|
| — |
|
| 2.4 |
|
| — |
|
| 2.4 |
|
| — |
|
| 2.4 |
Total |
| $ | 255.4 |
| $ | 266.7 |
| $ | 3.2 |
| $ | 525.3 |
| $ | (283.1) |
| $ | 242.2 |
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts |
| $ | 340.1 |
| $ | 123.4 |
| $ | 0.2 |
| $ | 463.7 |
| $ | (389.6) |
| $ | 74.1 |
Foreign currency contracts |
|
| — |
|
| 5.0 |
|
| — |
|
| 5.0 |
|
| (4.1) |
|
| 0.9 |
Inventories |
|
| — |
|
| 14.3 |
|
|
|
|
| 14.3 |
|
| — |
|
| 14.3 |
Total |
| $ | 340.1 |
| $ | 142.7 |
| $ | 0.2 |
| $ | 483.0 |
| $ | (393.7) |
| $ | 89.3 |
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts |
| $ | 173.7 |
| $ | 495.6 |
| $ | 4.2 |
| $ | 673.5 |
| $ | (368.0) |
| $ | 305.5 |
Foreign currency contracts |
|
| — |
|
| 21.8 |
|
| — |
|
| 21.8 |
|
| (12.0) |
|
| 9.8 |
Cash surrender value of life insurance |
|
| — |
|
| 2.2 |
|
| — |
|
| 2.2 |
|
| — |
|
| 2.2 |
Total |
| $ | 173.7 |
| $ | 519.6 |
| $ | 4.2 |
| $ | 697.5 |
| $ | (380.0) |
| $ | 317.5 |
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts |
| $ | 306.4 |
| $ | 329.9 |
| $ | 1.3 |
| $ | 637.6 |
| $ | (595.6) |
| $ | 42.0 |
Foreign currency contracts |
|
| — |
|
| 12.0 |
|
| — |
|
| 12.0 |
|
| (12.0) |
|
| — |
Inventories |
|
| — |
|
| 22.9 |
|
| — |
|
| 22.9 |
|
| — |
|
| 22.9 |
Total |
| $ | 306.4 |
| $ | 364.8 |
| $ | 1.3 |
| $ | 672.5 |
| $ | (607.6) |
| $ | 64.9 |
Fair Value Measurements as of December 31, 2016 | ||||||||||||
Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | |||||||||
Assets: | ||||||||||||
Commodities contracts | $ | 273.6 | $ | 55.3 | $ | 2.3 | $ | 331.2 | ||||
Foreign currency contracts | — | 16.0 | — | 16.0 | ||||||||
Cash surrender value of life insurance | — | 4.0 | — | 4.0 | ||||||||
Total assets at fair value | $ | 273.6 | $ | 75.3 | $ | 2.3 | $ | 351.2 | ||||
Liabilities: | ||||||||||||
Commodities contracts | $ | 236.6 | $ | 88.8 | $ | 0.7 | $ | 326.1 | ||||
Foreign currency contracts | — | 6.4 | — | 6.4 | ||||||||
Total liabilities at fair value | $ | 236.6 | $ | 95.2 | $ | 0.7 | $ | 332.5 |
Fair Value Measurements as of December 31, 2015 | ||||||||||||
Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | |||||||||
Assets: | ||||||||||||
Commodities contracts | $ | 262.0 | $ | 252.0 | $ | 3.3 | $ | 517.3 | ||||
Foreign currency contracts | — | 12.4 | — | 12.4 | ||||||||
Cash surrender value of life insurance | — | 2.4 | — | 2.4 | ||||||||
Total assets at fair value | $ | 262.0 | $ | 266.8 | $ | 3.3 | $ | 532.1 | ||||
Liabilities: | ||||||||||||
Commodities contracts | $ | 339.8 | $ | 123.4 | $ | 0.2 | $ | 463.4 | ||||
Foreign currency contracts | — | 5.0 | — | 5.0 | ||||||||
Total liabilities at fair value | $ | 339.8 | $ | 128.4 | $ | 0.2 | $ | 468.5 |
Nonrecurring Fair Value Measurements. In connection with the acquisition of all of the outstanding stock of Pester, we committed to a plan to sell certain assets and liabilities of Pester’s fuel retail business. The fair value of the assets and liabilities held for sale were measured using a discounted cash flow valuation methodology. In accordance with the applicable accounting guidance, the long-lived assets held for sale were recorded at fair value less cost to sell at the acquisition date. The carrying amounts of the current assets and liabilities held for sale approximate fair value based on the short-term maturities of these instruments. Based on the fair value hierarchy, as of December 31, 2015, the fair value of the asset disposal group (excluding inventories) of $37.8 million and the liability disposal group of $10.6 million were categorized as Level 3, as significant unobservable inputs were used in the valuation of such assets and liabilities. The inventories of $4.2 million as of December 31, 2015 were categorized as Level 2 as they were valued based on the price to retailers in a wholesale market.
79
The following table presents information regarding the balance sheet location of our commodity and foreign currency contracts net assets and liabilities (in millions):
|
|
|
|
|
|
|
|
| As of December 31, | ||||
|
| 2015 |
| 2014 | ||
Commodity Contracts |
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
Short-term derivative assets, net |
| $ | 212.6 |
| $ | 294.3 |
Identifiable intangible and other non-current assets |
|
| 18.9 |
|
| 11.2 |
Total net assets |
| $ | 231.5 |
| $ | 305.5 |
Liabilities: |
|
|
|
|
|
|
Accrued expenses and other current liabilities |
| $ | 68.7 |
| $ | 41.3 |
Other long-term liabilities |
|
| 5.4 |
|
| 0.7 |
Total net liabilities |
| $ | 74.1 |
| $ | 42.0 |
Foreign Currency Contracts |
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
Short-term derivative assets, net |
| $ | 7.6 |
| $ | 9.3 |
Identifiable intangible and other non-current assets |
|
| 0.7 |
|
| 0.5 |
Total net assets |
| $ | 8.3 |
| $ | 9.8 |
Liabilities: |
|
|
|
|
|
|
Accrued expenses and other current liabilities |
| $ | 0.9 |
| $ | — |
Total net liabilities |
| $ | 0.9 |
| $ | — |
For our derivative contracts, we may enter into master netting, collateral and offset agreements with counterparties. These agreements provide us the ability to offset a counterparty’s rights and obligations, request additional collateral when necessary or liquidate the collateral in the event of counterparty default. We net fair value of cash collateral paid or received against fair value amounts recognized for net derivative positions executed with the same counterparty under the same master netting or offset agreement.
As The following tables summarize those commodity derivative balances subject to the right of setoff as presented on our consolidated balance sheet. We have elected to offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements when a legal right offset exists.
Fair Value as of December 31, 2016 | ||||||||||||||||||
Gross Amounts Recognized | Gross Amounts Offset | Net Amounts Presented | Cash Collateral | Gross Amounts Without Right of Offset | Net Amounts | |||||||||||||
Assets: | ||||||||||||||||||
Commodities contracts | $ | 331.2 | $ | 249.7 | $ | 81.5 | $ | 27.1 | $ | — | $ | 54.5 | ||||||
Foreign currency contracts | 16.0 | 5.1 | 10.9 | — | — | 10.9 | ||||||||||||
Total assets at fair value | $ | 347.2 | $ | 254.8 | $ | 92.4 | $ | 27.1 | $ | — | $ | 65.3 | ||||||
Liabilities: | ||||||||||||||||||
Commodities contracts | $ | 326.1 | $ | 249.7 | $ | 76.5 | $ | 2.0 | $ | — | $ | 74.5 | ||||||
Foreign currency contracts | 6.4 | 5.1 | 1.2 | — | — | 1.2 | ||||||||||||
Total liabilities at fair value | $ | 332.5 | $ | 254.8 | $ | 77.7 | $ | 2.0 | $ | — | $ | 75.7 |
Fair Value as of December 31, 2015 | ||||||||||||||||||
Gross Amounts Recognized | Gross Amounts Offset | Net Amounts Presented | Cash Collateral | Gross Amounts Without Right of Offset | Net Amounts | |||||||||||||
Assets: | ||||||||||||||||||
Commodities contracts | $ | 517.3 | $ | 257.2 | $ | 260.1 | $ | 28.4 | $ | — | $ | 231.7 | ||||||
Foreign currency contracts | 12.4 | 4.1 | 8.2 | — | — | 8.2 | ||||||||||||
Total assets at fair value | $ | 529.6 | $ | 261.3 | $ | 268.4 | $ | 28.4 | $ | — | $ | 240.0 | ||||||
Liabilities: | ||||||||||||||||||
Commodities contracts | $ | 463.4 | $ | 257.2 | $ | 206.3 | $ | 140.8 | $ | — | $ | 65.5 | ||||||
Foreign currency contracts | 5.0 | 4.1 | 0.9 | — | — | 0.9 | ||||||||||||
Total liabilities at fair value | $ | 468.5 | $ | 261.3 | $ | 207.2 | $ | 140.8 | $ | — | $ | 66.4 |
setoff.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Beginning of Period |
| Realized and Unrealized Gains (Losses) Included in Earnings |
| Settlements |
|
| Transfers into Level 3 |
|
| End of Period |
|
| Change in Unrealized Gains (Losses) Relating to Assets and Liabilities that are Held at end of Period |
| Location of Realized and Unrealized gains (Losses) in Earnings | |||
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts |
| $ | 4.2 |
| $ | 3.4 |
| $ | 5.3 |
| $ | 1.0 |
| $ | 3.3 |
| $ | 2.8 |
| Revenue |
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts |
| $ | 1.3 |
| $ | 0.6 |
| $ | 0.5 |
| $ | (0.1) |
| $ | 0.3 |
| $ | 0.2 |
| Cost of revenue |
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts |
| $ | — |
| $ | 12.7 |
| $ | 8.9 |
| $ | 0.4 |
| $ | 4.2 |
| $ | 4.2 |
| Revenue |
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts |
| $ | — |
| $ | (1.4) |
| $ | 0.1 |
| $ | — |
| $ | (1.3) |
| $ | (1.3) |
| Cost of revenue |
80
2016 | 2015 | |||||
Fair value at beginning of the period | $ | 3.0 | $ | 2.8 | ||
Included in earnings | (1.3 | ) | 4.2 | |||
Settlements | — | 4.8 | ||||
Transfers in | — | 0.9 | ||||
Transfers out | 0.1 | — | ||||
Fair value at end of period | $ | 1.6 | $ | 3.0 | ||
Gains for the period included in earnings attributable to the change in unrealized gains relating to derivatives still held at the reporting date | $ | 1.6 | $ | 2.6 |
The nature of inputs that are considered Level 3 are modeled inputs. Commodity contractsContracts are categorized in Level 3 due to the significance of the unobservable model inputs to their respective fair values. The unobservable model inputs, such as basis differentials, are based on the difference between the historical prices of our prior transactions and the underlying observable data as well as certain risk related to non-performance. The effect on our income before income taxes of a 10% change in the model input for non-performance risk would not be significant. There were no transfers between Level 1 and Level 2 during the periods presented. Transfers between Level 2 and Level 3 were due to the increased significance of basis adjustments which are Level 3 measurements.
11.
|
|
|
|
|
|
|
|
|
|
|
| For the Year ended December 31, | |||||||
|
| 2015 |
| 2014 |
| 2013 | |||
Revenue: |
|
|
|
|
|
|
|
|
|
Aviation segment |
| $ | 11,738.2 |
| $ | 17,268.8 |
| $ | 16,087.6 |
Marine segment |
|
| 9,367.2 |
|
| 13,843.3 |
|
| 14,790.3 |
Land segment |
|
| 9,274.3 |
|
| 12,274.3 |
|
| 10,684.0 |
|
| $ | 30,379.7 |
| $ | 43,386.4 |
| $ | 41,561.9 |
Gross profit: |
|
|
|
|
|
|
|
|
|
Aviation segment |
| $ | 361.4 |
| $ | 321.6 |
| $ | 327.2 |
Marine segment |
|
| 189.6 |
|
| 205.6 |
|
| 177.1 |
Land segment |
|
| 309.5 |
|
| 286.4 |
|
| 248.5 |
|
| $ | 860.5 |
| $ | 813.6 |
| $ | 752.8 |
Income from operations: |
|
|
|
|
|
|
|
|
|
Aviation segment |
| $ | 131.7 |
| $ | 142.3 |
| $ | 150.9 |
Marine segment |
|
| 73.0 |
|
| 90.0 |
|
| 73.8 |
Land segment |
|
| 103.4 |
|
| 90.3 |
|
| 84.8 |
|
|
| 308.1 |
|
| 322.6 |
|
| 309.5 |
Corporate overhead – unallocated |
|
| 60.9 |
|
| 53.5 |
|
| 45.0 |
|
| $ | 247.2 |
| $ | 269.1 |
| $ | 264.5 |
Depreciation and amortization: |
|
|
|
|
|
|
|
|
|
Aviation segment, includes allocation from corporate |
| $ | 22.5 |
| $ | 15.4 |
| $ | 15.9 |
Marine segment, includes allocation from corporate |
|
| 6.4 |
|
| 5.6 |
|
| 5.4 |
Land segment, includes allocation from corporate |
|
| 30.8 |
|
| 34.7 |
|
| 20.8 |
Corporate |
|
| 3.7 |
|
| 3.7 |
|
| 2.6 |
|
| $ | 63.4 |
| $ | 59.4 |
| $ | 44.7 |
Capital expenditures: |
|
|
|
|
|
|
|
|
|
Aviation segment |
| $ | 13.4 |
| $ | 9.0 |
| $ | 5.8 |
Marine segment |
|
| 8.0 |
|
| 13.9 |
|
| 17.3 |
Land segment |
|
| 16.4 |
|
| 16.0 |
|
| 54.3 |
Corporate |
|
| 10.6 |
|
| 12.9 |
|
| 5.3 |
|
| $ | 48.4 |
| $ | 51.8 |
| $ | 82.7 |
81
For the Year ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Revenue: | |||||||||||
Aviation segment | $ | 10,914.4 | $ | 11,739.8 | $ | 17,268.8 | |||||
Marine segment | 7,182.5 | 9,367.2 | 13,843.3 | ||||||||
Land segment | 8,918.8 | 9,274.3 | 12,279.6 | ||||||||
$ | 27,015.8 | $ | 30,381.4 | $ | 43,391.8 | ||||||
Gross profit: | |||||||||||
Aviation segment | $ | 401.0 | $ | 361.9 | $ | 323.4 | |||||
Marine segment | 149.5 | 189.6 | 207.8 | ||||||||
Land segment | 348.5 | 309.5 | 287.9 | ||||||||
$ | 899.0 | $ | 861.0 | $ | 819.1 | ||||||
Income from operations: | |||||||||||
Aviation segment | $ | 160.5 | $ | 132.2 | $ | 144.1 | |||||
Marine segment | 30.2 | 73.0 | 92.2 | ||||||||
Land segment | 70.8 | 101.4 | 93.9 | ||||||||
261.5 | 306.5 | 330.2 | |||||||||
Corporate overhead - unallocated | (72.7 | ) | (60.9 | ) | (53.5 | ) | |||||
$ | 188.9 | $ | 245.7 | $ | 276.7 | ||||||
Depreciation and amortization: | |||||||||||
Aviation segment, includes allocation from corporate | $ | 24.2 | $ | 22.6 | $ | 15.4 | |||||
Marine segment, includes allocation from corporate | 6.6 | 6.4 | 5.6 | ||||||||
Land segment, includes allocation from corporate | 47.1 | 32.9 | 32.5 | ||||||||
Corporate | 4.4 | 3.7 | 3.7 | ||||||||
$ | 82.3 | $ | 65.5 | $ | 57.3 | ||||||
Capital expenditures: | |||||||||||
Aviation segment | $ | 4.9 | $ | 13.4 | $ | 9.0 | |||||
Marine segment | 6.1 | 8.0 | 13.9 | ||||||||
Land segment | 12.3 | 16.4 | 16.0 | ||||||||
Corporate | 14.5 | 10.6 | 12.9 | ||||||||
$ | 37.7 | $ | 48.4 | $ | 51.8 |
Information concerning our accounts receivable, net, goodwill, identifiable intangible assets, net and total assets by segment is as follows (in millions):
|
|
|
|
|
|
|
|
| As of December 31, | ||||
|
| 2015 |
| 2014 | ||
Accounts receivable, net: |
|
|
|
|
|
|
Aviation segment, net of allowance for bad debt of $6.1 and $7.9 as of December 31, 2015 and 2014 respectively |
| $ | 571.6 |
| $ | 685.1 |
Marine segment, net of allowance for bad debt of $10.6 and $8.4 as of December 31, 2015 and 2014 respectively |
|
| 611.2 |
|
| 974.0 |
Land segment, net of allowance for bad debt of $7.2 and $9.4 as of December 31, 2015 and 2014 respectively |
|
| 629.8 |
|
| 647.3 |
|
| $ | 1,812.6 |
| $ | 2,306.4 |
Goodwill: |
|
|
|
|
|
|
Aviation segment |
| $ | 173.7 |
| $ | 174.3 |
Marine segment |
|
| 71.4 |
|
| 73.1 |
Land segment |
|
| 430.7 |
|
| 405.9 |
|
| $ | 675.8 |
| $ | 653.3 |
Identifiable intangible assets, net: |
|
|
|
|
|
|
Aviation segment |
| $ | 64.7 |
| $ | 72.9 |
Marine segment |
|
| 6.0 |
|
| 7.2 |
Land segment |
|
| 140.2 |
|
| 137.5 |
|
| $ | 210.9 |
| $ | 217.6 |
Total assets: |
|
|
|
|
|
|
Aviation segment |
| $ | 1,546.4 |
| $ | 1,636.5 |
Marine segment |
|
| 1,165.6 |
|
| 1,483.0 |
Land segment |
|
| 1,651.5 |
|
| 1,570.6 |
Corporate |
|
| 185.9 |
|
| 190.9 |
|
| $ | 4,549.4 |
| $ | 4,881.0 |
As of December 31, | |||||||
2016 | 2015 | ||||||
Accounts receivable, net: | |||||||
Aviation segment, net of allowance for bad debt of $6.6 and $6.1 as of December 31, 2016 and December 31, 2015, respectively | $ | 776.0 | $ | 571.6 | |||
Marine segment, net of allowance for bad debt of $10.2 and $10.7 as of December 31, 2016 and December 31, 2015, respectively | 830.5 | 611.2 | |||||
Land segment, net of allowance for bad debt of $8.2 and $8.2 as of December 31, 2016 and December 31, 2015, respectively | 737.5 | 629.8 | |||||
$ | 2,344.0 | $ | 1,812.6 | ||||
Goodwill: | |||||||
Aviation segment | $ | 266.8 | $ | 173.7 | |||
Marine segment | 72.3 | 71.4 | |||||
Land segment | 496.7 | 430.7 | |||||
$ | 835.8 | $ | 675.8 | ||||
Identifiable intangible assets, net: | |||||||
Aviation segment | $ | 72.1 | $ | 64.7 | |||
Marine segment | 5.0 | 6.1 | |||||
Land segment | 205.2 | 140.2 | |||||
$ | 282.3 | $ | 210.9 | ||||
Total assets: | |||||||
Aviation segment | $ | 2,050.6 | $ | 1,546.9 | |||
Marine segment | 1,287.7 | 1,149.5 | |||||
Land segment | 1,928.5 | 1,651.5 | |||||
Corporate | 145.8 | 177.3 | |||||
$ | 5,412.6 | $ | 4,525.3 |
|
|
|
|
|
|
|
|
|
|
|
| For the Year ended December 31, | |||||||
|
| 2015 |
| 2014 |
| 2013 | |||
Revenue: |
|
|
|
|
|
|
|
|
|
United States |
| $ | 15,494.6 |
| $ | 21,514.3 |
| $ | 21,149.2 |
EMEA (1) |
|
| 6,382.2 |
|
| 8,612.8 |
|
| 7,017.5 |
Asia/Pacific (2) |
|
| 5,863.4 |
|
| 9,844.7 |
|
| 10,215.4 |
Americas, excluding United States |
|
| 2,639.5 |
|
| 3,414.6 |
|
| 3,179.8 |
Total |
| $ | 30,379.7 |
| $ | 43,386.4 |
| $ | 41,561.9 |
Income from operations: |
|
|
|
|
|
|
|
|
|
United States |
| $ | 16.9 |
| $ | 52.2 |
| $ | 50.0 |
EMEA |
|
| 157.7 |
|
| 121.7 |
|
| 109.6 |
Asia/Pacific |
|
| 54.4 |
|
| 74.7 |
|
| 70.6 |
Americas, excluding United States |
|
| 18.2 |
|
| 20.5 |
|
| 34.3 |
Total |
| $ | 247.2 |
| $ | 269.1 |
| $ | 264.5 |
82
For the Year ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Revenue: | |||||||||||
United States | $ | 14,368.8 | $ | 15,496.3 | $ | 21,519.6 | |||||
EMEA (1) | 6,018.6 | 6,382.2 | 8,613.1 | ||||||||
Asia/Pacific (2) | 4,271.1 | 5,863.4 | 9,844.7 | ||||||||
Americas, excluding United States | 2,357.2 | 2,639.5 | 3,414.4 | ||||||||
Total | $ | 27,015.8 | $ | 30,381.4 | $ | 43,391.8 | |||||
Income from operations: | |||||||||||
United States | $ | (26.1 | ) | $ | 19.2 | $ | 51.8 | ||||
EMEA | 155.3 | 153.8 | 123.7 | ||||||||
Asia/Pacific | 38.3 | 54.4 | 76.2 | ||||||||
Americas, excluding United States | 21.3 | 18.2 | 24.9 | ||||||||
Total | $ | 188.9 | $ | 245.7 | $ | 276.7 |
|
|
|
|
|
|
| |||||||
|
| As of December 31, | As of December 31, | ||||||||||
|
| 2015 |
| 2014 | 2016 | 2015 | |||||||
Non-current assets: |
|
|
|
|
|
| |||||||
United States |
| $ | 639.9 |
| $ | 548.1 | $ | 799.2 | $ | 639.9 | |||
EMEA |
|
| 604.6 |
|
| 595.4 | 587.4 | 604.6 | |||||
Asia/Pacific |
|
| 5.3 |
|
| 12.3 | 17.2 | 5.3 | |||||
Americas, excluding United States |
|
| 45.0 |
|
| 51.8 | 172.4 | 29.5 | |||||
Total |
| $ | 1,294.8 |
| $ | 1,207.6 | $ | 1,576.1 | $ | 1,279.3 | |||
Total assets: |
|
|
|
|
|
| |||||||
United States |
| $ | 1,899.3 |
| $ | 1,908.1 | $ | 2,462.0 | $ | 1,890.5 | |||
EMEA |
|
| 1,719.5 |
|
| 1,697.7 | 1,805.6 | 1,719.5 | |||||
Asia/Pacific |
|
| 614.9 |
|
| 922.7 | 661.2 | 614.9 | |||||
Americas, excluding United States |
|
| 315.7 |
|
| 352.5 | 483.9 | 300.2 | |||||
Total |
| $ | 4,549.4 |
| $ | 4,881.0 | $ | 5,412.6 | $ | 4,525.3 |
(1) | Includes revenue related to the |
(2) | Includes revenue related to Singapore of $4.2 billion, $5.8 billion and $9.7 billion for 2016, 2015 and 2014, |
(2) Includes revenue related to Singapore of $5.8billion, $9.7 billion and $10.1 billion for 2015, 2014 and 2013, respectively.
12.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| March 31, |
| June 30, |
| September 30, |
| December 31, | ||||
|
| 2015 (1) |
| 2015 (1) |
| 2015 (1)(2) |
| 2015 (1)(2) | ||||
Revenue |
| $ | 7,340.7 |
| $ | 8,496.4 |
| $ | 7,810.7 |
| $ | 6,731.9 |
Gross profit |
| $ | 215.4 |
| $ | 190.4 |
| $ | 226.7 |
| $ | 228.0 |
Net income including noncontrolling interest |
| $ | 54.6 |
| $ | 28.4 |
| $ | 48.6 |
| $ | 51.4 |
Net income attributable to World Fuel |
| $ | 55.6 |
| $ | 29.9 |
| $ | 49.6 |
| $ | 51.8 |
Basic earnings per common share (7) |
| $ | 0.79 |
| $ | 0.42 |
| $ | 0.71 |
| $ | 0.75 |
Diluted earnings per common share (7) |
| $ | 0.78 |
| $ | 0.42 |
| $ | 0.71 |
| $ | 0.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| March 31, |
| June 30, |
| September 30, |
| December 31, | ||||
|
| 2014 (3) |
| 2014 (3)(4) |
| 2014 (3)(4)(5) |
| 2014 (3)(4)(5)(6) | ||||
Revenue |
| $ | 10,550.9 |
| $ | 11,342.5 |
| $ | 11,713.4 |
| $ | 9,779.5 |
Gross profit |
| $ | 188.0 |
| $ | 191.5 |
| $ | 214.6 |
| $ | 219.5 |
Net income including noncontrolling interest |
| $ | 50.5 |
| $ | 46.3 |
| $ | 54.4 |
| $ | 67.1 |
Net income attributable to World Fuel |
| $ | 50.7 |
| $ | 48.2 |
| $ | 55.6 |
| $ | 67.1 |
Basic earnings per common share (7) |
| $ | 0.72 |
| $ | 0.68 |
| $ | 0.79 |
| $ | 0.95 |
Diluted earnings per common share |
| $ | 0.71 |
| $ | 0.68 |
| $ | 0.78 |
| $ | 0.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83
March 31, | June 30, | September 30, | December 31, | ||||||||||||
2016 | 2016 | 2016 (1) | 2016 (1)(2) | ||||||||||||
Revenue | $ | 5,190.8 | $ | 6,633.0 | $ | 7,399.8 | $ | 7,792.1 | |||||||
Gross profit | $ | 221.5 | $ | 218.5 | $ | 236.7 | $ | 222.3 | |||||||
Net income including noncontrolling interest | $ | 51.6 | $ | 29.8 | $ | 43.0 | $ | 2.1 | |||||||
Net income attributable to World Fuel | $ | 51.8 | $ | 30.0 | $ | 42.7 | $ | 2.2 | |||||||
Basic earnings per common share (5) | $ | 0.74 | $ | 0.43 | $ | 0.62 | $ | 0.03 | |||||||
Diluted earnings per common share (5) | $ | 0.74 | $ | 0.43 | $ | 0.61 | $ | 0.03 |
|
13. Assets(2)Includes the operating results of certain affiliates from ExxonMobil in Canada and Liabilities HeldFrance since November 1, 2016 and additional affiliates from ExxonMobil in the U.K. and France since December 1, 2016 as a result of the acquisition.
each quarter and the full year based upon respective weighted average shares outstanding. Therefore, the sum of the quarterly basic and diluted earnings per share amounts may not equal the annual basic and diluted earnings per share amounts reported.
As of December 31, 2015 | ||||||||||
As Reported | Adjustment | Revised | ||||||||
Assets: | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 582.5 | — | $ | 582.5 | |||||
Accounts receivable, net | 1,812.6 | — | 1,812.6 | |||||||
Inventories | 359.1 | — | 359.1 | |||||||
Prepaid expenses | 57.9 | — | 57.9 | |||||||
Short-term derivative assets, net | 227.2 | (6.8 | ) | 220.4 | ||||||
Other current assets | 209.8 | (1.8 | ) | 208.0 | ||||||
Current assets held for sale | 5.5 | — | 5.5 | |||||||
Total current assets | 3,254.6 | (8.6 | ) | 3,246.0 | ||||||
Property and equipment, net | 225.6 | — | 225.6 | |||||||
Goodwill | 675.8 | — | 675.8 | |||||||
Identifiable intangible and other non-current assets | 356.9 | (15.5 | ) | 341.4 | ||||||
Non-current assets held for sale | 36.5 | — | 36.5 | |||||||
Total assets | $ | 4,549.4 | (24.1 | ) | $ | 4,525.3 | ||||
Liabilities: | ||||||||||
Current liabilities: | ||||||||||
Short-term debt | $ | 25.5 | — | $ | 25.5 | |||||
Accounts payable | 1,349.6 | — | 1,349.6 | |||||||
Customer deposits | 118.3 | — | 118.3 | |||||||
Accrued expenses and other current liabilities | 263.8 | (8.6 | ) | 255.2 | ||||||
Current liabilities held for sale | 5.6 | — | 5.6 | |||||||
Total current liabilities | 1,762.8 | (8.6 | ) | 1,754.2 | ||||||
Long-term debt | 746.7 | — | 746.7 | |||||||
Non-current income tax liabilities, net | 87.7 | — | 87.7 | |||||||
Other long-term liabilities | 25.8 | — | 25.8 | |||||||
Non-current liabilities held for sale | 5.0 | — | 5.0 | |||||||
Total liabilities | $ | 2,628.0 | (8.6 | ) | $ | 2,619.4 | ||||
Commitments and contingencies | ||||||||||
Equity: | ||||||||||
World Fuel shareholders' equity: | ||||||||||
Preferred stock, $1.00 par value; 0.1 shares authorized, none issued | — | — | — | |||||||
Common stock, $0.01 par value; 100.0 shares authorized, 70.8 and 72.1 issued and outstanding as of December 31, 2015 and December 31, 2014, respectively | 0.7 | — | 0.7 | |||||||
Capital in excess of par value | 435.3 | — | 435.3 | |||||||
Retained earnings | 1,588.6 | (19.2 | ) | 1,569.4 | ||||||
Accumulated other comprehensive loss | (113.2 | ) | 3.7 | (109.5 | ) | |||||
Total World Fuel shareholders' equity | 1,911.4 | (15.5 | ) | 1,895.9 | ||||||
Noncontrolling interest equity | 10.0 | — | 10.0 | |||||||
Total equity | 1,921.4 | (15.5 | ) | 1,905.9 | ||||||
Total liabilities and equity | $ | 4,549.4 | (24.1 | ) | $ | 4,525.3 |
14. Subsequent Event
Comprehensive Income
84
For the Year ended | For the Year ended | |||||||||||||||||||||
December 31, 2015 | December 31, 2014 | |||||||||||||||||||||
As Reported | Adjustment | Revised | As Reported | Adjustment | Revised | |||||||||||||||||
Revenue | $ | 30,379.7 | 1.7 | $ | 30,381.4 | $ | 43,386.4 | 5.4 | $ | 43,391.8 | ||||||||||||
Cost of revenue | 29,519.2 | 1.2 | 29,520.4 | 42,572.8 | (0.1 | ) | 42,572.7 | |||||||||||||||
Gross profit | 860.5 | 0.5 | 861.0 | 813.6 | 5.5 | 819.1 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Compensation and employee benefits | 365.8 | — | 365.8 | 319.8 | — | 319.8 | ||||||||||||||||
Provision for bad debt | 7.5 | — | 7.5 | 3.8 | — | 3.8 | ||||||||||||||||
General and administrative | 240.0 | 2.1 | 242.1 | 220.9 | (2.1 | ) | 218.8 | |||||||||||||||
613.3 | 2.0 | 615.3 | 544.5 | (2.1 | ) | 542.4 | ||||||||||||||||
Income from operations | 247.2 | (1.5 | ) | 245.7 | 269.1 | 7.6 | 276.7 | |||||||||||||||
Non-operating expenses, net: | ||||||||||||||||||||||
Interest expense and other financing costs, net | (29.9 | ) | — | (29.9 | ) | (25.2 | ) | — | (25.2 | ) | ||||||||||||
Other income, net | 2.0 | — | 2.0 | 25.6 | (2.3 | ) | 23.3 | |||||||||||||||
(27.9 | ) | — | (27.9 | ) | 0.4 | (2.3 | ) | (1.9 | ) | |||||||||||||
Income before income taxes | 219.3 | (1.6 | ) | 217.7 | 269.5 | 5.3 | 274.8 | |||||||||||||||
Provision for income taxes | 36.3 | 10.9 | 47.2 | 51.1 | 2.5 | 53.6 | ||||||||||||||||
Net income including noncontrolling interest | 183.0 | (12.5 | ) | 170.5 | 218.4 | 2.7 | 221.1 | |||||||||||||||
Net (loss) attributable to noncontrolling interest | (3.9 | ) | — | (3.9 | ) | (3.3 | ) | — | (3.3 | ) | ||||||||||||
Net income attributable to World Fuel | $ | 186.9 | (12.4 | ) | $ | 174.5 | $ | 221.7 | 2.8 | $ | 224.5 | |||||||||||
Basic earnings per common share | $ | 2.66 | (0.17 | ) | $ | 2.49 | $ | 3.13 | 0.04 | $ | 3.17 | |||||||||||
Basic weighted average common shares | 70.2 | — | 70.2 | 70.8 | — | 70.8 | ||||||||||||||||
Diluted earnings per common share | $ | 2.64 | (0.17 | ) | $ | 2.47 | $ | 3.11 | 0.04 | $ | 3.15 | |||||||||||
Diluted weighted average common shares | 70.7 | — | 70.7 | 71.3 | — | 71.3 | ||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||
Net income including noncontrolling interest | $ | 183.0 | (12.5 | ) | $ | 170.5 | $ | 218.4 | 2.7 | $ | 221.1 | |||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||
Foreign currency translation adjustments | (49.6 | ) | 4.2 | (45.4 | ) | (30.9 | ) | 0.1 | (30.8 | ) | ||||||||||||
Cash Flow hedge, net | 0.6 | (1.4 | ) | (0.8 | ) | — | — | — | ||||||||||||||
(49.0 | ) | 2.8 | (46.2 | ) | (30.9 | ) | 0.1 | (30.8 | ) | |||||||||||||
Comprehensive income including noncontrolling interest | 134.0 | (9.7 | ) | 124.3 | 187.5 | 2.9 | 190.4 | |||||||||||||||
Comprehensive income (loss) attributable to noncontrolling interest | 0.1 | (8.0 | ) | (2.2 | ) | (3.3 | ) | — | (1.1 | ) | ||||||||||||
Comprehensive income attributable to World Fuel | $ | 133.9 | (1.6 | ) | $ | 126.4 | $ | 190.8 | 2.9 | $ | 191.4 |
17, 2017.
| ||
/s/ MICHAEL J. KASBAR | ||
Michael J. Kasbar Chairman, President and Chief Executive Officer | ||
/s/ IRA M. BIRNS | ||
Ira M. Birns Executive Vice President and Chief Financial Officer |
|
| ||
Signature | Title | ||
/s/ MICHAEL J. KASBAR
| Chairman, President and Chief Executive Officer | ||
Michael J. Kasbar | (Principal Executive Officer) | ||
/s/ IRA M. BIRNS
| Executive Vice President and Chief Financial Officer | ||
Ira M. Birns | (Principal Financial Officer) | ||
/s/ CARLOS M. VELAZQUEZ
| Senior Vice President and Chief Accounting Officer | ||
Carlos M. Velazquez | (Principal Accounting Officer) | ||
/s/ KEN BAKSHI
| Director | ||
Ken Bakshi | |||
/s/ JORGE L. BENITEZ | Director | ||
Jorge L. Benitez |
| ||
/s/ RICHARD A. KASSAR | Director | ||
Richard A. Kassar |
| ||
/s/ MYLES KLEIN
| Director | ||
Myles Klein | |||
/s/ JOHN L. MANLEY | Director | ||
John L. Manley |
| ||
/s/ J. THOMAS PRESBY | Director | ||
J. Thomas Presby |
| ||
/s/ STEPHEN K. RODDENBERRY | Director | ||
Stephen K. Roddenberry |
| ||
/s/ PAUL H. STEBBINS | Director | ||
Paul H. Stebbins |
| ||
85