Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-Q
 
(Mark One)
 
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED SEPTEMBERFor the quarterly period ended June 30, 20172020

OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE TRANSITION PERIOD FROM                      TO                      For the transition period from __________ to ___________   
 
COMMISSION FILE NUMBER 1-9533
int-20200630_g1.jpg
WORLD FUEL SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Florida

9800 N.W. 41st Street,Miami,Florida3317859-2459427
(State or other jurisdiction of

incorporation or organization)
59-2459427
(I.R.S. Employer
Identification No.)
9800 N.W. 41stStreet
Miami, Florida
(Address of Principal Executive Offices)
(Zip Code)
33178
(Zip Code)I.R.S. Employer
Identification No.)
Registrant’s telephone number, including area code:
(305)428-8000
Securities registered pursuant to Section 12(b) of the Act
Title of each classTrading Symbol (s)Name of each exchange on which registered
Common Stock , $0.01 par valueINTNew York Stock Exchange
 
Registrant’s Telephone Number, including area code: (305) 428-8000
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒þ   No ☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes ☒þ   No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”,filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  Large accelerated filer ☒þ   Accelerated filer ☐   Non-accelerated filer ☐   Smaller reporting company ☐ Emerging growth company ☐
 


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ☐   No ☒þ
 
The registrant had a total of 67,618,76263,489,928 shares of common stock, par value $0.01 per share, issued and outstanding as of October 19, 2017.July 24, 2020.




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Part I — Financial Information
 
Item 1.Financial Statements
Item 1.  Financial Statements
 
World Fuel Services Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited - In millions, except per share data)
 
 As of  As of
 September 30,
 December 31,
 June 30,December 31,
 2017
 2016
 20202019
Assets:    Assets:  
Current assets:    Current assets:  
Cash and cash equivalents $546.0
 $698.6
Cash and cash equivalents$645.7  $186.1  
Accounts receivable, net 2,583.4
 2,344.0
Accounts receivable, net1,415.9  2,891.9  
Inventories 522.7
 458.0
Inventories308.8  593.3  
Prepaid expenses 55.3
 46.5
Prepaid expenses72.7  80.6  
Short-term derivative assets, net 30.6
 58.9
Short-term derivative assets, net146.5  59.5  
Other current assets 287.3
 230.6
Other current assets341.8  358.8  
Total current assets 4,025.3
 3,836.6
Total current assets2,931.4  4,170.1  
Property and equipment, net 332.1
 311.2
Property and equipment, net368.4  360.9  
Goodwill 901.1
 835.8
Goodwill913.5  843.7  
Identifiable intangible and other non-current assets 464.6
 429.1
Identifiable intangible and other non-current assets667.6  617.7  
Total assets $5,723.1
 $5,412.6
Total assets$4,881.0  $5,992.4  
Liabilities:  
  
Liabilities:  
Current liabilities:  
  
Current liabilities:  
Current maturities of long-term debt and capital leases $23.6
 $15.4
Current maturities of long-term debtCurrent maturities of long-term debt$53.8  $54.1  
Accounts payable 2,041.0
 1,770.4
Accounts payable1,090.4  2,602.7  
Customer deposits 99.4
 90.8
Customer deposits124.4  126.7  
Accrued expenses and other current liabilities 302.2
 306.0
Accrued expenses and other current liabilities337.9  378.9  
Total current liabilities 2,466.3
 2,182.7
Total current liabilities1,606.6  3,162.4  
Long-term debt 1,128.1
 1,170.8
Long-term debt1,043.3  574.7  
Non-current income tax liabilities, net 149.7
 84.6
Non-current income tax liabilities, net211.2  210.1  
Other long-term liabilities 43.2
 34.5
Other long-term liabilities201.6  151.3  
Total liabilities $3,787.3
 $3,472.6
Total liabilities3,062.7  4,098.5  
Commitments and contingencies 


 


Commitments and contingencies (Note 12)Commitments and contingencies (Note 12)
Equity:  
  
Equity:  
World Fuel shareholders' 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, 67.7 and 69.9 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 0.7
 0.7
Preferred stock, $1.00 par value; 0.1 shares authorized, NaN issuedPreferred stock, $1.00 par value; 0.1 shares authorized, NaN issued—  —  
Common stock, $0.01 par value; 100.0 shares authorized, 63.3 and 65.2 issued and outstanding as of June 30, 2020 and December 31, 2019, respectivelyCommon stock, $0.01 par value; 100.0 shares authorized, 63.3 and 65.2 issued and outstanding as of June 30, 2020 and December 31, 2019, respectively0.6  0.7  
Capital in excess of par value 349.3
 399.9
Capital in excess of par value219.3  274.7  
Retained earnings 1,693.9
 1,679.3
Retained earnings1,768.6  1,761.3  
Accumulated other comprehensive loss (124.8) (154.8)Accumulated other comprehensive loss(173.5) (146.3) 
Total World Fuel shareholders' equity 1,919.0
 1,925.0
Total World Fuel shareholders' equity1,815.0  1,890.4  
Noncontrolling interest equity 16.8
 15.0
Noncontrolling interestNoncontrolling interest3.3  3.5  
Total equity 1,935.8
 1,940.0
Total equity1,818.3  1,893.9  
Total liabilities and equity $5,723.1
 $5,412.6
Total liabilities and equity$4,881.0  $5,992.4  
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.Consolidated Financial Statements.


1

World Fuel Services Corporation and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
(Unaudited – In millions, except per share data)
 
 For the Three Months Ended  For the Nine Months Ended  For the Three Months EndedFor the Six Months Ended
 September 30,  September 30,  June 30,June 30,
 2017
 2016
 2017
 2016
 2020201920202019
Revenue $8,543.0
 $7,399.8
 $24,823.4
 $19,223.6
Revenue$3,158.3  $9,459.4  $11,173.5  $18,138.2  
Cost of revenue 8,303.1
 7,163.1
 24,121.1
 18,546.9
Cost of revenue2,944.5  9,190.8  $10,700.9  $17,618.5  
Gross profit 239.9
 236.7
 702.3
 676.7
Gross profit213.9  268.6  472.6  519.7  
Operating expenses:  
  
  
  
Operating expenses:    
Compensation and employee benefits 107.6
 106.6
 314.5
 306.2
Compensation and employee benefits95.9  112.0  198.3  220.3  
Provision for bad debt 2.4
 1.5
 6.3
 5.4
General and administrative 68.6
 70.3
 218.7
 200.2
General and administrative84.4  79.5  168.2  150.1  
Asset impairmentsAsset impairments18.6  —  18.6  —  
Restructuring chargesRestructuring charges3.1  1.9  4.8  3.7  
 178.6
 178.4
 539.5
 511.9
202.0  193.4  389.9  374.1  
Income from operations 61.3
 58.2
 162.8
 164.8
Income from operations11.9  75.2  82.7  145.6  
Non-operating expenses, net:  
  
  
  
Non-operating expenses, net:    
Interest expense and other financing costs, net (15.8) (10.3) (42.2) (26.0)Interest expense and other financing costs, net(10.0) (20.2) (25.3) (39.6) 
Other income (expense), net (0.9) 0.5
 (5.0) 1.2
Other income (expense), net(4.9) 2.6  (2.7) 3.0  
 (16.7) (9.8) (47.3) (24.8) (14.9) (17.6) (28.1) (36.6) 
Income before income taxes 44.6
 48.4
 115.6
 140.1
Income (loss) before income taxesIncome (loss) before income taxes(3.0) 57.6  54.6  109.0  
Provision for income taxes 82.6
 5.4
 92.2
 15.7
Provision for income taxes7.7  20.0  23.7  34.0  
Net income (loss) including noncontrolling interest (37.9) 43.0
 23.4
 124.4
Net income (loss) including noncontrolling interest(10.7) 37.6  31.0  74.9  
Net income attributable to noncontrolling interest 0.6
 0.3
 0.6
 0.1
Net income (loss) attributable to noncontrolling interestNet income (loss) attributable to noncontrolling interest(0.4) 0.6  (0.2) 0.7  
Net income (loss) attributable to World Fuel $(38.5) $42.7
 $22.8
 $124.3
Net income (loss) attributable to World Fuel$(10.2) $37.0  $31.2  $74.2  
        
Basic earnings per common share $(0.57) $0.62
 $0.33
 $1.79
Basic earnings per common share$(0.16) $0.56  $0.49  $1.11  
        
Basic weighted average common shares 67.9
 69.1
 68.3
 69.4
Basic weighted average common shares63.3  66.7  64.1  66.9  
        
Diluted earnings per common share $(0.57) $0.61
 $0.33
 $1.78
Diluted earnings per common share$(0.16) $0.55  $0.48  $1.10  
        
Diluted weighted average common shares 68.2
 69.5
 68.6
 69.9
Diluted weighted average common shares63.3  67.0  64.4  67.2  
        
Comprehensive income:  
      Comprehensive income:  
Net income (loss) including noncontrolling interest $(37.9) $43.0
 $23.4
 $124.4
Net income (loss) including noncontrolling interest$(10.7) $37.6  $31.0  $74.9  
Other comprehensive income (loss):  
  
  
  Other comprehensive income (loss):   
Foreign currency translation adjustments 12.2
 (14.6) 29.8
 (27.9)Foreign currency translation adjustments5.1  (6.0) (27.9) (5.9) 
Cash Flow hedges, net of income tax benefit of $5.5 and income tax expense of $1.1 for the three and nine months ended September 30, 2017, respectively (8.7) (7.7) 1.8
 (2.8)
Other comprehensive income (loss): 3.5
 (22.4) 31.6
 (30.7)
Cash flow hedges, net of income tax benefit of $7.2 and benefit of $1.1 for the three months ended June 30, 2020 and 2019, respectively, and net of income tax expense of $0.2 and benefit of $5.2 for the six months ended June 30, 2020 and 2019, respectivelyCash flow hedges, net of income tax benefit of $7.2 and benefit of $1.1 for the three months ended June 30, 2020 and 2019, respectively, and net of income tax expense of $0.2 and benefit of $5.2 for the six months ended June 30, 2020 and 2019, respectively(21.0) (2.9) 0.7  (14.7) 
Other comprehensive income (loss)Other comprehensive income (loss)(16.0) (8.9) (27.2) (20.6) 
Comprehensive income (loss) including noncontrolling interest (34.4) 20.7
 55.0
 93.7
Comprehensive income (loss) including noncontrolling interest(26.7) 28.7  3.7  54.3  
Comprehensive income attributable to noncontrolling interest 1.1
 1.4
 2.2
 1.9
Comprehensive income (loss) attributable to noncontrolling interestComprehensive income (loss) attributable to noncontrolling interest—  —  —  (0.7) 
Comprehensive income (loss) attributable to World Fuel $(35.5) $19.3
 $52.8
 $91.9
Comprehensive income (loss) attributable to World Fuel$(26.7) $28.7  3.7  $55.0  
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.Consolidated Financial Statements.


2

World Fuel Services Corporation and Subsidiaries
Consolidated Statements of Shareholders’ Equity  
(Unaudited - In millions)
 
 Common StockCapital in
Excess of
Par Value		Retained
Earnings		Accumulated
Other
Comprehensive
Loss		Total
World Fuel
Shareholders'
Equity		Noncontrolling
Interest
Equity		 
 SharesAmountTotal Equity
Balance as of December 31, 201965.2  $0.7  $274.7  $1,761.3  $(146.3) $1,890.4  $3.5  $1,893.9  
Cumulative effect of change in accounting principle—  —  —  (11.1) —  (11.1) —  (11.1) 
Net income (loss)—  —  —  41.4  —  41.4  0.2  41.6  
Cash dividends declared—  —  —  (6.5) —  (6.5) —  (6.5) 
Amortization of share-based payment awards—  —  (1.8) —  —  (1.8) —  (1.8) 
Issuance (cancellation) of common stock related to share-based payment awards0.2  —  1.2  —  —  1.2  —  1.2  
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards—  —  (1.5) —  —  (1.5) —  (1.5) 
Purchases of common stock(2.2) —  (55.6) —  —  (55.6) —  (55.6) 
Other comprehensive income (loss)—  —  —  —  (11.3) (11.3) —  (11.3) 
Other—  (0.1) 1.2  —  —  1.2  —  1.2  
Balance as of March 31, 202063.2  $0.6  $218.2  $1,785.1  $(157.5) $1,846.4  $3.7  $1,850.1  
Net income (loss)—  —  —  (10.2) —  (10.2) (0.4) (10.7) 
Cash dividends declared—  —  —  (6.3) —  (6.3) —  (6.3) 
Amortization of share-based payment awards—  —  2.3  —  —  2.3  —  2.3  
Issuance (cancellation) of common stock related to share-based payment awards0.1  —  —  —  —  —  —  —  
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards—  —  (1.2) —  —  (1.2) —  (1.2) 
Other comprehensive income (loss)—  —  —  —  (16.0) (16.0) —  (16.0) 
Balance as of June 30, 202063.3  $0.6  $219.3  $1,768.6  $(173.5) $1,815.0  $3.3  $1,818.3  
3

  Common Stock  
Capital in
Excess of
Par Value

 
Retained
Earnings

 
Accumulated
Other
Comprehensive
Loss

 
Total
World Fuel
Shareholders'
Equity

 
Noncontrolling
Interest
Equity

  
  Shares
 Amount
      Total Equity
 Balance as of December 31, 201669.9
 $0.7
 $399.9
 $1,679.3
 $(154.8) $1,925.0
 $15.0
 $1,940.0
 Net income—
 —
 —
 22.8
 —
 22.8
 0.6
 23.4
 Cash dividends declared—
 —
 —
 (8.2) —
 (8.2) —
 (8.2)
 Distribution of noncontrolling interest—
 —
 —
 —
 —
 —
 (0.4) (0.4)
 Amortization of share-based payment awards—
 —
 15.3
 —
 —
 15.3
 —
 15.3
 Cancellation 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—
 —
 (4.0) —
 —
 (4.0) —
 (4.0)
 Purchases of common stock(1.7) —
 (61.9) —
 —
 (61.9) —
 (61.9)
 Other comprehensive income—
 —
 —
 —
 30.0
 30.0
 1.6
 31.6
 Balance as of September 30, 201767.7
 $0.7
 $349.3
 $1,693.9
 $(124.8) $1,919.0
 $16.8
 $1,935.8
 Common StockCapital in
Excess of
Par Value		Retained
Earnings		Accumulated
Other
Comprehensive
Loss		Total
World Fuel
Shareholders'
Equity		Noncontrolling
Interest
Equity		 
 SharesAmountTotal Equity
Balance as of December 31, 201867.0  $0.7  $340.4  $1,606.1  $(131.7) $1,815.4  $16.1  $1,831.6  
Net income—  —  —  37.2  —  37.2  0.1  37.3  
Cash dividends declared—  —  —  (4.0) —  (4.0) —  (4.0) 
Amortization of share-based payment awards4.0  —  —  4.0  —  4.0  
Issuance (cancellation) of common stock related to share-based payment awards0.1  —  —  —  —  —  —  —  
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards—  —  (1.4) —  —  (1.4) —  (1.4) 
Other comprehensive income (loss)—  —  —  —  (11.0) (11.0) (0.8) (11.7) 
Balance as of March 31, 201967.1  $0.7  $343.0  $1,639.3  $(142.7) $1,840.3  $15.5  $1,855.8  
Net income—  —  —  37.0  —  37.0  0.6  37.6  
Cash dividends declared—  —  —  (6.6) —  (6.6) —  (6.6) 
Amortization of share-based payment awards—  —  3.5  —  —  3.5  —  3.5  
Issuance (cancellation) of common stock related to share-based payment awards0.2  —  0.7  —  —  0.7  —  0.7  
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards—  —  (1.2) —  —  (1.2) —  (1.2) 
Purchases of common stock(2.1) —  (65.4) —  —  (65.4) —  (65.4) 
Other comprehensive income (loss)—  —  —  —  (8.9) (8.9) —  (8.9) 
Balance as of June 30, 201965.2  $0.7  $280.7  $1,669.7  $(151.6) $1,799.4  $16.1  $1,815.6  
Cash Dividends

During the six months ended June 30, 2020, the Company's Board of Directors declared quarterly cash dividends of $0.10 per common share representing $6.5 million and $6.3 million in total dividends, which were paid on April 9, 2020 and July 2, 2020 respectively. During the six months ended June 30, 2019, the Company's Board of Directors declared quarterly cash dividends of $0.06 and $0.10 per common share representing $4.0 million and $6.6 million in total dividends, which were paid on April 12, 2019 and July 5, 2019 respectively.
  Common Stock  
Capital in
Excess of
Par Value

 
Retained
Earnings

 
Accumulated
Other
Comprehensive
Loss

 
Total
World Fuel
Shareholders'
Equity

 
Noncontrolling
Interest
Equity

  
  Shares
 Amount
      Total Equity
 Balance as of December 31, 201570.8
 $0.7
 $435.3
 $1,569.4
 $(109.5) $1,895.9
 $10.0
 $1,905.9
 Net income—
 —
 —
 124.3
 —
 124.3
 0.1
 124.4
 Cash dividends declared—
 —
 —
 (12.5) —
 (12.5) —
 (12.5)
 Distribution of noncontrolling interest—
 —
 —
 —
 —
 —
 (0.2) (0.2)
 Amortization of share-based payment awards—
 —
 14.5
 —
 —
 14.5
 —
 14.5
 Issuance of common stock related to share-based payment awards including income tax benefit of $1.6 million0.1
 —
 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) —
 (4.2) —
 —
 (4.2) —
 (4.2)
 Purchases of common stock(0.4) —
 (18.4) —
 —
 (18.4) —
 (18.4)
 
Acquisition of remaining 49% equity interest (a)
—
 —
 (10.9) —
 —
 (10.9) 7.2
 (3.7)
 Other comprehensive (loss)—
 —
 —
 —
 (28.9) (28.9) (1.8) (30.7)
 Balance as of September 30, 201670.4
 $0.7
 $418.0
 $1,681.2
 $(138.3) $1,961.6
 $15.2
 $1,976.8
(a) Relates to Tobras. See Note 2. Acquisitions.

The accompanying notes are an integral part of these unaudited consolidated financial statements.Consolidated Financial Statements.


4

World Fuel Services Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited - In millions)

 For the Nine Months Ended  For the Six Months Ended
 September 30,  June 30,
 2017
 2016
 20202019
Cash flows from operating activities:    Cash flows from operating activities:  
Net income including noncontrolling interest $23.4
 $124.4
Net income including noncontrolling interest$31.0  $74.9  
Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities:  
  Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities: 
Depreciation and amortization 64.1
 58.4
Depreciation and amortization44.2  43.1  
Provision for bad debt 6.3
 5.4
Provision for bad debt34.6  5.7  
Valuation allowance against the net U.S. deferred tax assets 76.9
 —
Gain on sale of held for sale assets and liabilities —
 (3.8)
Share-based payment award compensation costs 15.3
 14.5
Share-based payment award compensation costs0.6  7.7  
Deferred income tax benefit (21.2) (14.5)
Extinguishment of liabilities, net (2.2) (5.2)
Foreign currency losses (gains), net 8.4
 (18.3)
Deferred income tax expense (benefit)Deferred income tax expense (benefit)(5.3) 4.8  
Foreign currency (gains) losses, netForeign currency (gains) losses, net3.0  2.1  
Other (0.2) 2.6
Other0.2  (0.3) 
Changes in assets and liabilities, net of acquisitions:  
  Changes in assets and liabilities, net of acquisitions: 
Accounts receivable, net (256.3) (212.3)Accounts receivable, net1,462.6  (12.5) 
Inventories (69.5) (89.3)Inventories282.8  (40.4) 
Prepaid expenses (9.8) (0.2)Prepaid expenses6.4  (7.2) 
Short-term derivative assets, net 28.4
 192.5
Short-term derivative assets, net(110.4) 167.6  
Other current assets (49.7) (30.4)Other current assets17.2  8.9  
Cash collateral with financial counterparties (15.6) 128.8
Cash collateral with counterpartiesCash collateral with counterparties17.6  (38.0) 
Other non-current assets (19.3) 13.6
Other non-current assets(18.4) 33.9  
Accounts payable 253.7
 213.2
Accounts payable(1,527.1) 70.0  
Customer deposits 6.4
 (10.5)Customer deposits(2.3) 19.5  
Accrued expenses and other current liabilities —
 (144.5)Accrued expenses and other current liabilities(25.2) (143.7) 
Non-current income tax, net and other long-term liabilities 5.9
 (4.0)Non-current income tax, net and other long-term liabilities33.7  (60.4) 
Total adjustments 21.8
 95.9
Total adjustments214.1  60.8  
Net cash provided by operating activities 45.2
 220.3
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities245.1  135.8  
Cash flows from investing activities:  
  Cash flows from investing activities: 
Acquisition of businesses, net of cash acquired and other investments (94.6) (266.4)
Proceeds from sale of business —
 29.3
Acquisition of business, net of cash acquiredAcquisition of business, net of cash acquired(130.6) —  
Capital expenditures (37.8) (28.9)Capital expenditures(32.9) (37.3) 
Other investing activities, net (0.5) 6.9
Other investing activities, net(5.3) 3.8  
Net cash (used in) investing activities (133.0) (259.2)
Net cash (used in) provided by investing activitiesNet cash (used in) provided by investing activities(168.7) (33.6) 
Cash flows from financing activities:  
  Cash flows from financing activities: 
Borrowings of debt 3,500.1
 2,810.6
Borrowings of debt2,080.0  3,197.6  
Repayments of debt (3,492.6) (2,451.1)Repayments of debt(1,613.7) (3,218.6) 
Dividends paid on common stock (12.3) (12.5)Dividends paid on common stock(13.0) (8.0) 
Purchases of common stock (61.9) (18.4)
Federal and state tax benefits resulting from tax deductions in excess of the compensation cost recognized for share-based payment awards —
 1.6
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards (4.0) (4.2)
Repurchases of common stockRepurchases of common stock(55.6) (65.4) 
Other financing activities, net (2.0) (0.2)Other financing activities, net(2.8) (2.6) 
Net cash (used in) provided by financing activities (72.7) 325.7
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities394.9  (97.1) 
Effect of exchange rate changes on cash and cash equivalents 7.8
 3.0
Effect of exchange rate changes on cash and cash equivalents(11.6) 1.2  
Net (decrease) increase in cash and cash equivalents (152.6) 289.9
Cash and cash equivalents, as of beginning of period 698.6
 582.5
Cash and cash equivalents, as of end of period $546.0
 $872.3
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents459.6  6.3  
Cash and cash equivalents, as of the beginning of the periodCash and cash equivalents, as of the beginning of the period186.1  211.7  
Cash and cash equivalents, as of the end of the periodCash and cash equivalents, as of the end of the period$645.7  $218.1  
 
The accompanying notes are an integral part of these unaudited consolidated financial statementsConsolidated Financial Statements.



5

Supplemental Schedule of Noncash Investing and Financing Activities:
 
1. Cash dividends declared, but not yet paid, was $4.2were $6.3 million and $6.6 million for the six months ended June 30, 2020 and 2019, respectively.

2. Deferred consideration and other transactions for the acquisition of a business and assets were $38.9 million as of SeptemberJune 30, 2016.2020.

In connection with our acquisitions, the following table presents the assets acquired, net of cash and liabilities assumed (in millions):
 For the Nine Months Ended
For the Nine Months Ended
 September 30, 2017
September 30, 2016
Assets acquired, net of cash$98.9
$321.6
   
Liabilities assumed$7.0
$59.2
The accompanying notes are an integral part of these unaudited consolidated financial statements.Consolidated Financial Statements.


6

World Fuel Services Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
(Unaudited) 

1. Basis of Presentation and Significant Accounting Policies
 
Basis        General

        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 Quarterly Report on Form 10-Q (“10-Q Report”) as “World Fuel,” “we,” “our” and “us.”

        We are a leading global fuel services company, principally engaged in the distribution of Presentationfuel and related products and services in the aviation, marine and land transportation industries. In recent years, we have expanded our product and service offerings to include energy advisory services and supply fulfillment with respect to natural gas and power and transaction and payment management solutions to commercial and industrial customers. Our intention is to become a leading global energy management company offering a full suite of energy advisory, management and fulfillment services, technology solutions as well as sustainability products and services across the energy product spectrum. We also offer payment management solutions to commercial and industrial customers, principally in the aviation, land and marine transportation industries. We will continue to focus on enhancing the portfolio of products and services we provide based on changes in customer demand, including sustainability offerings and renewable fuel products.

We prepared the consolidated financial statementsour Consolidated Financial Statements following the requirements of the United States (“U.S.”) Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by accounting principles generally accepted in the U.S. (“U.S. GAAP”) can be condensed or omitted. Unless the context requires otherwise, references to “World Fuel”, “the Company”, “we”, “us”, or “our” in this Quarterly Report on Form 10-Q (“10-Q Report”) refer to World Fuel Services Corporation and its subsidiaries.

Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be representative of those for the full year. In our opinion, all adjustments necessary for a fair presentationstatement of the financial information,statements, which are of a normal and recurring nature, have been made for the interim periods reported. The information included in this 10-Q Report should be read in conjunction with the consolidated financial statementsConsolidated Financial Statements and accompanying notes included in our 20162019 Annual Report on Form 10-K (“20162019 10-K Report”). Certain amounts in the consolidated financial statementsConsolidated Financial Statements and associatedaccompanying notes may not add due to rounding. All percentages have been calculated using unrounded amounts.

COVID-19

The outbreak of COVID-19, which was declared a pandemic by the World Health Organization in March 2020, has created significant volatility, uncertainty and disruption in the global economy. The rapid spread of the virus has caused governments around the world to implement stringent measures to help control its spread, including, without limitation, quarantines, “stay-at-home” or “shelter-in-place” orders, social-distancing mandates, travel restrictions, and closures or reduced operations for businesses, governmental agencies, schools and other institutions, among others.

Beginning in the quarterly period ended March 31, 2020, the aviation, marine and land transportation industries, along with global economic conditions generally, have been significantly disrupted by the pandemic. A large number of our customers in these industries have experienced substantial reductions in their operations due to travel restrictions and stay-at-home orders, as well as the extended shutdown of various businesses in affected regions. Furthermore, government measures also led to a precipitous decline and historic volatility in fuel prices in response to concerns about demand for fuel, further exacerbated by recent disagreements regarding crude oil production levels between the Organization of Petroleum Exporting Countries ("OPEC") members and other oil-producing countries such as Russia, as well as related global storage considerations. In response to these developments, in March 2020, we took swift action to ensure the safety of our employees and other stakeholders and initiated a number of initiatives relating to cost reduction, liquidity and operating efficiencies.

While the pandemic and associated impacts on economic activity had a limited adverse effect on our results of operations and financial condition for the first quarter of 2020, we have since seen a sharp decline in demand and related sales as large sectors of the global economy have been adversely impacted by the crisis. Accordingly, our results of operations during the second quarter of 2020 were significantly impacted due to the effects of the pandemic. As a result, during the second quarter of 2020, we took additional steps and expanded the restructuring of our operations to include the rationalization of our global office footprint, including the transition of select offices to smaller or more cost-effective locations.
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We make estimates and assumptions that affect the reported amounts on our financial statements and accompanying notes as of the date of the financial statements. We assessed accounting estimates that require consideration of forecasted financial information, including, but not limited to, our allowance for credit losses, the carrying value of our goodwill, intangible assets, and other long-lived assets. This assessment was conducted in the context of information reasonably available to us, as well as our consideration of the future potential impacts of COVID-19 on our business as of June 30, 2020. At this time, we are unable to predict with specificity the ultimate impact of the crisis, as it will depend on the magnitude, severity and duration of the pandemic, as well as how quickly, and to what extent, normal economic and operating conditions resume on a sustainable basis globally. Accordingly, if the impact is more severe or longer in duration than we have assumed, such impact could potentially result in additional impairments and increases in credit allowances.

Significant Accounting Policies

There have been no significant changes, other than those related to the adopted new accounting standards below, in the Company's accounting policies from those disclosed in our 2016 10‑K2019 10-K Report. The significant accounting policies we use for quarterly financial reporting are disclosed in Note 11. Basis of Presentation, New Accounting Standards and Significant Accounting Policies of the “Notesaccompanying notes to the Consolidated Financial Statements”Statements included in our 2016 10‑K Report.2019 10-K Report, and in the section below Adoption of New Accounting Standards.

Adoption of New Accounting StandardStandards
We included below a description of recent new accounting standards or accounting standards updates that had an impact on the Company’s Consolidated Financial Statements. New accounting standards or accounting standards updates not listed below were assessed and determined to be either not applicable or did not have a material impact on the Company’s Consolidated Financial Statements or processes.
Intangibles - Goodwill and Other
Financial Instruments-Credit Losses (Topic 350)326): Simplifying the Test for Goodwill ImpairmentMeasurement of Credit Losses on Financial Instruments.. In January 2017,June 2016, Accounting Standards Update (ASU) 2017-04("ASU") 2016-13 was issued, which simplifiesreplaced the accountingincurred loss impairment model with a model that reflects expected credit losses over the lifetime of the asset and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. The guidance in this update, including the subsequent related codification amendments, changed how entities account for goodwillcredit impairment by eliminatingfrom trade and other receivables, net investments arising from sales-type and direct financing leases, debt securities, purchased-credit impaired financial assets and other instruments in addition to loans. For receivables and certain other instruments that are not measured at fair value, entities are required to estimate expected credit losses. Under the requirement to perform a hypothetical purchase price allocation. As a result,expected loss model, an entity should recognize an impairment charge forrecognizes a loss upon initial recognition of the amount by whichasset that reflects all future events that could lead to a loss being realized, regardless of whether it is probable that the carrying valuefuture event will occur.
The Company adopted ASU 2016-13, including the related codification amendments, in the first quarter of a reporting unit exceeds its fair value, not2020 utilizing the modified retrospective transition method and applying the transition provisions at the effective date.
The Company implemented changes to exceed the total amount of goodwill allocated tobusiness processes and internal controls that reporting unit. We have early adopted ASU 2017-04 and will applysupport the new guidance for our goodwill impairment tests that will be performed duringstandard. As of the fourth quarter. Accordingly, we continuedate of implementation on January 1, 2020, the Company recognized $11.1 million as a reduction to evaluate the adoptionopening retained earnings balance. The main drivers of this new guidancethe consolidated impact at transition are related to determine if it will have a significant impact on our consolidated financial statementsthe inclusion of future economic conditions, the exclusion of freestanding credit enhancements when estimating the expected credit loss and related disclosures.estimating the lifetime credit losses of notes receivable.
Accounting Standards Issued but Not Yet Adopted

There have been no recently issued accounting standards not yet adopted by us which are expected, upon adoption, to have a material impact on the Company’s Consolidated Financial Statements or processes.
Revenue Recognition (Topic 606): Revenue from Contracts

2. Accounts Receivable

        Accounts receivable and allowance for credit losses

        We extend credit on an unsecured basis to most of our customers. Our exposure to expected credit losses depends on the financial condition of our customers and other macroeconomic factors beyond our control, such as deteriorating conditions in the world economy or in the industries we serve, changes in oil prices and political instability. While we actively manage our
8

credit exposure and work to respond to both changes in our customers’ financial conditions or macroeconomic events, there can be no guarantee we will be able to mitigate all of these risks successfully.

        We perform ongoing credit evaluations of our customers and adjust credit limits based upon payment history and the customer’s current creditworthiness based on expected exposure. Our payment terms with Customers. In May 2014, ASU 2014-09 was issued. Under this ASUcustomers are based on each customers' creditworthiness and subsequently issued amendments,are generally 30-60 days, although certain markets and other customer-specific factors may warrant longer payment terms. Accounts receivable balances that are not paid within the terms of the sales agreement may be subject to finance fees based on the outstanding balance. Although we analyze customers’ payment history and expected creditworthiness, since we extend credit on an entityunsecured basis to most of our customers, there is required to recognize the amount of revenue it expectsa possibility that any accounts receivable not collected may ultimately need to be entitled towritten off.

Accounts receivable are measured at amortized cost. The health of our receivables is continuously monitored using a risk-based model, taking into consideration both the timeliness and predictability of collections from our customers. We maintain a provision for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP. This ASU provides alternative methods of transition, a full retrospective and a modified restrospective approach. The modified retrospective approach would result in recognition of the cumulative impact of a retrospective application as of the beginning of the period of initial application, which inexpected credit losses based upon our case is the interim period beginning January 1, 2018.

In preparation for adoption, we initially developed a cross-functional team and utilized a third-party service provider to assist us throughouthistorical experience with our evaluation. In addition,customers, along with any specific customer collection issues that we have factored in the adoption into our ongoing enterprise resource planning ("ERP") platform upgrade,identified from current financial information and business prospects, as well as any political or economic conditions or other market factors, including certain assumptions based on reasonable forward-looking information from market sources. Principally, based on these credit risk factors, portfolio segments are defined and an internally derived risk-based credit loss reserve is established and applied to each portfolio segment. Customer account balances that are deemed to be at high risk of collectability are reserved at higher rates than customer account balances which we previously committed to perform, as our system readiness is a key element towards the determination of the adoption approach we undertake. We have substantially completed our review of certain contracts for each of our revenue streams, including additional selections that were identified as we continued to consider our various revenue streams. Through this process, we have made preliminary determinations on how certain of our revenue streams will be accounted for and we have substantially completed our associated revenue recognition policy, which captures those decisions. We continue to evaluate the appropriate design of our internal control environment and will make necessary changes to our existing controls, if necessary. Additionally, the Company has selected the modified retrospective adoption approach, and as we proceed through our analysis, we will begin assessing the potential cumulative adjustment, if any that the Company would recognize upon adoption of the ASU. We continue to perform our assessment, and while those activities are not complete, we expect to identify similar performance obligationscollect without difficulty.

We had accounts receivable of $1.4 billion and $2.9 billion as of June 30, 2020 and December 31, 2019, respectively. We also had an allowance for credit losses related to accounts receivables and other insignificant financing receivables of $48.6 million (including the $11.1 million cumulative transition adjustment to retained earnings related to the implementation of ASU 2016-13) and $35.5 million, as of June 30, 2020 and December 31, 2019, respectively. Changes to the expected credit loss provision during the six months ended June 30, 2020 include global economic outlook considerations as a result of the Company’s assessment of reasonable and supportable forward-looking information including the expected overall impact of the pandemic mainly to the aviation segment. Write-off of uncollectible receivables during the six months ended June 30, 2020 resulted from negative impacts of the pandemic combined with pre-existing financial difficulties experienced by certain customers. Based on an aging analysis as of June 30, 2020, 91% of our net accounts receivable were outstanding less than 60 days.
The following table sets forth activities in our allowance for credit losses (in millions):
Total
Balance as of January 1, 2020$46.6 
Charges to provision for credit losses34.6 
Write-off of uncollectible receivables(32.9)
Recoveries of credit losses0.4 
Translation adjustments(0.1)
Balance as of June 30, 2020$48.6 
        Financing programs
We have accounts receivable financing programs under receivables purchase agreements (“RPAs”) with Wells Fargo Bank, N.A. and Citibank, N.A. that allow for the sale of our accounts receivable in an amount up to 100% of our outstanding qualifying accounts receivable balances and receive cash consideration equal to the total balance, less a discount margin equal to LIBOR plus 1% to 3%. Accounts receivable sold under the RPAs are accounted for as sales, in accordance with FASB ASC 606 as compared to those previously identified.

Leases (Topic 842).Topic 860, In February 2016, ASU 2016-02, Leases, was issued. This standard will require all lessees to recognize a right of use assetTransfers and a lease liabilityServicing, and excluded from Accounts receivable, net on the balance sheet, exceptaccompanying Consolidated Balance Sheets. Fees and interest paid under the RPAs are recorded within Interest expense and other financing costs, net on the Consolidated Statements of Comprehensive Income.

        Under the RPAs, accounts receivable sold, which remained outstanding as of June 30, 2020 and December 31, 2019, were $92.6 million and $405.9 million, respectively. The fees and interest paid under the RPAs were $5.5 million and $13.3 million for leases with durations that are less than twelve months. Thisthe six months ended June 30, 2020 and 2019, respectively. For the six months ended June 30, 2020 and 2019, cash payments to the owners of account receivables were $2.5 billion and $4.2 billion, respectively, and cash proceeds from the sale of account receivables were $2.2 billion and $4.2 billion, respectively.


standard is effective at
9

3. Acquisitions
        2020 Acquisitions

During the beginningsecond quarter of 2020, we acquired an additional interest in a software company in our 2019 fiscal year. We are currently evaluating whether the adoption of this new guidance willaviation segment and obtained control. The transaction was accounted for as an asset acquisition and did not have a significantmaterial impact on our consolidated financial statements and related disclosures.

Consolidated Financial Statements.
Cash Flows: Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.
In August 2016 ASU 2016-15 was issued. The ASU provides guidance on classification of eight specific cash flows items. 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.

Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory. In October 2016, ASU 2016-16 was issued. The update prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. 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.

Cash Flows: Statement of Cash Flows (Topic 230): Restricted Cash. In November 2016, ASU 2016-18 was issued. The update requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. 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.

Business Combinations (Topic 805): Clarifying the Definition of a Business. In January 2017, ASU 2017-01 was issued. 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 and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. In August 2017, ASU 2017-12 was issued. The ASU is targeted at simplifying the application of hedge accounting and is effective at the beginning of our 2019 fiscal year. The amended guidance aims at aligning the recognition and presentation of the effects of hedge instruments and hedge items. We are currently evaluating whether the adoption of this new guidance will have a significant impact on our consolidated financial statements and related disclosures.

2. Acquisitions
2017 Acquisitions

During the first quarter of 2017,2020, we completed the acquisition of certainthe aviation fueling operations in Italy, Germany, Australiafuel business from Universal Weather and New Zealand associated with the ExxonMobil transaction described below. We also completed two acquisitions during the first quarter of 2017Aviation, Inc. (“UVair fuel business”), which were not material individually or in the aggregate.serves business and general aviation customers worldwide. The acquisition was accounted for as a business combination.

The following table summarizes the aggregate consideration paid for acquisitions during the nine months ended Septemberthis acquisition, updated as of June 30, 20172020 for certain working capital items, and the provisional amounts of the assets acquired and liabilities assumed, recognized at the acquisition date. The Company is in the process of finalizingobtaining information to finalize the valuations of certain acquired fixed assets and intangible assets; thus,assumed liabilities and expects to complete the process in the third quarter 2020. Thus, the provisional measurements of these acquired assets and assumed liabilities are subject to change and will be finalized no later than one year from the acquisition date.(amounts in millions):

Total
Cash paid for acquisition of business$128.6 
Amounts due to sellers30.0 
Estimated purchase price$158.6 
Assets acquired:
Accounts receivable$42.8 
Goodwill and identifiable intangible assets123.0 
Other current and long-term assets3.8 
Liabilities assumed:
Accounts payable(9.9)
Other current and long-term liabilities(1.0)
Estimated purchase price$158.6 

(In millions)  Total
Cash paid for acquisition of businesses $87.6
Non-monetary consideration 4.3
Estimated purchase price $91.9
   
Assets acquired:  
Property and equipment 10.3
Goodwill and identifiable intangible assets 79.8
Other current and long-term assets 8.8
   
Liabilities assumed:  
Long-term liabilities and deferred tax liabilities (7.0)
Estimated purchase price $91.9


The goodwill of $46.4$78.7 million included the adjustments made to certain working capital items during the quarter ended June 30, 2020 and was assigned to the aviation segment,segment. The company anticipates $70.3 million of which $22.4 million is anticipatedthe goodwill assigned to be deductible for tax purposes and is attributable primarily to the expected synergies and other benefits that we believe will result from combining the acquired operations with the aviation segment operations. The identifiable intangible assets consists of $33.4were $44.3 million and primarily consisted of customer relationships with weighted average lives of 9.9 years.and other identifiable assets.

The financial position, results of operations and cash flows of the 2017these acquisitions have been included in our consolidated financial statementsConsolidated Financial Statements since their respective acquisition dates and did not have a material impact on our consolidated revenue and net income for the three and ninesix months ended SeptemberJune 30, 2017. Accordingly,2020; accordingly, pro forma information for the 2017these acquisitions hashave not been provided as the impact iswas not considered material.

2016 Acquisitions

On July 1, 2016, we acquired all of the outstanding capital stock of PAPCO, Inc. (“PAPCO”) and Associated Petroleum Products, Inc. (“APP”). PAPCO, headquartered in Virginia Beach, VA and APP, headquartered in Tacoma, WA are leading distributors of gasoline, diesel, lubricants, propane and related services in the Mid-Atlantic and the Pacific Northwest region of the U.S., respectively.
In addition to the above acquisitions, we completed five acquisitions in our land segment in the nine months ended September 30, 2016 which were not significant individually or in the aggregate.

The aggregate purchase price for the 2016 acquisitions of $264.0 million was allocated to the assets acquired and liabilities assumed based on their fair value as of the acquisition date. The purchase price allocation for the 2016 acquisitions is as follows :


(In millions)  Total
Cash paid for acquisition of businesses $253.7
Amounts due to sellers 10.4
Purchase price $264.0
   
Assets acquired:  
Accounts and notes receivable $60.4
Inventories 35.4
Property and equipment 45.3
Goodwill and identifiable intangible assets 166.5
Other current and long-term assets 11.5
   
Liabilities assumed:  
Accounts payable (33.0)
Accrued expenses and other current liabilities (21.4)
Long-term liabilities and deferred tax liabilities (0.5)
Purchase price $264.0

Goodwill of $73.4 million, of which $72.0 million is anticipated to be deductible for tax purposes, was assigned to the land segment and is attributable primarily to the expected synergies and other benefits that we believe will result from combining the operations of PAPCO and APP with our land segment operations. The identifiable intangible assets consisted of $79.7 million of customer relationships and $3.9 million of other identifiable assets, with weighted average lives of 5.4 years and 2.0 years, respectively, as well as $9.5 million of indefinite-lived trademark/trade name rights.
The following presents the unaudited pro forma results for 2016 as if the 2016 acquisitions had been completed on January 1, 2016:
  Unaudited Supplemental Pro Forma Consolidated Results 
  Three Months Ended
 Nine Months Ended
  September 30,
 September 30,
(In millions, except per share data) 2016
 2016
Revenues $7,399.8
 $19,797.6
Net income attributable to World Fuel 42.7
 133.2
     
Earnings per common share:    
Basic earnings per common share $0.62
 $1.92
Diluted earnings per common share $0.61
 $1.91


ExxonMobil
In the first quarter of 2016, we signed a definitive agreement to acquire from certain ExxonMobil affiliates their aviation fueling operations at more than 80 airport locations in Canada, the United Kingdom, Germany, Italy, France, Australia and New Zealand. The transaction closed in phases with the Canada, France and U.K. locations closing during the fourth quarter of 2016 and the remaining locations closing during the first quarter of 2017.

4. Derivative Instruments

Tobras Distribuidora de Combustiveis Limitada (“Tobras”)
On June 23, 2016, we acquired the remaining 49% of the outstanding equity interest of Tobras from the minority owners for an aggregate purchase price of approximately $3.7 million in cash (the “Tobras Acquisition”). Prior to the Tobras Acquisition, we owned 51% of the outstanding shares of Tobras and exercised control, and as such, we consolidated Tobras in our financial statements. As a result of the acquisition of the remaining equity interest of Tobras, we recorded a $10.9 million adjustment to capital in excess of par value on our consolidated balance sheets, which consisted of $3.7 million of cash paid and $7.2 million of noncontrolling interest equity.


Assets and Liabilities Held for Sale

On May 1, 2016, we completed the sale of Pester Marketing Company's ("Pester") retail business for $32.3 million, resulting in a gain of $3.8 million, which is included in other income, net in the consolidated statements of income and comprehensive income for the nine months ended September 30, 2016.

3. Derivatives

We enter into financial derivative contracts in order to mitigate the risk of market price fluctuations in aviation, land and marine fuel, to offer our customers fuel pricing alternatives to meet their needs and to mitigate the risk of fluctuations in foreign currency exchange rates. We also enter into proprietary derivative transactions, primarily intended to capitalize on arbitrage opportunities in basis or time spreads related to fuel products we sell. We have applied the normal purchase and normal sales exception (“NPNS”), as provided by accounting guidance for derivative instruments and hedging activities, to certain of our physical forward sales and purchase contracts. While these contracts are considered derivative instruments under the guidance for derivative instruments and hedging activities, they are not recorded at fair value, but rather are recorded in our consolidated financial statements when physical settlement of the contract occurs. If it is determined that a transaction designated as NPNS no longer qualifies for this classification, the fair value of the related contract is recorded as an asset or liability on the consolidated balance sheets and the difference between the fair value and the contract amount is immediately recognized through earnings.

The following describes our derivative classifications:

Cash Flow Hedges. Includes certain derivative contracts we execute to mitigate the risk of price volatility in forecasted transactions.

Fair Value Hedges. Includes derivative contracts we hold to hedge the risk of changes in the price of our inventory.

Cash Flow Hedges. Includes derivative contracts we execute to mitigate the risk of price and interest rate volatility in forecasted transactions.

Non-designated Derivatives. Includes derivatives we primarily transact to mitigate the risk of market price fluctuations in the form of swaps or futures contracts, as well as certain forward fixed price purchase and sale contracts to hedge the risk of currency rate fluctuations and proprietary trading.for portfolio optimization.

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In March 2020, we entered into a $300 million, one-month LIBOR, floating-for-fixed non-amortizing interest rate swap contract ("IR Swap") with a maturity date in March 2025. The IR Swap was designated as a cash flow hedge to mitigate potential adverse changes in interest rates related to certain variable rate debt obligations. Changes in the IR Swap's fair value recorded periodically in Accumulated other comprehensive income, are subsequently reclassified to our Consolidated Statements of Income and Comprehensive Income within Interest expense and other financing costs, net when the underlying hedged variable rate interest payments are accrued.

The following table presents the gross fair value of our derivative instruments and their locations on the consolidated balance sheetsConsolidated Balance Sheets (in millions):
 
   Gross Derivative Assets  Gross Derivative Liabilities 
   As of  As of 
   September 30, 2017 December 31, 2016  September 30, 2017 December 31, 2016 
Derivative Instruments Balance Sheet Location 
Derivatives designated as hedging instruments         
   Commodity contracts Short-term derivative assets, net $0.6
 $2.2
  $1.0
 $5.4
  Accrued expenses and other current liabilities 41.6
 86.0
  52.8
 93.5
  Other long-term liabilities —
 5.1
  —
 10.1
Total derivatives designated as hedging instruments $42.3
 $93.3
  $53.8
 $108.9
            
Derivatives not designated as hedging instruments         
   Commodity contracts Short-term derivative assets, net $133.8
 $160.3
  $83.4
 $86.7
  Identifiable intangible and other non-current assets 27.4
 17.1
  16.0
 6.2
  Accrued expenses and other current liabilities 46.4
 52.5
  77.1
 112.2
  Other long-term liabilities 6.9
 8.1
  12.1
 12.1
    $214.5
 $238.0
  $188.7
 $217.2
            
   Foreign currency contracts Short-term derivative assets, net $0.4
 $13.5
  $0.2
 $3.4
  Identifiable intangible and other non-current assets —
 0.9
  —
 0.1
  Accrued expenses and other current liabilities 4.6
 1.6
  9.1
 2.8
  Other long-term liabilities —
 —
  0.2
 —
    $5.0
 $16.0
  $9.5
 $6.4
Total derivatives not designated as hedging instruments $219.5
 $253.9
  $198.2
 $223.6
            
Total derivatives   $261.8
 $347.2
  $251.9
 $332.5

Gross Derivative AssetsGross Derivative Liabilities
As ofAs of
June 30,December 31,June 30,December 31,
2020201920202019
Derivative InstrumentsConsolidated Balance Sheets location
Derivatives designated as hedging instruments
   Commodity contractsShort-term derivative assets, net$—  $—  $—  $—  
Identifiable intangible and other non-current assets—  —  —  —  
Accrued expenses and other current liabilities204.0  1.7  177.0  20.0  
Other long-term liabilities0.1  —  0.4  —  
204.1  1.7  177.3  20.0  
Interest rate contractsShort-term derivative assets, net—  —  —  —  
Identifiable intangible and other non-current assets—  —  —  —  
Accrued expenses and other current liabilities—  —  1.2  —  
Other long-term liabilities—  —  3.7  —  
Total derivatives designated as hedging instruments$204.1  $1.7  $182.2  $20.0  
Derivatives not designated as hedging instruments
   Commodity contractsShort-term derivative assets, net$217.8  $65.7  $64.5  $7.2  
Identifiable intangible and other non-current assets45.1  23.0  12.3  4.8  
Accrued expenses and other current liabilities206.5  161.0  328.5  203.4  
Other long-term liabilities18.9  7.7  40.6  19.7  
488.3  257.3  445.9  235.0  
   Foreign currency contractsShort-term derivative assets, net0.6  1.2  0.3  0.2  
Identifiable intangible and other non-current assets—  —  —  —  
Accrued expenses and other current liabilities1.8  0.9  10.6  11.4  
2.4  2.0  10.9  11.6  
Total derivatives not designated as hedging instruments$490.7  $259.4  $456.9  $246.6  
Total derivatives$694.8  $261.1  $639.1  $266.6  
For information regarding our derivative instruments measured at fair value after netting and collateral, see Note 4.7. Fair Value Measurements.

11

The following table summarizes the gross notional values of our commodity and foreign currency exchange derivative contracts used for risk management purposes that were outstanding as of SeptemberJune 30, 20172020 (in millions):

As of SeptemberJune 30,
Derivative InstrumentsUnits2017
2020
Commodity contracts
Buy / LongBBL77.265.0 
Sell / ShortBBL(88.7(49.2))
Foreign currency exchange contracts
Sell U.S. dollar, buy other currenciesUSD(241.2(70.3))
Buy U.S. dollar, sell other currenciesUSD431.8422.6 


As of June 30, 2020, and December 31, 2019, the following amounts were recorded on our Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges (in millions):
Line item in the Consolidated Balance Sheets in which the hedged item is includedCarrying Amount of Hedged Assets/(Liabilities)Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Asset/(Liabilities)
As ofAs of
June 30, 2020December 31, 2019June 30, 2020December 31, 2019
Inventory$32.1  $30.7  $2.3  $2.3  


12

The following table presents the effect of fair value and financial statement location of our derivative instrumentscash flow hedges on income and related hedgedexpense line items in fair value hedging relationships on our consolidated statementsConsolidated Statements of incomeIncome and comprehensive incomeComprehensive Income (in millions):

Location and Amount of Gain and (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
For the Three Months Ended
June 30, 2020June 30, 2019
RevenueCost of RevenueInterest expense and other financing costs, netRevenueCost of RevenueInterest expense and other financing costs, net
Total amounts of income and expense line items in which the effects of fair value or cash flow hedged are recorded$3,158.3  $2,944.5  $10.7  $9,459.4  $9,190.8  $21.7  
Gains or Loss on fair value hedge relationships:
   Commodity contracts:
Hedged Item—  8.9  —  —  (0.9) —  
Derivatives designated as hedging instruments—  (4.6) —  —  (0.6) —  
Gains or Loss on cash flow hedge relationships:
   Commodity contracts:
Amount of Gain (Loss) Reclassified from AOCI into Income27.0  (56.2) —  (2.5) 25.8  —  
   Interest rate contracts:
Amount of Gain (Loss) Reclassified from AOCI into Income—  —  —  —  —  —  
Total amount of income and expense line items excluding the impact of hedges$3,131.4  $2,892.6  $10.7  $9,461.9  $9,215.1  $21.7  
Location and Amount of Gain and (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
For the Six Months Ended
June 30, 2020June 30, 2019
RevenueCost of RevenueInterest expense and other financing costs, netRevenueCost of RevenueInterest expense and other financing costs, net
Total amounts of income and expense line items in which the effects of fair value or cash flow hedged are recorded$11,173.5  $10,700.9  $26.9  $18,138.2  $17,618.5  $42.2  
Gains or Loss on fair value hedge relationships:
   Commodity contracts:
Hedged Item—  (14.3) —  —  15.4  —  
Derivatives designated as hedging instruments—  13.8  —  —  (14.1) —  
Gains or Loss on cash flow hedge relationships:
   Commodity contracts:
Amount of Gain (Loss) Reclassified from AOCI into Income41.0  (57.3) —  (6.3) 17.4  —  
   Interest rate contracts:
Amount of Gain (Loss) Reclassified from AOCI into Income—  —  —  —  —  —  
Total amount of income and expense line items excluding the impact of hedges$11,132.5  $10,643.1  $26.9  $18,144.5  $17,637.2  $42.2  
Realized and Unrealized Gain (Loss)For the Three Months Ended  Realized and Unrealized Gain (Loss)For the Three Months Ended 
 September 30,   September 30, 
Derivative InstrumentsLocation 2017
 2016
 Hedged ItemsLocation 2017
 2016
Commodity contracts      Inventories     
 Cost of revenue $(23.1) $11.3
  Cost of revenue $0.8
 $(0.9)
Total (Loss) Gain  $(23.1) $11.3
 Total Gain (Loss)  $0.8
 $(0.9)
   
Realized and Unrealized Gain (Loss)For the Nine Months Ended  Realized and Unrealized Gain (Loss)For the Nine Months Ended 
 September 30,   September 30, 
Derivative InstrumentsLocation 2017
 2016
 Hedged ItemsLocation 2017
 2016
Commodity contracts      Inventories     
 Cost of revenue $(16.4) $(19.5)  Cost of revenue $(1.3) $9.8
Total (Loss)  $(16.4) $(19.5) Total (Loss) Gain  $(1.3) $9.8

The netFor the three and six months ended June 30, 2020 and 2019, there were 0 gains or losses recognized in income for the three months ended September 30, 2017 and 2016, representing hedge ineffectiveness were a $22.3 million loss, and a $10.4 million gain, respectively. For the nine months ended September 30, 2017 and 2016, the amounts of losses representing hedge ineffectiveness were $17.7 million, and $9.7 million, respectively. There were no amounts for the three and nine months ended September 30, 2017 and 2016,earnings related to our fair value or cash flow hedges that were excluded from the assessment of hedge effectiveness.

        As of June 30, 2020, on a pre-tax basis for commodity cash flow hedges, $160.8 million and $170.8 million is scheduled to be reclassified from Accumulated other comprehensive loss as an increase to Revenue and increase to Cost of revenue, respectively, over the effectiveness of our fair value hedges.next twelve months.
13



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, consolidated statements of income and comprehensive income (in millions):
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Effective Portion)For the Three Months Ended  Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)For the Three Months Ended 
September 30,  September 30, 
Derivative Instruments 2017
 2016
 Location 2017
 2016
           
Commodity contracts $(83.0) $11.2
 Revenue $(8.4) $(16.6)
Commodity contracts 68.7
 17.4
 Cost of Revenue 2.8
 53.0
Total (Loss) Gain $(14.3) $28.7
 Total (Loss) Gain $(5.6) $36.4
           
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Effective Portion)For the Nine Months Ended  Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)For the Nine Months Ended 
September 30,  September 30, 
Derivative Instruments 2017
 2016
 Location 2017
 2016
           
Commodity contracts $23.3
 $(105.3) Revenue $(2.6) $30.7
Commodity contracts (25.2) 130.4
 Cost of Revenue (1.0) (2.9)
Total (Loss) Gain $(1.8) $25.1
 Total (Loss) Gain $(3.6) $27.9
Amount of Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)

For the Three Months Ended 
September 30, 
Location 2017
 2016
Revenue $(8.2) $2.9
Cost of Revenue 4.2
 (3.6)
Total (Loss) $(4.1) $(0.7)
     
Amount of Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)

For the Nine Months Ended 
September 30, 
Location 2017
 2016
Revenue $2.1
 $(12.2)
Cost of Revenue (13.9) 9.2
Total (Loss) $(11.8) $(3.0)

The effective portion of the gains or losses on derivative instruments designated as cash flow hedges of forecasted transactions are initially reported as a component of accumulatedAccumulated other comprehensive income and subsequently reclassified into earnings once the future transactions affects earnings.Consolidated Statements of Income and Comprehensive Income (in millions):

Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive IncomeFor the Three Months EndedAmount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into IncomeFor the Three Months Ended
June 30,June 30,
Derivative Instruments20202019Location20202019
Commodity contracts$(148.5) $42.8  Revenue$27.0  $(2.5) 
Commodity contracts100.3  (22.7) Cost of revenue(56.2) 25.8  
Interest rate contracts(2.2) —  Interest expense and other financing costs, net—  —  
Total Gain (Loss)$(50.3) $20.1  Total Gain (Loss)$(29.2) $23.3  
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive IncomeFor the Six Months EndedAmount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into IncomeFor the Six Months Ended
June 30,June 30,
Derivative Instruments20202019Location20202019
Commodity contracts$185.6  $(177.7) Revenue$41.0  $(6.3) 
Commodity contracts(197.4) 173.7  Cost of Revenue(57.3) 17.4  
Interest rate contracts(3.7) —  Interest expense and other financing costs, net—  —  
Total Gain (Loss)$(15.5) $(4.0) Total Gain (Loss)$(16.3) $11.1  

The following table presents the effect and financial statement location of our derivative instruments not designated as hedging instruments on our consolidated statementsConsolidated Statements of incomeIncome and comprehensive incomeComprehensive Income (in millions):
Amount of Realized and Unrealized Gain (Loss)For the Three Months Ended
June 30,
Derivative Instruments - Non-designatedLocation20202019
Commodity contracts
Revenue$34.1  $69.4  
Cost of revenue(25.8) (57.1) 
8.4  12.4  
Foreign currency contracts
Revenue(0.5) —  
Other (expense), net(7.8) (1.3) 
(8.3) (1.3) 
Total Gain (Loss)$0.2  $11.1  
Amount of Realized and Unrealized Gain (Loss)For the Six Months Ended
June 30,
Derivative Instruments - Non-designatedLocation20202019
Commodity contracts
Revenue$113.3  $144.5  
Cost of revenue(10.3) (123.0) 
102.9  21.5  
Foreign currency contracts
Revenue—  (0.1) 
Other (expense), net10.7  (0.8) 
10.7  (0.9) 
Total Gain (Loss)$113.6  $20.6  
Amount of Realized and Unrealized Gain (Loss) For the Three Months Ended 
   September 30, 
Derivative Instruments - Non-designatedLocation 2017
 2016
Commodity contracts     
 Revenue $(31.2) $18.3
 Cost of revenue 47.9
 (14.6)
   $16.7
 $3.7
Foreign currency contracts     
 Revenue $(1.0) $1.3
 Other (expense), net (2.5) (0.5)
   $(3.5) $0.8
Total Gain  $13.2
 $4.5
      
Amount of Realized and Unrealized Gain (Loss) For the Nine Months Ended 
   September 30, 
Derivative Instruments - Non-designatedLocation 2017
 2016
Commodity contracts     
 Revenue $37.1
 $51.7
 Cost of revenue 11.7
 (53.3)
   $48.8
 $(1.6)
Foreign currency contracts     
 Revenue $(3.1) $7.7
 Other (expense), net (8.9) (6.1)
   $(12.0) $1.6
Total Gain  $36.8
 $—
14

Credit-Risk-Related Contingent Features
 
We enter into derivative instrument contracts, which may require us to periodically provide collateral. Certaincollateral periodically. Additionally, certain derivative contracts contain credit-risk-related contingent clauses whichthat are triggered by credit events. These credit events may include the requirement to provide additional collateral or the immediate settlement of the derivative instruments upon the occurrence of asuch credit downgradeevent or if certain defined financial ratios fall below an established threshold.default. The following table presents the potential collateral requirements for derivative liabilities with credit-risk-contingent features as of June 30, 2020 and December 31, 2019 (in millions):
Potential Collateral Requirements for
Derivative Liabilities with
Credit-Risk-Contingent Features
As of June 30, 2020As of December 31, 2019
Net derivative liability positions with credit contingent features$65.2  $45.6  
Collateral posted and held by our counterparties—  —  
Maximum additional potential collateral requirements$65.2  $45.6  
 
Potential Collateral Requirements for
Derivative Liabilities with
Credit-Risk-Contingent Features
 
   As of September 30, 2017
  As of December 31, 2016
Net derivatives liability positions with credit contingent features  $5.0
  $15.2
Maximum potential collateral requirements  $5.0
  $15.2


5. Goodwill
Goodwill arises because the purchase price paid for our acquisitions reflects numerous factors, including the strategic fit and expected synergies these acquisitions bring to our existing operations. Goodwill is recorded at fair value and is reviewed at least annually for impairment.
The following table provides the components of and changes in the carrying amount of goodwill for the six months ended June 30, 2020 (in millions):
Aviation
Land (1)
Total
Balance as of December 31, 2019$323.6  $520.1  $843.7  
Additions78.7  —  78.7  
Foreign exchange and other adjustments(0.1) (8.8) (8.9) 
Balance as of June 30, 2020$402.2  $511.3  $913.5  
(1)At SeptemberJune 30, 20172020, $446.7 million of the land segment's goodwill amount relates to the land reporting unit.


6. Debt, Interest Income, Expense and Other Finance Costs

Our debt consisted of the following as of June 30, 2020 and December 31, 2016, there was no collateral held by2019 (in millions):
As of
June 30,December 31,
20202019
Credit Facility$530.0  $55.0  
Term Loans509.5  515.6  
Finance Leases17.7  18.7  
Other (1)
40.0  39.5  
Total debt1,097.2  628.8  
Current maturities of long-term debt53.8  54.1  
Long-term debt$1,043.3  $574.7  
(1) Includes secured borrowings of $37.7 million (EUR 33.6 million), due within 12 months, for the transfer of tax receivables as of June 30, 2020.
15

The following table provides additional information about our counterparties on these derivative contracts with credit-risk-contingent features.interest income (expense), and other financing costs, net, for the periods presented for the three and six months ended June 30, 2020 and 2019 (in millions):

For the Three Months EndedFor the Six Months Ended
June 30,June 30,
2020201920202019
Interest income$0.7  $1.5  $1.6  $2.6  
Interest expense and other financing costs(10.7) (21.7) (26.9) (42.2) 
$(10.0) $(20.2) $(25.3) $(39.6) 
4.t

7. Fair Value Measurements
 
The carrying amounts of cash and cash equivalents, net accounts receivable, net, accounts payable and accrued expenses and other current liabilities approximate fair value based on thetheir short-term maturities of these instruments.maturities. The carrying values of our debt and notes receivablesreceivable approximate fair value since these instruments bear interest either at variable rates or fixed rates, which are not significantly different thanfrom market rates. Based on the fair value hierarchy, our total debt of $1.2$1.1 billion and $1.2 billion$628.8 million as of SeptemberJune 30, 20172020 and December 31, 2016,2019, respectively, and our notes receivable of $65.4$23.4 million and $16.9$21.0 million as of SeptemberJune 30, 20172020 and December 31, 2016,2019, respectively, arewere categorized inas Level 3.2.


The following table presentstables present information about our gross assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019(in millions):
 Fair Value measurements as of September 30, 2017 
  Level 1 Inputs
 Level 2 Inputs
 Level 3 Inputs
 Total Fair Value
Assets:        
Commodities contracts $208.7
 $46.7
 $1.4
 $256.8
Foreign currency contracts —
 5.0
 —
 5.0
Cash surrender value of life insurance —
 5.4
 —
 5.4
Total assets at fair value $208.7
 $57.1
 $1.4
 $267.2
         
Liabilities:  
  
  
  
Commodities contracts $187.3
 $54.8
 $0.2
 $242.4
Foreign currency contracts —
 9.5
 —
 9.5
Total liabilities at fair value $187.3
 $64.3
 $0.2
 $251.9
         
 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 June 30, 2020
Level 1 InputsLevel 2 InputsLevel 3 InputsTotal
Assets:
Commodities contracts$417.8  $259.7  $14.8  $692.4  
Foreign currency contracts—  2.4  —  2.4  
Interest rate contract—  —  —  —  
Cash surrender value of life insurance—  9.2  —  9.2  
Total assets at fair value$417.8  $271.3  $14.8  $704.0  
Liabilities:    
Commodities contracts$437.7  $181.7  $3.8  $623.2  
Foreign currency contracts—  10.9  —  10.9  
Interest rate contract—  4.9  —  4.9  
Total liabilities at fair value$437.7  $197.6  $3.8  $639.1  
Fair Value Measurements as of December 31, 2019
Level 1 InputsLevel 2 InputsLevel 3 InputsTotal
Assets:
Commodities contracts$148.3  $100.0  $10.7  $259.0  
Foreign currency contracts—  2.0  —  2.0  
Cash surrender value of life insurance—  9.4  —  9.4  
Total assets at fair value$148.3  $111.4  $10.7  $270.4  
Liabilities:
Commodities contracts$177.6  $69.3  $8.1  $255.0  
Foreign currency contracts—  11.6  —  11.6  
Total liabilities at fair value$177.6  $80.9  $8.1  $266.6  
         
There were no transfers between Level 1 and Level 2 during the periods presented.
16

The fair values of our commodity contracts measured using Level 3 inputs were not material at SeptemberJune 30, 20172020 and December 31, 2016,2019, respectively.

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 the 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.


The following tables summarize those commodity derivative balances subject to the right of offset as presented on our consolidated balance sheet.Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019. 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 of offset exists.
Fair Value as of June 30, 2020
Gross Amounts
Gross AmountsGross AmountsNet AmountsCash without
RecognizedOffsetPresentedCollateralRight of OffsetNet Amounts
Assets:
Commodities contracts$692.4  $507.5  $184.9  $7.5  $—  $177.4  
Interest rate contract—  —  —  —  —  —  
Foreign currency contracts2.4  2.2  0.3  —  —  0.3  
Total assets at fair value$694.8  $509.7  $185.1  $7.5  $—  $177.7  
Liabilities:
Commodities contracts$623.2  $507.5  $115.7  $19.5  $—  $96.2  
Interest rate contract4.9  —  4.9  —  —  4.9  
Foreign currency contracts10.9  2.2  8.8  —  —  8.8  
Total liabilities at fair value$639.1  $509.7  $129.4  $19.5  $—  $109.9  
Fair Value as of September 30, 2017 Fair Value as of December 31, 2019
         Gross Amounts
  Gross Amounts
 Gross Amounts
 Gross Amounts
 Net Amounts
 Cash
  without
  Gross AmountsGross AmountsNet AmountsCash without
 Recognized
 Offset
 Presented
 Collateral
 Right of Offset
 Net Amounts
RecognizedOffsetPresentedCollateralRight of OffsetNet Amounts
Assets:            Assets:
Commodities contracts $256.8
 $198.9
 $57.9
 $22.4
 $—
 $35.5
Commodities contracts$259.0  $130.0  $129.0  $—  $—  $129.0  
Foreign currency contracts 5.0
 4.8
 0.2
 —
 —
 0.2
Foreign currency contracts2.0  1.0  1.0  —  —  1.0  
Total assets at fair value $261.8
 $203.7
 $58.1
 $22.4
 $—
 $35.7
Total assets at fair value$261.1  $131.1  $130.0  $—  $—  $130.0  
            
Liabilities:            Liabilities:
Commodities contracts $242.4
 $198.9
 $43.5
 $11.3
 $—
 $32.2
Commodities contracts$255.0  $130.0  $125.0  $29.3  $—  $95.7  
Foreign currency contracts 9.5
 4.8
 4.7
 —
 —
 4.7
Foreign currency contracts11.6  1.0  10.5  —  —  10.5  
Total liabilities at fair value $251.9
 $203.7
 $48.2
 $11.3
 $—
 $36.9
Total liabilities at fair value$266.6  $131.1  $135.5  $29.3  $—  $106.3  

 Fair Value as of December 31, 2016 
          Gross Amounts
  
  Gross Amounts
 Gross Amounts
 Net Amounts
 Cash
  without
  
  Recognized
 Offset
 Presented
 Collateral
 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


At SeptemberJune 30, 20172020 and December 31, 2016,2019, we did not present any amounts gross on our consolidated balance sheetConsolidated Balance Sheets where we had the right of offset.
Concentration of Credit Risk

TheOur individual over-the-counter (OTC)("OTC") counterparty exposure is managed within predetermined credit limits and includes the use of cash-call margins when appropriate, thereby reducing the risk of significant nonperformance. At SeptemberJune 30, 2017, two2020, one of our counterparties, eachwith an exposure amount of $18.7 million, represented over 10% of our credit exposure to OTC derivative counterparties for a total credit risk of $8.1 million.counterparties.

5. Debt, Interest Income, Expense and Other Finance Costs

Our debt consisted of the following (in millions):
  As of 
  September 30,
 December 31,
  2017
 2016
Credit Facility $297.0
 $325.2
Term Loans 840.0
 840.0
Capital leases 11.1
 12.6
Other 3.6
 8.5
Total debt $1,151.7
 $1,186.3
Current maturities of long-term debt and capital leases $23.6
 $15.4
Long-term debt $1,128.1
 $1,170.8


17
The following table provides additional information about our interest income (expense), and other financing costs, net, for the periods presented (in millions):
  For the Three Months Ended  For the Nine Months Ended 
  September 30,  September 30, 
  2017
 2016
 2017
 2016
Interest income $1.2
 $0.8
 $3.9
 $3.6
Interest expense and other financing costs (17.0) (11.0) (46.2) (29.5)
  $(15.8) $(10.3) $(42.2) $(26.0)


t
6. Shareholders’ Equity
Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss
Our other comprehensive income (loss), consisting of foreign currency translation adjustments related to our subsidiaries that have a functional currency other than the U.S. dollar and derivative instruments, was as follows (in millions):
  
Foreign
Currency
Translation
Adjustments

 
Derivative
Instruments

 
Accumulated
Other
Comprehensive
Loss

Balance as of December 31, 2016 $(147.5) $(7.4) $(154.8)
Other comprehensive income 29.8
 1.8
 31.6
Less: Net other comprehensive (loss) attributable to noncontrolling interest (1.6) —
 (1.6)
Balance as of September 30, 2017 $(119.2) $(5.6) $(124.8)
       
Balance as of December 31, 2015 $(108.7) $(0.8) $(109.5)
Other comprehensive (loss) (27.9) (2.8) (30.7)
Less: Net other comprehensive (loss) income attributable to noncontrolling interest (1.8) —
 (1.8)
Balance as of September 30, 2016 $(134.8) $(3.6) $(138.3)

The foreign currency translation adjustment gains for the nine months ended September 30, 2017 were primarily due to the weakening of the U.S. dollar as compared to the British Pound. The foreign currency translation adjustment losses for the nine months ended September 30, 2016 were primarily due to the strengthening of the U.S. dollar as compared to the Brazilian Real and the British Pound.

7.8. Income Taxes
U.S. and foreign income (loss) before income taxes consist of the following (in millions):
  For the Three Months Ended  For the Nine Months Ended 
  September 30,  September 30, 
  2017
 2016
 2017
 2016
United States $(28.2) $(13.0) $(46.7) $(38.6)
Foreign 72.8
 61.4
 162.2
 178.6
  $44.6
 $48.4
 $115.6
 $140.1

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and income tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in income tax rates is recorded as a component of the income tax provision in the period that includes the enactment date.


We have recorded deferred tax assets for gross temporary differences where our tax basis exceeds our book basis, including net operating loss deferred tax assets primarily in the United States. We have also recorded deferred tax liabilities for gross temporary differences where our book basis exceeds our tax basis.

Regular assessments are made on the likelihood that our deferred tax assets will be recovered from our future taxable income. Our evaluation is based on estimates, assumptions, and includes an analysis of available positive and negative evidence, giving weight based on the evidence’s relative objectivity. Sources of positive evidence include estimates of future taxable income, future reversal of existing taxable temporary differences, taxable income in carryback years, and available tax planning strategies. Sources of negative evidence include current and cumulative losses in recent years, losses expected in early future years, any history of operating losses or tax credit carryforwards expiring unused, and unsettled circumstances that, if unfavorably resolved, would adversely affect future profit levels.

The remaining carrying value of the Company’s deferred tax assets, after recording the valuation allowance on our U.S. deferred tax assets, is based on our present belief that it is more likely than not that we will be able to generate sufficient future taxable income in certain tax jurisdictions to utilize such deferred tax assets. The amount of the remaining deferred tax assets considered recoverable could be adjusted if our estimates of future taxable income during the carryforward period change favorably or unfavorably. To the extent we believe that it is more likely than not that some or all of the remaining deferred tax assets will not be realized, we must establish a valuation allowance against those deferred tax assets, resulting in additional income tax expense in the period such determination is made. To the extent a valuation allowance currently exists, we will continue to monitor all positive and negative evidence until we believe it is more likely than not that it is no longer necessary, resulting in an income tax benefit in the period such determination is made.
Our income tax provision for the periods presented and the respective effective income tax rates for such periods are as follows (in millions, except for income tax rates):
  For the Three Months Ended  For the Nine Months Ended 
  September 30,  September 30, 
  2017
 2016
 2017
 2016
Income tax provision $82.6
 $5.4
 $92.2
 $15.7
         
Effective income tax rate 185.0% 11.1% 79.8% 11.2%

For the Three Months EndedFor the Six Months Ended
June 30,June 30,
2020201920202019
Income tax provision$7.7  $20.0  $23.7  $34.0  
Effective income tax rate(258)%35 %43 %31 %
 
Our provision for income taxes for the three months ended SeptemberJune 30, 20172020, was $82.6$7.7 million, andresulting in an effective income tax rate of (258%). The provision includes a valuation allowance on our U.S. deferred tax assets of $76.9 million, due to the Company's U.S. operations generating a three-year cumulative loss during the quarter. The valuation allowance is comprised of $24.0 million of deferred tax assets generated during 2017 and $52.9 million related to deferred tax assets generated in previous years. In addition, the provision also includes other net discrete items totaling $1.7tax expense of $3.4 million for the period related primarily related to changesreturn to provision adjustments resulting from tax return filings in estimates in uncertain tax positions and an adjustment for stock based compensation.several foreign jurisdictions. Without the $76.9$3.4 million valuation adjustment and otherin discrete items, the effective income tax rate would have been 12.5%(144)%.

Our provision for income taxes for the three months ended SeptemberJune 30, 2017.2019, was $20.0 million resulting in an effective tax rate of 35%. The provision includes a net discrete income tax expense of $0.8 million for the period. Without the $0.8 million in discrete items, the effective income tax rate would have been 33%.

Our provision for income taxes for the ninesix months ended SeptemberJune 30, 20172020, was $92.2$23.7 million, andresulting in an effective income tax rate of 43%. The provision includes a net discrete tax expense of $4.4 million for the U.S. valuation allowance of $76.9 million and other discrete amounts of $5.6 millionperiod related primarily to changesreturn to provision adjustments resulting from tax return filings in estimates in uncertain tax positions and an adjustment for stock based compensation.several foreign jurisdictions. Without the valuation allowance of $76.9$4.4 million and otherin discrete items, the nine months ended September 30, 2017 effective income tax rate would have been 8.3%35%.

Our provision for income taxes for eachthe six months ended June 30, 2019, was $34.0 million resulting in an effective tax rate of 31%. The provision includes a net discrete income tax benefit of $2.0 million for the period. Without the $2.0 million in discrete items, the effective income tax rate would have been 33%.

Our income tax concession in Singapore, which reduces the income tax rate on qualified sales and derivative gains and losses decreased foreign income taxes by $0.8 million and $0.6 million for the three months ended June 30, 2020 and 2019, respectively. The impact of the nineincome tax concession on basic earnings per common share was $0.01 and $0.01 for the three months ended SeptemberJune 30, 20172020 and 20162019, respectively and $0.01 and $0.01 on a diluted earnings per common share basis, respectively.

Our income tax concession decreased foreign income taxes by $2.7 million and $1.5 million for the six months ended June 30, 2020 and 2019, respectively. The impact of the income tax concession on basic earnings per common share was $0.04 and $0.02 for the six months ended June 30, 2020 and 2019, respectively and $0.04 and $0.02 on a diluted earnings per common share basis, respectively.

Our provision for income taxes for the three and six months ended June 30, 2020 and 2019 was calculated based on the estimated annual effective income tax rate for 2017the 2020 and 20162019 fiscal years. The actual effective income tax rate for the 20172020 fiscal year may be materially different as a result of differences between estimated versus actual results and the geographic tax jurisdictions in which the results are earned.

On July 20, 2020, the Internal Revenue Service (“IRS”) released final regulations relating to the high tax exception rules under the global intangible low-tax income ("GILTI") and Subpart F income provisions of the Code which are effective for years beginning after July 23, 2020; however taxpayers may choose to apply the regulations for tax years beginning after December 31, 2017. The company is in the process of reviewing the final regulations and determining the potential impact if any.

18

We operatehave various tax returns under a special incomeexamination both in the U.S. and foreign jurisdictions. The most significant of these are in Denmark for the 2013 to 2015 tax concession in Singapore which began January 1, 2008. Our current 5 year special incomeyears, South Korea for the 2011 to 2014 tax concession was effective January 1, 2013. The special income tax concession is conditional upon our meeting of certain employment and investment thresholds which, if not met in accordance with our agreement, may eliminate the benefit beginning with the first year in which the conditions are not satisfied. The income tax concession reduces the income tax rate on qualified salesyears, and the impact of this income tax concession decreased foreign income taxes by $0.2 million and $0.6 millionU.S. for the three months ended September 30, 2017 and 2016, respectively, and by $1.4 million and $2.3 million for the nine months ended September 30, 2017 and 2016, respectively. The impact of the incometo 2018 tax concession on basic earnings per common share was $0.01 for the three months ended September 30, 2016, and $0.02 and $0.03 for the nine months ended September 30, 2017 and 2016, respectively.

The impact of the income tax concession on diluted earnings per common share was $0.01 for the three months ended September 30, 2016 and $0.02 and $0.03 for the nine months ended September 30, 2017 and 2016, respectively. The income tax concession did not have an impact on basic and diluted earnings per common share for the three months ended September 30, 2017.

The South Korea branch ofyears. In 2018, one of our subsidiaries hasin Denmark received an incomeaudit inquiry from the Danish tax assessment noticeauthorities regarding transfer pricing and other related matters for the tax years 2011 -2013 to 2015. In the second quarter 2019, it received a proposed tax adjustment of approximately $1.7 million (DKK 11.2 million) related to the 2013 tax year and on April 30, 2020, it received a proposed tax adjustment of approximately $1.3 million (DKK 8.6 million) related to the 2014 totaling $8.2 million (KRW 9.2 billion).tax year. We disagree withare responding to the South Korea tax authorities' assessment and are in the process of appealing.

8. Goodwill and Identifiable Intangible Assets
Goodwill arises because the purchase price paid for our acquisitions reflects numerous factors, including the strategic fit and expected synergies these acquisitions bring to our existing operations. Goodwill is recorded at fair value and is reviewed at least annually for impairment.
Goodwill evaluations are performed at the reporting unit level and are based on an assessment of qualitative factors to determine whether it is more likely than not that the fair value of any individual reporting unit is less than its carrying amount. Factors that could affect fair value include material adverse changes in the markets in which a unit operates, such as the prolonged weakness within the global shipping and offshore oil exploration markets, and extended periods of oversupplied global fuel markets combined with limited market volatility, which can adversely impact the demand for our products and services, among others.
The following table provides the components of and changes in the carrying amount of goodwill (in millions):
  Aviation
 Land
 Marine
 Total
Balance as of December 31, 2016 $266.8
 $496.7
 $72.3
 $835.8
Additions 46.4
 —
 —
 46.4
Foreign exchange and other adjustments 8.9
 9.9
 0.1
 19.0
Balance as of September 30, 2017 $322.2
 $506.6
 $72.4
 $901.1


In connection with our acquisitions, we record identifiable intangible assets at fair value. The determination of the fair values of our identifiable intangible assets involves a significant amount of forecastingproposed income adjustments and other assumptions associated with recently acquired businesses for which we may not have as much historical information or trend data as we would for our existing businesses. Identifiable intangible assets are reviewed for impairment at least annually duringrequests from the fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The following table provides information about our identifiable intangible assets (in millions):
 As of September 30, 2017  As of December 31, 2016 
 Gross Carrying Amount
 Accumulated Amortization
 Net
 Gross Carrying Amount
 Accumulated Amortization
 Net
Intangible assets subject to amortization:           
Customer relationships$391.7
 $181.9
 $209.8
 $353.8
 $155.5
 $198.3
Supplier agreements38.7
 14.8
 23.9
 38.7
 13.3
 25.4
Others40.9
 25.1
 15.8
 37.2
 20.2
 17.0
 471.4
 221.9
 249.5
 429.8
 189.1
 240.7
Intangible assets not subject to amortization:           
Trademark/trade name rights40.2
 

 40.2
 41.7
 

 41.7
 $511.6
 $221.9
 $289.6
 $471.4
 $189.1
 $282.3


9. Earnings per Common Share
The following table sets forth the computation of basic and diluted earnings per common share for the periods presented (in millions, except per share amounts):

  For the Three Months Ended  For the Nine Months Ended 
  September 30,  September 30, 
  2017
 2016
 2017
 2016
Numerator:        
Net income (loss) attributable to World Fuel $(38.5) $42.7
 $22.8
 $124.3
Denominator:        
Weighted average common shares for basic earnings per common share 67.9
 69.1
 68.3
 69.4
Effect of dilutive securities 0.3
 0.4
 0.3
 0.5
Weighted average common shares for diluted earnings per common share 68.2
 69.5
 68.6
 69.9
         
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 1.6
 1.3
 1.4
 1.3
         
Basic earnings per common share $(0.57) $0.62
 $0.33
 $1.79
         
Diluted earnings per common share $(0.57) $0.61
 $0.33
 $1.78



10. Commitments and Contingencies
Tax Matters
From time to time, we are under review by various domestic and foreignDanish tax authorities with regards to indirect tax matters and are involved in various challenges and litigation in a number of countries, including, in particular, Brazil and South Korea, where the amounts under controversy may be significant.

During the quarter ended December 31, 2016,authorities. In 2017, the Korean branch (“WFSK”)Branch of one of our subsidiaries received assessments of approximately $10.6income tax assessment notices for $9.4 million (KRW 11.9 billion) and during the quarter ended June 30, 2017, an assessment for an additional $17.9 million (KRW 20.111.3 billion) from the regional tax authorities of Seoul, South Korea (“SRTO”). The assessments primarily consist of fines and penalties for allegedly failing to issue Value Added Tax ("VAT") invoices and report certain transactions during the period 2011-2014. These assessments do not involve failure to pay or collect VAT.tax authorities. We believe that these assessments are without merit and are currently appealing the actions.

We are also involved in a number of tax disputes with federal, state and municipal tax authorities in Brazil, relating primarily to VAT (ICMS) tax matters. These disputes are at various stages of On March 11, 2020, the legal process, includingU.S. Internal Revenue Service began the administrative review phase and the collection action phase, and include assessments of fixed amounts of principal and penalties, plus interest.

When we deem it appropriate and the amounts are reasonably estimable, we establish reserves for potential adjustments to our provision for the accrual of indirect taxes that may result from examinations or other actions by tax authorities. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of benefits in the period we determine the liabilities are no longer necessary. If our estimates of anyaudit of our federal, state,2017 and foreign indirect2018 tax liabilitiesyears, and we are less than the ultimate assessment, it could result in a further chargecurrently responding to expense. Except with respect to the matters described above, we believe that the final outcome of any pending examinations, agreements, administrative or judicial proceedings will not have a material effect on our results of operations or cash flows.their information requests.

Other Matters
On August 31, 2016, Hanjin Shipping Co., Ltd. (“Hanjin”), one of our customers in our marine segment, filed for bankruptcy protection in South Korea and on September 1, 2016, the Korean Rehabilitation Court accepted Hanjin’s application for rehabilitation. On February 17, 2017, the Korean Rehabilitation Court formally adjudicated the liquidation of Hanjin. As of September 30, 2017, the outstanding Hanjin receivables were not material.

We are also a party to various claims, complaints and proceedings arising in the ordinary course of our business including, but not limited to, environmental claims, commercial and governmental contract claims, such as property damage, demurrage, personal injury, billing and fuel quality claims, as well as bankruptcy preference claims and administrative claims. We have established loss provisions for these ordinary course claims as well as other matters in which losses are probable and can be

reasonably estimated. As of September 30, 2017, we had recorded certain reserves which were not material. For those matters where a reserve has not been established and for which we believe a loss is reasonably possible, as well as for matters where a reserve has been recorded but for which an exposure to loss in excess of the amount accrued is reasonably possible, we believe that such losses will not have a material adverse effect on our consolidated financial statements. However, any adverseAn unfavorable resolution of one or more such claims, complaints or proceedings during a particular periodof the above matters could have a material adverse effect on our consolidated financial statementsresult of operations or disclosurescash flows in the quarter or year in which the adjustments are recorded, or the tax is due or paid. As examinations are still in process or have not yet reached the final stages of the appeals process, the timing of the ultimate resolution or payments that may be required cannot be determined at this time.

9. Revenue from Contracts with Customers

Our contracts with customers primarily require us to deliver fuel and fuel-related products, while other arrangements require us to complete agreed-upon services. Revenue from the sale of fuel is recognized when our customers obtain control of the fuel, which is typically upon delivery of each promised gallon or barrel to an agreed-upon delivery point. We generally recognize revenue for that period.
Our estimates regarding potential losses and materiality areservices provided over the contract period when services have been performed based on our judgmentright to invoice for those services.

        Our contracts may contain fixed or variable pricing (such as market or index-based pricing) or some combination of those. Within our land and assessmentaviation segments, contracts with customers may include multi-year sales contracts, which are priced at market-based indices and require minimum volume purchase commitments from our customers. The consideration expected from these contracts is considered variable due to the market-based pricing and the variability is not resolved until delivery is made to our customers. We have elected to apply the optional exemption from estimating and disclosing the variable consideration from our remaining performance obligations under these contracts.

        We also have fixed price fuel and fuel-related product sale contracts with a contract term of less than one year (typically one month). For these contracts, we apply the optional exemption to not disclose the amount of transaction price allocated to remaining performance obligations. We also apply this exemption to those contracts in which the right to consideration corresponds directly with the value to the customer of the claims utilizing currently available information. Althoughentity's performance to date. In limited cases, we will continue to reassessmay have multi-period fixed price contracts. Because our reserves and estimateslong-term supply arrangements that exceed one year are typically based on future developments,market index prices as previously discussed, the transaction price associated with remaining performance obligations under multi-year fixed price fuel sale contracts is not significant.

19

The following table presents our objective assessmentrevenues from contracts with customers disaggregated by major geographic areas we conduct business in for the three and six months ended June 30, 2020 and 2019 (in millions):
For the Three Months EndedFor the Six Months Ended
June 30,June 30,
2020201920202019
Aviation$103.9  $340.8  $357.9  $705.2  
Land0.8  4.1  5.6  9.0  
Marine441.0  719.5  1,365.7  1,428.4  
Asia Pacific545.8  1,064.5  1,729.1  2,142.6  
Aviation157.8  1,008.8  796.6  1,727.9  
Land313.9  569.7  932.1  1,210.2  
Marine285.0  736.3  896.2  1,391.1  
EMEA756.7  2,314.9  2,625.0  4,329.2  
Aviation77.2  614.6  656.7  1,160.3  
Land76.4  149.6  206.8  288.5  
Marine83.1  143.4  316.4  334.9  
LATAM236.7  907.6  1,179.9  1,783.7  
Aviation500.6  2,828.5  2,607.1  5,476.5  
Land804.9  1,884.6  2,134.2  3,519.0  
Marine134.2  347.9  476.4  682.4  
North America1,439.7  5,061.0  5,217.7  9,677.9  
Other revenues (excluded from ASC 606) (1)
179.6  111.3  421.9  204.8  
$3,158.3  $9,459.4  $11,173.5  $18,138.2  
(1) Includes revenue from leases and other transactions that we account for under separate guidance.

The nature of the legal meritsreceivables related to revenue from contracts with customers and Other revenues (excluded from ASC 606) are substantially similar, as they are both generated from transactions with the same type of counterparties (e.g., separate fuel sales and storage lease with the same counterparty) and are entered into utilizing the same credit approval and monitoring procedures for all customers. As such, claims maywe believe the risk associated with the cash flows from the different types of receivables is not always be predictivemeaningful to separately disaggregate the accounts receivable balance presented on our Consolidated Balance Sheet. Furthermore, as of June 30, 2020 and December 31, 2019, the outcomecontract assets and actual results may vary from our current estimates.contract liabilities recognized by the Company were not material.


11.
10. Business Segments
 
We operate in three3 reportable segments consisting of aviation, land and marine. Corporate expenses are allocated to the segments based on usage, where possible, or on other factors according to the nature of the activity. Our operating segments are determined based on the different markets in which we provide products and services, which are defined primarily by the customers and the products and services provided to those customers. Accordingly, our aviation, land and marine segments are organized based on the specific markets their functional business components serve, which are primarily businesses and governmental customers operating in those respective markets.

In our aviation segment, we offer fuel and related products and services to major commercial airlines, second and third tierthird-tier airlines, cargo carriers, regional and low cost carriers, airports, fixed based operators, corporate fleets, fractional operators, private aircraft,aircraft. In addition, we supply products and services to U.S. and foreign government, intergovernmental and military fleetscustomers, such as the North Atlantic Treaty Organization (NATO) and the U.S. and foreign governments as well as intergovernmental organizations.Defense Logistics Agency.

20

In our land segment, we offer fuel, lubricants, power and natural gas solutions through World Kinect global energy management brand, 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 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.

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.
 
Information concerning our revenue, gross profit and income from operations by reportable segment is as follows for the three and six months ended June 30, 2020 and 2019(in millions):
  For the Three Months Ended  For the Nine Months Ended 
  September 30,  September 30, 
Revenue: 2017
 2016
 2017
 2016
Aviation segment $3,705.8
 $2,969.2
 $10,531.6
 $7,810.2
Land segment 2,770.5
 2,509.8
 8,117.9
 6,375.9
Marine segment 2,066.7
 1,920.7
 6,173.9
 5,037.5
  $8,543.0
 $7,399.8
 $24,823.4
 $19,223.6
         
Gross profit:        
Aviation segment $123.9
 $111.7
 $334.8
 $298.9
Land segment 85.5
 87.8
 270.5
 261.7
Marine segment 30.5
 37.2
 97.0
 116.0
  $239.9
 $236.7
 $702.3
 $676.7
Income from operations:        
Aviation segment $61.6
 $52.6
 $151.7
 $123.8
Land segment 13.1
 13.9
 46.7
 64.0
Marine segment 4.3
 10.3
 19.9
 32.8
  79.1
 76.8
 218.4
 220.5
Corporate overhead - unallocated (17.8) (18.6) (55.5) (55.7)
  $61.3
 $58.2
 $162.8
 $164.8

For the Three Months EndedFor the Six Months Ended
June 30,June 30,
Revenue:2020201920202019
Aviation segment$1,020.6  $4,785.0  $4,784.8  $9,037.7  
Land segment1,197.6  2,663.0  3,303.6  5,156.6  
Marine segment940.2  2,011.4  3,085.2  3,943.9  
$3,158.3  $9,459.4  $11,173.5  $18,138.2  
Gross profit:
Aviation segment$91.9  $140.5  $185.0  $254.8  
Land segment84.8  91.7  191.0  193.2  
Marine segment37.2  36.4  96.6  71.6  
$213.9  $268.6  $472.6  $519.7  
Income from operations:
Aviation segment$9.0  $73.5  $38.1  $129.1  
Land segment9.7  11.8  35.3  32.8  
Marine segment13.3  10.1  47.2  23.6  
32.0  95.4  120.6  185.5  
Corporate overhead - unallocated(20.1) (20.2) (37.9) (40.0) 
$11.9  $75.2  $82.7  $145.6  
 


Information concerning our accounts receivable, net and total assets by segment is as follows as of June 30, 2020 and December 31, 2019 (in millions):
As of
June 30,December 31
20202019
Accounts receivable, net:
Aviation segment, net of allowance for credit losses of $33.0 and $14.6 as of June 30, 2020 and December 31, 2019, respectively$412.6  $1,098.2  
Land segment, net of allowance for credit losses of $8.3 and $2.8 as of June 30, 2020 and December 31, 2019, respectively590.9  863.2  
Marine segment, net of allowance for credit losses of $4.3 and $18.0 as of June 30, 2020 and December 31, 2019, respectively412.5  930.5  
$1,415.9  $2,891.9  
Total assets:  
Aviation segment$1,817.4  $2,416.5  
Land segment1,881.6  2,089.4  
Marine segment812.6  1,189.7  
Corporate369.3  296.8  
$4,881.0  $5,992.4  
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        During each of the periods presented on the Consolidated Statements of Income and Comprehensive Income, none of our customers accounted for more than 10% of total consolidated revenue. Sales to government customers, which principally consist of sales to NATO in support of military operations in Afghanistan, have accounted for a material portion of our profitability in recent years. The profitability associated with our government business can be significantly impacted by supply disruptions, border closures, road blockages, hostility-related product losses, inventory shortages and other logistical difficulties that can arise when sourcing and delivering fuel in areas that are actively engaged in war or other military conflicts. Our sales to government customers may fluctuate significantly from time to time as a result of the foregoing factors, as well as the level of troop deployments and related activity in a particular region or area or the commencement, extension, renewal or completion of existing and new government contracts. See Item 1A. Risk Factors of our 2019 10-K Report for more information.


11. Earnings per Common Share
The following table sets forth the computation of basic and diluted earnings per common share for the periods presented (in millions, except per share amounts):
For the Three Months EndedFor the Six Months Ended
June 30,June 30,
2020201920202019
Numerator:
Net income attributable to World Fuel$(10.2) $37.0  $31.2  $74.2  
Denominator:
Weighted average common shares for basic earnings per common share63.3  66.7  64.1  66.9  
Effect of dilutive securities—  0.3  0.3  0.3  
Weighted average common shares for diluted earnings per common share63.3  67.0  64.4  67.2  
Weighted average securities which are not included in the calculation of diluted earnings per common share because their impact is anti-dilutive or their performance conditions have not been met3.4  1.5  2.8  2.3  
Basic earnings per common share$(0.16) $0.56  $0.49  $1.11  
Diluted earnings per common share$(0.16) $0.55  $0.48  $1.10  
12. Commitments and Contingencies
Tax Matters
        From time to time, we are under review by various domestic and foreign tax authorities with regard to indirect tax matters and are involved in various challenges and litigation in a number of countries, including, in particular, Brazil and South Korea, where the amounts under controversy may be material. We believe that these assessments are without merit and are currently appealing the actions.
During the quarter ended December 31, 2016, the Korean branch of one of our subsidiaries received assessments of approximately $9.4 million (KRW 11.3 billion) and during the quarter ended June 30, 2017, an assessment for an additional $16.8 million (KRW 20.1 billion) from the regional tax authorities of Seoul, South Korea. The assessments primarily consist of fines and penalties for allegedly failing to issue Value Added Tax ("VAT") invoices and report certain transactions during the period 2011-2014. These assessments do not involve failure to pay or collect VAT. We believe that these assessments are without merit and are currently appealing the actions.
We are also involved in a number of tax disputes with federal, state and municipal tax authorities in Brazil, relating primarily to a VAT tax known as ICMS. These disputes are at various stages of the legal process, including the administrative review phase and the collection action phase, and include assessments of fixed amounts of principal and penalties, plus interest. One of our Brazilian subsidiaries is currently appealing an assessment of approximately $9.0 million (BRL 49.1 million) from the Brazilian tax authorities relating to the ICMS rate used for certain transactions.  The assessment primarily consists of
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interest and penalties.  We believe that the assessment is without merit and are pursuing our remedies in the judicial court system.
        When we deem it appropriate and the amounts are reasonably estimable, we establish reserves for potential adjustments to our provision for the accrual of indirect taxes that may result from examinations or other actions by tax authorities. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities will result in the recognition of benefits in the period we determine the liabilities are no longer necessary. If our estimates of any of our federal, state, and foreign indirect tax liabilities are less than the ultimate assessment, it could result in a further charge to expense. Except with respect to the matters described above, we believe that the final outcome of any pending examinations, agreements, administrative or judicial proceedings will not have a material effect on our results of operations or cash flows.

Other Matters

        We are also a party to various claims, complaints and proceedings arising in the ordinary course of our business including, but not limited to, environmental claims, commercial and governmental contract claims, such as property damage, demurrage, personal injury, billing and fuel quality claims, as well as bankruptcy preference claims and tax and administrative claims. We have established loss provisions for these ordinary course claims as well as other matters in which losses are probable and can be reasonably estimated. As of June 30, 2020, we had recorded certain reserves that were not material. For those matters where a reserve has not been established and for which we believe a loss is reasonably possible, as well as for matters where a reserve has been recorded but for which exposure to loss in excess of the amount accrued is reasonably possible, we believe that such losses will not have a material adverse effect on our Consolidated Financial Statements. However, any adverse resolution of one or more such claims, complaints or proceedings during a particular period could have a material adverse effect on our Consolidated Financial Statements or disclosures for that period. 
        Our estimates regarding potential losses and materiality are based on our judgment and assessment of the claims utilizing currently available information. Although we will continue to reassess our reserves and estimates based on future developments, our objective assessment of the legal merits of such claims may not always be predictive of the outcome and actual results may vary from our current estimates.

13. Restructuring

As a result of the continued review of our land business and changes in the overall economic landscape for all reportable segments as a result of the COVID-19 pandemic, we are implementing a restructuring initiative focused on further streamlining our operations and sharpening our deployment of resources in 2020.  While the company took several actions during the second quarter of 2020, we continue to evaluate and define the overall restructuring plan as the full impact of COVID-19 on our business and our customers is unknown.

For the six months ended June 30, 2020, we incurred $4.8 million in restructuring costs, comprised principally of certain severance costs included in Restructuring charges in our Consolidated Statements of Income and Comprehensive Income. Our accrued restructuring charges as of June 30, 2020 are included in Accrued expenses and other current liabilities on our Consolidated Balance Sheet.
The following table provides a summary of our restructuring activities during the six months ended June 30, 2020 (in millions):
AviationLandMarineCorporateConsolidated
Balance as of December 31, 2019$0.5  $7.5  $1.3  $0.2  $9.5  
Severance costs0.7  2.7  0.4  1.0  4.8  
Payments(0.5) (4.5) (1.0) (0.5) (6.5) 
Restructuring charges as of June 30, 2020$0.7  $5.7  $0.7  $0.8  $7.9  
  As of 
  September 30,
 December 31,
  2017
 2016
Accounts receivable, net:    
Aviation segment, net of allowance for bad debt of $9.4 and $6.6 as of September 30, 2017 and December 31, 2016, respectively $934.3
 $776.0
Land segment, net of allowance for bad debt of $7.8 and $8.2 as of September 30, 2017 and December 31, 2016, respectively 794.0
 737.5
Marine segment, net of allowance for bad debt of $11.1 and $10.2 as of September 30, 2017 and December 31, 2016, respectively 855.1
 830.5
  $2,583.4
 $2,344.0
Total assets:  
  
Aviation segment $2,242.3
 $2,050.6
Land segment 2,014.7
 1,928.5
Marine segment 1,309.6
 1,287.7
Corporate 156.4
 145.8
  $5,723.1
 $5,412.6
During the second quarter of 2020, we implemented a cost reduction initiative to rationalize our global office footprint and approved the abandonment of certain office leases, including the transition of select offices to smaller or more cost-effective locations. These asset groups, consisting mainly of right-of-use assets and leasehold improvements, were tested for impairment. We concluded that the carrying amounts of these asset groups were not recoverable and the fair value determined was concluded to be nominal based on a discounted cash flow model. As a result, an $18.6 million impairment charge was recognized and is included within Asset impairments on our Consolidated Statements of Income and Comprehensive Income.
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The following table provides a summary of this impairment by reportable business segment (in millions):

AviationLandMarineCorporateConsolidated
Asset impairments$6.9  $5.9  $4.0  $1.8  $18.6  

14. Subsequent Events
On July 30, 2020, we entered into a definitive agreement to sell our Multi Service payment solutions business. Subject to certain closing adjustments, we will receive a total of approximately $350.0 million in cash, consisting of approximately $275.0 million at closing and $75.0 million deferred for future payment, of which $50.0 million will be conditioned on MSTS' achievement of financial targets in 2021 and 2022. The closing is subject to customary conditions, including regulatory approvals. We expect the sale to be completed within 90 days from the date of the agreement. Multi Service, which is mainly reported within the land segment, did not qualify as held for sale as of June 30, 2020 and will not meet the criteria to be reported as a discontinued operation. The net carrying amount of Multi Service as of June 30, 2020 was $222.5 million.
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion should be read in conjunction with our 20162019 10-K Report and the consolidated financial statementsConsolidated Financial Statements and related notes in “ItemItem 1 — Financial Statements”Statements appearing elsewhere in this 10-Q Report. The following discussion may contain forward-looking statements, and our actual results may differ significantlymaterially from the results suggested by these forward-looking statements. Some factors that may cause our results to differ are disclosed in “ItemItem 1A —- Risk Factors”Factors of our 20162019 10-K Report as updated and supplemented by Part II - Item 1A of this 10-Q Report.

Forward-Looking Statements
 
Certain statements made in this reportThis 10-Q Report and the information incorporated by reference in it, or made by us in other reports, filings with the Securities and Exchange Commission (“SEC”),SEC, press releases, teleconferences, industry conferences or otherwise, arecontain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “project,” “could,” “would,” “will,” “will be,” “will continue,” “will likely result,” “plan,” or words or phrases of similar meaning. Specifically, this 10-Q Report includes forward-looking statements about (i) the impact of COVID-19 on us and our customers, including our expectations about demand, volume, profitability and the impact of fuel prices, (ii) our expectations regarding the conditions in the aviation, land, and marine markets and their impact on our business, (iii) our expectations regarding government-related activity in Afghanistan with the North Atlantic Treaty Organization (NATO) and the impact of the U.S. troop withdrawal, as well as the related profit contribution, (iv) our estimates regarding the expected benefits from our actions to reduce cost and our restructuring initiatives, including the rationalization of our global office footprint, (v) our expectations regarding our working capital, liquidity, capital expenditure requirements, (vi) our expectations and estimates regarding certain tax, legal and accounting matters, including the impact on our financial statements, (vii) our expectations regarding the financial impact and other benefits of previous acquisitions, including estimates of future expenses and our ability to realize estimated synergies, and (viii) estimates regarding the financial impact of our derivative contracts. These forward-looking statements are qualified in their entirety by cautionary statements and risk factor disclosures contained in our SEC filings.

Forward-lookingThese forward-looking statements are estimates and projections reflecting our best judgment and involve risks, uncertainties or other factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. The Company’s actual results may differ materially from the future results, performance or achievements expressed or implied by the forward-looking statements. These statements are based on our management’s expectations, beliefs and assumptions concerning future events affecting us, which in turn are based on currently available information.
Examples of forward-looking statements in this 10-Q Report include, but are not limited to, our expectations about the conditions in the aviation, land and marine markets in 2017, our cost reduction initiatives, our expectations regarding government-related activity and the related profit contribution, our expectations about the effect of acquisitions on our aviation and land segments, the timing, cost and benefits of our multi-year project and upgrade of our Enterprise Resource Planning (“ERP”) platform, our expectations about oversupplied market conditions in the U.S, our ability to drive greater leverage and ratability in our land operating model, our ability to divest or exit certain businesses, sharpen our portfolio and manage the related costs, our ability to improve cost competitiveness, gain structural efficiencies and rationalize our operating model, our ability to implement a single common technology platform for our land segment, as well as our expectations about our business strategy, business prospects, operating results, effectiveness of internal controls to manage risk, working capital, liquidity, capital expenditure requirements and future acquisitions. These forward-looking statements are qualified in their entirety by cautionary statements and risk factor disclosures contained in the Company’s Securities and Exchange Commission filings, including the Company’s Annual Report on Form 10-K filed with the SEC on February 21, 2017. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding our ability to effectively leverage technology and operating systems and realize the anticipated benefits, our ability to successfully execute and achieve efficiencies and other benefits related to our transformation initiatives and address market conditions, our ability to effectively integrate and derive benefits from acquisitions, our ability to capitalize on new market opportunities, the demand for our products, the cost, terms and availability of fuel from suppliers, pricing levels, the timing and cost of capital expenditures, outcome of pending litigation, competitive conditions, general economic conditions and synergies relating to acquisitions, joint ventures and alliances. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect.
Our actual results may differ materially from the future results, performance or achievements expressed or implied by the forward-looking statements.
Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking statements include, but are not limited to:
 
•customer and counterparty creditworthiness and our ability to collect accounts receivable and settle derivative contracts;contracts, particularly for those customers most significantly impacted by the COVID-19 pandemic;
•the extent of the impact of the pandemic, including the duration, spread, severity and scope of related government orders and restrictions, on ours and our customers' sales, profitability, operations and supply chains;
•loss of, or reduced sales to a significant government customer, such as NATO;
•the availability of cash and sufficient liquidity to fund our working capital and strategic investment needs, particularly in light of the impact of the pandemic on the financial markets;
•adverse conditions in the industries in which our customers operate such as the current global economic environment as a result of the coronavirus pandemic;
•sudden changes in the market price of fuel or extremely high or low fuel prices that continue for an extended periodsperiod of lowtime, including as a result of disagreements between the OPEC members and other oil pricesproducing countries such as Russia and limited market volatility;the impact of the pandemic on fuel demand;
•our failure to comply with restrictions and covenants in our senior revolving credit facility (“Credit Facility”) and our senior term loans (“Term Loans”), including our financial covenants;
•changes in the political, economic or regulatory conditionsenvironment generally and in the markets in which we operate;operate, such as IMO 2020 (defined below);

•our failure to effectively hedge certain financial risks and the use ofother risks associated with derivatives;
non-performance by counterparties or customers to derivative contracts;
•changes in credit terms extended to us from our suppliers;

•non-performance of suppliers on their sale commitments and customers on their purchase commitments;
loss of, or reduced sales to a significant government customer;

sudden changes in the market price of fuel;

•non-performance of third-party service providers;
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adverse conditions in the industries in which our customers operate;
•our ability to meet financial forecasts associated with our operating plan;

•lower than expected valuations associated with our cash flows and revenues, which could impair our ability to realize the value of recorded intangible assets and goodwill;

•the impact of cyber and other information security-related incidents;

•currency exchange fluctuations;
currencyfluctuations and other global marketthe impacts associated with United Kingdom ("U.K.") referendum voteBrexit;
•ability to exit fromeffectively leverage technology and operating systems and realize the European Union;anticipated benefits;
•failure of fuel and other products we sell to meet specifications;
our ability to manage growth;
•our ability to effectively integrate and derive benefits from acquired businesses;
•our ability to achieve the expected level of benefit from our restructuring activities and cost reduction initiatives;
material disruptions in the availability or supply of fuel;
•environmental and other risks associated with the storage, transportation and delivery of petroleum products;
•risks associated with operating in high risk locations;high-risk locations, including supply disruptions, border closures and other logistical difficulties that arise when working in these areas;
•uninsured losses;

our ability to realize the benefit of any cost savings;
•the impact of natural disasters, such as earthquakes and hurricanes;
•seasonal variability that adversely affects our revenues and operating results;
our failure to comply with restrictions and covenants in our senior revolving credit facility (“Credit Facility”) and our senior term loans (“Term Loans”);
•declines in the value and liquidity of cash equivalents and investments;
•our ability to retain and attract senior management and other key employees;
•changes in United States ("U.S.") or foreign tax laws (including the Tax Cuts and Jobs Act), interpretations of such laws, or changes in the mix of taxable income among different tax jurisdictions;jurisdictions, or adverse results of tax audits, assessments, or disputes;

•our failure to generate sufficient future taxable income in jurisdictions with significantmaterial deferred tax assets and net operating loss carryforwards;
•the impact of the U.K.’s exit from the European Union, known as Brexit, on our business, operations and financial condition;
•our ability to comply with U.S. and international laws and regulations including those related to anti-corruption, economic sanction programs and environmental matters;
increased levels of competition;

•the outcome of litigation and other proceedings, including the costs associated in defending any actions;
the liquidity and solvency of banks within our Credit Facility and Term Loans;
•increases in interest rates; and
•other risks, including those described in “ItemItem 1A - Risk Factors”Factors in our 20162019 10-K Report, andPart II, Item 1A of this 10-Q Report, as well as those described from time to time in our other filings with the SEC.
 
We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. The forward-looking statements in this 10-Q Report are based on assumptions management believes are reasonable.  However, due to the uncertainties associated with forward looking statements, you should not place undue reliance on any forward-looking statements.  Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to publicly update any of them in light of new information, future events, or otherwise. Any public statements or disclosures by the Companyus following this report that modify or impact any of the forward-looking statements contained in or accompanying this 10-Q Report will be deemed to modify or supersede such forward-looking statements.
 
For these statements, we claim the protection of the safe harbor for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act.Act, as amended (the “Exchange Act”). 
 
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Business Overview
 
We are a leading global fuel services company, principally engaged in the distribution of fuel and related products and services in the aviation, land and marine transportation industries. In recent years, we have expanded our product and service offerings to include energy advisory services and supply fulfillment for natural gas and power and transaction and payment management solutions to commercial and industrial customers. Our intention is to become a leading global energy management company involved in providingoffering a full suite of energy procurement advisory, management and fulfillment services, supply fulfillmenttechnology solutions, as well as sustainability products and transaction andservices across the energy product spectrum. We also offer payment management solutions to commercial and industrial customers, principally in the aviation, land and marine transportation industries. We competewill continue to focus on enhancing the portfolio of products and services we provide based on changes in customer demand, including sustainability offerings and renewable fuel products.

COVID-19

Beginning in the first quarter of 2020 and through the date of this filing, the aviation, marine and land transportation industries, along with global economic conditions, have been significantly impacted by providingthe COVID-19 pandemic. A large number of our customers with value-added benefits, including single-supplier convenience, competitive pricing,in these industries have experienced substantial reductions in their operations, especially commercial airlines and cruise lines, which have been particularly impacted by the availabilitytravel restrictions and stay-at-home orders. Customers in our marine and land segments have also been adversely affected by these restrictions, as well as the extended shutdown of trade credit, price risk management, logistical support, fuel quality controlvarious businesses in affected regions.

While the pandemic and fuel procurement outsourcing.associated impacts on economic activity had a limited adverse effect on our results of operations and financial condition for the first quarter of 2020, we have since seen a sharp decline in demand and related sales as large sectors of the global economy have been adversely impacted by the crisis. Accordingly, our results of operations during the second quarter of 2020 were significantly impacted as a result of the effects of the pandemic as described in greater detail below. Since the level of activity in our business and that of our customers has historically been driven by the level of economic activity globally, we generally expect these negative impacts to continue through the third quarter as the recent increases in COVID-19 cases have further delayed the reopening of various economies around the world.

The overall aviation market remains strong, reflecting healthy airline financial performance and strong overall demand.  Aviation Segment

Our aviation segment has benefited from growth in our increasedfuel and related services offerings, as well as our improving logistics capability and expanded footprint from the acquisitionimpact of internationalour expanded aviation fueling operations from various ExxonMobil affiliates, which has facilitated our expansionfootprint into additional international airport locations. TheHowever, as a result of COVID-19, the overall aviation market, principally commercial passenger airlines, has been significantly impacted by the travel restrictions and a sharp decrease in demand for air travel. Accordingly, during the second quarter of 2020, we experienced a material volume decline in our commercial aviation business and, to a somewhat lesser extent, a significant reduction in our business and general aviation activities. Our results of operations in these lines of business for the balance of 2020 will be highly contingent on the timing and extent to which the restrictions on air travel are lifted and the global economy begins to recover from the effects of the current crisis.

Furthermore, our aviation segment has benefited from increasedsignificant sales to government customers,NATO in Afghanistan, which include the U.S. Defense Logistics Agency, the North Atlantic Treaty Organization (NATO) and other government and military customers. Sales to government customers accountaccounts for a significantmaterial portion of our aviation segment's profitability. We expect our government-related activityThe current contract for these sales to remain strong, although we believe the related profit contribution will decrease in 2018 as a result of compressed margins associated with contract renewals. Sales to government customers are driven by globalNATO has been renewed through December 2020 and has two additional one-year renewal options at NATO's discretion. Global events and military-related activities, andas well as the level of troop deployments, can thereforecause our government customer sales to vary significantly change from period to period and materially impact our results of operations. The U.S. government has announced its intention to significantly reduce the level of U.S. troops in the Middle East, including the troops supporting NATO in Afghanistan. In connection therewith, in the early part of 2020, the U.S. entered into an agreement with the Taliban where it agreed to reduce the level of troops and negotiate a full withdrawal by 2021, subject to various conditions including a peace agreement being reached between the government of Afghanistan and the Taliban. In June 2020, the U.S. government publicly confirmed that it had completed the initial reduction in the level of troops in accordance with the terms of the agreement. While the exact timing and full impact of the troop withdrawal remains uncertain, we began to see a decline in demand at the end of the first quarter of 2020, which continued in the second quarter, and expect to experience additional material reductions in demand over the balance of the year and into 2021.

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Land Segment

Our land segment has grown primarily through acquisitions as we seek to build out ourconsists of land fuel distribution capabilities, primarily in the U.S. and the U.K. Recently,, further complemented by our expansion into energy advisory, brokerage and fulfillment solutions with respect to power, natural gas and other energy products. We also offer sustainability consulting, renewable fuel products, and carbon management and renewable energy solutions through our World Kinect global energy management brand. Due to the diverse portfolio of customers, businesses and activities within our land segment, has been negatively impacted by lower profitability from our supply and trading activities as a resultthe COVID-19 related impacts are more difficult to predict. For example, during the second quarter of oversupplied market conditions in the U.S., which we do not expect will improve in the near future. In addition,2020, our operating results in the U.S. and U.K. in recent years have been adversely impacted by unseasonably warm winter weather conditions. In contrast, our land segment has benefited from improvements in the U.K. However, this increase was largely offset by a decline in profitability in North America, primarily due to a material decrease in sales to governmentretail, commercial and industrial customers in connection with the continued negative impacts of the pandemic, particularly throughout much of the U.S. The extent of any improvements in these activities will continue to be dependent on the timing and extent to which quarantine restrictions are lifted and local business activity resumes. Furthermore, for the same reasons as those described above, we experienced a decline in government-related activity in Afghanistan during the second quarter of 2020 and expect suchto continue to see a decline in this activity to remain strong inthrough the near term. We are focused on realizing the synergies associated with our acquisitions, implementing a single common technology platformbalance of 2020 and driving greater leverage and ratability in our operating model.into 2021.

Marine Segment

Our marine segment continues to be adversely impacted by the weakhas posted strong quarterly comparative results in recent periods despite challenging conditions within the global shipping and offshore oil exploration marketsmarkets. Overall, throughout 2019 and has experienced lower overall volumes in our core business as compared to historical levels. We have also experienced lower demand for our price risk management products as a result of lowinto early 2020, higher average fuel prices, combined with our focus on reshaping our portfolio and limited market volatility. Ascost management, improved profitability. In addition, the implementation of the IMO 2020 mandatory low sulfur regulations that went into effect on January 1, 2020 resulted in certain supply imbalances and price volatility in late 2019 and through much of the first quarter of 2020 that positively impacted our operating results in those periods. However, in the latter part of the first quarter of 2020, we began to experience a result, we have conducted certain cost reduction initiativesdecline in volume and profitability due to lowerthe effects of the pandemic coupled with the significant decline in fuel prices, which continued into the second quarter. We expect our marine segment cost structure to address current market conditions. We currently do not anticipate a meaningful improvement in the overall macroeconomic environmentsegment’s volume and continue to rationalize our operating model to gain efficiencies through various initiatives that are ongoing throughout the company.

We continue to seek the most cost-effective means and efficient structure to serve our customers and suppliers and to respond to changes in the markets in which we operate. Accordingly, from time to time, we have, and are likelyprofitability to continue to divestbe negatively impacted by the effects of the pandemic for the balance of the year, particularly with respect to cruise lines and certain non-core assets, exit linessectors of the shipping industry, as well as lower fuel prices. However, we still expect our results for the third quarter of 2020 to be generally consistent with the third quarter of 2019.

Other Actions

With respect to our own operations, we have implemented our business or otherwise restructure certaincontinuity and emergency response plans in alignment with mandates from local authorities. To ensure the safety of our operationsemployees who are continuing to work, we have provided instructions on how to work safely in an effortlight of the pandemic and elevated our cleaning protocols for our offices, facilities and equipment. We are maximizing remote work throughout our global offices and our employees are collaborating virtually with our customers, suppliers and each other using the information sharing tools and technology that we have invested in during the last several years.

Due to improve cost competitivenessthe ongoing and profitability.expected adverse impacts of the COVID-19 crisis, we immediately made cost-related decisions as the pandemic began impacting our business activities. For example, we divested certainimmediately instituted a hiring freeze and implemented travel restrictions for our employees across the organization, postponed or eliminated all non-essential capital expenditures and other projects and initiatives, significantly reduced or deferred professional fees, marketing expenses and other similar costs. In addition, while we have continued to focus on improving operating efficiencies and returns, we have also concentrated on lowering our operating costs, including those of our convenience store assets in 2016 and also engaged in

cost reduction initiatives, principally in our marineland segment, in 2016 and throughout our organization in 2017. We are currently reviewingwhich has historically had a higher expense ratio than other non-core businesses and investments which we may divest or exit in the future as well as beginning to develop our 2018 annual operating plan and are identifying other areas for cost containment to further sharpen our portfolio, such as divesting of our remaining convenience store assets and exiting our rail business, among others. Any proceeds from divestitures are typically used to pay down debt or invested in other areasparts of our business. ReorganizationAccordingly, during the first quarter of 2020, we commenced a restructuring initiative focused on further streamlining our operations and exit costs vary significantly dependingsharpening our deployment of resources, not only in our land segment but also in our other segments due to the adverse impacts of the pandemic. During the second quarter of 2020, we expanded this restructuring to include the rationalization of our global office footprint and approved the abandonment of certain office leases, including the transition of select offices to smaller or more cost-effective locations. See note 13 of the financial statements included in Part I of this 10-Q Report for additional information regarding this restructuring.

The ultimate duration and impact of the COVID-19 pandemic on our business and our customers' operations continue to be unclear. Furthermore, the extent to which we or our customers will ultimately be impacted by the pandemic is not fully ascertainable as it is closely related to the timing and extent to which the global economy, and the aviation land and marine transportation industries, in particular, recover from the crisis. For additional discussion on the scoperisks relating to the pandemic, see Item 1A. Risk Factors in Part II of such activities as does their effectiveness in addressing market deterioration, and therefore may also result in financial charges for the impairment of assets, including goodwill and other intangible assets.this 10-Q Report.

We continue to evaluate all of the foregoing circumstances and these, as well as other changes in the industries in which we operate, such as increased competition or changes in regulation, can impact our annual operating plan, results of operations, tangible and intangible assets and cash flows.
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Reportable Segments
 
We operate in three reportable segments consisting of aviation, land and marine. In our aviation segment,marine, where 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 the U.S. and foreign governments as well as intergovernmental organizations.  In our land 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 basecustomers in each 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.these transportation industries. 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 our aviation and land segments, we primarily purchase and resell fuel and other products. Profit from our aviation and land segments is primarily determined by the volume and the gross profit achieved on fuel sales and a percentage of card payment and processing revenue.related services. In our marine segment, we primarily purchase and resell fuel and also act as brokers for others. Profit from our marine segment is determined primarilymostly 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 significantlymaterially affected to the extent that we are required to provide for potential bad debt.
Our revenue and cost of revenue are significantly impacted by fuel prices. 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. Additionally, 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 aviation and land fuel during the summer months, as well as other seasonal weather patterns. 

Corporate 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 the fueling operations acquired in Italy, Germany, Australia and New Zealand as of their respective acquisition dates.
Selected financial information with respect to our business segments is provided in Note 11 to10. Business Segments accompanying the accompanying consolidated financial statementsConsolidated Financial Statements included in this 10‑Q10-Q Report.


29

Results of Operations
Three Months Ended SeptemberJune 30, 20172020 Compared to Three Months Ended SeptemberJune 30, 20162019

Revenue. Our revenue for the thirdsecond quarter of 20172020 was $8.5$3.2 billion, an increasea decrease of $1.1$6.3 billion, or 15.4%67%, as compared to the thirdsecond quarter of 2016.2019. Our revenue during these periods was attributable to the following segments (in millions):
 For the Three Months ended   For the Three Months Ended
 September 30,   June 30,
 2017
 2016
 $ Change
20202019$ Change
Aviation segment $3,705.8
 $2,969.2
 $736.5
Aviation segment$1,020.6  $4,785.0  $(3,764.4) 
Land segment 2,770.5
 2,509.8
 260.7
Land segment1,197.6  2,663.0  (1,465.4) 
Marine segment 2,066.7
 1,920.7
 146.0
Marine segment940.2  2,011.4  (1,071.2) 
 $8,543.0
 $7,399.8
 $1,143.2
$3,158.3  $9,459.4  $(6,301.0) 
Revenues in our aviation segment were $3.7$1.0 billion for the thirdsecond quarter of 2017, an increase2020, a decrease of $0.7$3.8 billion, or 24.8%79% as compared to the thirdsecond quarter of 2016. The increase in aviation revenues was attributable to increased volumes associated with seasonal gains in our core resale operations in North America and from our acquired international fueling operations. Total volumes for the third quarter of 2017 were 2.1 billion gallons, an increase of 8.8%, as compared to the comparable prior year period. The overall increase in revenue was also driven by higher2019. Lower average jet fuel prices per gallon solddrove much of the decrease in aviation revenue in the thirdsecond quarter of 2017,2020, where the average price per gallon sold was $1.71,$1.04, as compared to $1.57$2.10 in the thirdsecond quarter of 2016. 2019. Additionally, as compared to the prior-year period, total aviation volumes for the second quarter of 2020 decreased by 1.5 billion or 68% to 688.1 million gallons. The volume reduction was due to the significant decline in activity in our commercial aviation business as a result of the impact of the COVID-19 pandemic on air travel.

Revenues in our land segment were $2.8$1.2 billion for the thirdsecond quarter of 2017, an increase2020, a decrease of $0.3$1.5 billion, or 10.4%55%, as compared to the thirdsecond quarter of 2016.2019. The increase in land revenues primarily resulted from a 0.1 billion gallon volume increase to 1.5 billion gallons for the third quarter of 2017, an increase of 5.3%, primarily attributable to acquired businesses. The overall increasedecrease in revenue was also influenced by a higherdue to lower average fuel price per gallon soldprices in the thirdsecond quarter of 2017,2020, as compared to the thirdsecond quarter of 2016.2019, where the average price per gallon or gallon equivalent sold was $1.01 in 2020, as compared to $1.99 in 2019. Volumes in our land segment for the second quarter of 2020 decreased by 161.2 million or 12.1% to 1.2 billion gallons as a result of stay-at-home restrictions and other pandemic-related impacts.

Revenues in our marine segment were $2.1 billion$940.2 million for the thirdsecond quarter of 2017, an increase2020, a decrease of $146.0 million,$1.1 billion, or 7.6%53%, as compared to the thirdsecond quarter of 2016.2019.  The increasedecrease in revenues was driven by higher average fuel prices, where we experiencedmainly attributable to a 23.9% increase40% decrease in the average price per metric ton of bunker fuel sold to $303.2$234.9 in the thirdsecond quarter of 20172020 as compared to $244.8$393.6 in the thirdsecond quarter of 2016. Despite the revenue increase, overall prices remain low compared to historical levels, and we do not anticipate meaningful improvements in the overall macroeconomic environment over the remainder of 2017.2019. Volumes in our marine segment declined 13.1% to 6.8by 1.1 million metric tons, foror 22% to 4.0 million metric tons in the thirdsecond quarter of 2017,2020, as compared to 2019. The volume decline was a result of the 2016 period, driven principally by lower volumeseffects of the pandemic on demand, combined with a continuing effort to exit activities that generate a low economic return, particularly in our core operations, specificallylight of the elevated credit risk environment in Asia.the wake of the pandemic.

Gross Profit. Our gross profit for the thirdsecond quarter of 20172020 was $239.9$213.9 million, an increasea decrease of $3.2$54.7 million, or 1.4%20%, as compared to the thirdsecond quarter of 2016. In connection with the recent natural disasters, including the earthquake in Mexico and hurricanes Harvey and Irma, we experienced certain business interruptions within our aviation and land segments, including supply disruptions, which adversely impacted the timing and consequently the cost of our inventory purchases, and we also incurred limited damage to certain facilities and other assets. We continue to assess the overall impact to our ongoing business operations of these events and during the period ended September 30, 2017, the impact of these events was approximately $8.0 million.2019.

Our gross profit during these periods was attributable to the following segments (in millions):
 For the Three Months ended   For the Three Months Ended
 September 30,   June 30,
 2017
 2016
 $ Change
20202019$ Change
Aviation segment $123.9
 $111.7
 $12.3
Aviation segment$91.9  $140.5  $(48.6) 
Land segment 85.5
 87.8
 (2.3)Land segment84.8  91.7  (7.0) 
Marine segment 30.5
 37.2
 (6.8)Marine segment37.2  36.4  0.9  
 $239.9
 $236.7
 $3.2
$213.9  $268.6  $(54.7) 
 

Our aviation segment gross profit for the thirdsecond quarter of 20172020 was $123.9$91.9 million, an increasea decrease of $12.3$48.6 million, or 11.0%35%, as compared to the thirdsecond quarter of 2016.2019. The increasedecrease in aviation gross profit was primarily due to increased activity froma 68% decline in volume as a consequence of the significant decline in air travel due to the COVID-19 pandemic, together with a reduction in our government-related business, includingactivity in Afghanistan as a result of the ongoing drawdown of troops. Partially offsetting the volume-related impact on gross profit were certain spot governmentsituation-specific, nontraditional activity arising from the pandemic, such as repatriation flights and the repositioning of aircraft, as well as physical supply opportunities. These increases were partially offset by hurricane-related marketgains associated with the historic volatility which negatively impactedin jet fuel prices.prices during the second quarter.

30

Our land segment gross profit for the thirdsecond quarter of 20172020 was $85.5$84.8 million, a decrease of $2.3$7.0 million, or 2.6%8%, as compared to the thirdsecond quarter of 2016.2019. The decrease in land segment gross profit is principallywas primarily attributable to lower profitability related tovolumes as a result of the pandemic, particularly in our supplyretail, commercial and tradingindustrial activities in North America and our government-related activities in Afghanistan, partly offset by continued strength in the U.S. and the aforementioned hurricane-related disruptions during the third quarter of 2017, as compared to the comparable prior year quarter.U.K.

Our marine segment gross profit for the thirdsecond quarter of 20172020 was $30.5$37.2 million, a decreasean increase of $6.8$0.9 million, or 18.2%2%, as compared to the thirdsecond quarter of 2016. Our marine segment continues to be adversely impacted by further deterioration of market conditions in the overall maritime industry.2019. The gross profit declineincrease was principally driven by reduced volumesrelated to improved performance in our core resale business, primarily in Asia, andoffset by significantly lower volume due to a further decline in profits fromactivity in connection with the sale of price risk management products to our global marine customers.pandemic.

Operating Expenses. Total operating expenses for the thirdsecond quarter of 20172020 were $178.6$202.0 million, an increase of $0.2$8.6 million, or 0.1%4%, as compared to the thirdsecond quarter of 2016. The2019. As part of our cost-reduction initiatives, we significantly reduced certain general and administrative expenses during the second quarter of 2020, which were effectively offset by a higher provision for bad debt, principally due to the effects of the pandemic on the aviation industry. Furthermore, despite lower compensation costs, including lower incentive compensation, total increase in operating expenses waswere higher as a result of an impairment charge of $18.6 million during the second quarter of 2020 associated with acquisition related costs that were directly attributableour decision to rationalize our acquired businesses.global office footprint. The following table sets forth our expense categories (in millions):

  For the Three Months ended   
  September 30,   
  2017
 2016
 $ Change
Compensation and employee benefits $107.6
 $106.6
 $1.0
Provision for bad debt 2.4
 1.5
 0.9
General and administrative 68.6
 70.3
 (1.7)
  $178.6
 $178.4
 $0.2

For the Three Months Ended
June 30,
20202019$ Change
Compensation and employee benefits$95.9  $112.0  $(16.1) 
General and administrative84.4  79.5  4.9  
Asset impairments18.6  —  18.6  
Restructuring charges3.1  1.9  1.2  
$202.0  $193.4  $8.6  
Income from Operations. Income from operations during these periods was attributable to the following segments (in millions):
 For the Three Months ended   For the Three Months Ended
 September 30,   June 30,
 2017
 2016
 $ Change
20202019$ Change
Aviation segment $61.6
 $52.6
 $9.0
Aviation segment$9.0  $73.5  $(64.5) 
Land segment 13.1
 13.9
 (0.8)Land segment9.7  11.8  (2.1) 
Marine segment 4.3
 10.3
 (5.9)Marine segment13.3  10.1  3.2  
 79.1
 76.8
 2.3
32.0  95.4  (63.4) 
Corporate overhead - unallocated (17.8) (18.6) 0.8
Corporate overhead - unallocated(20.1) (20.2) 0.1  
 $61.3
 $58.2
 $3.1
$11.9  $75.2  $(63.3) 
Our income from operations for the thirdsecond quarter of 20172020 was $61.3$11.9 million, an increasea decrease of $3.1$63.3 million, or 5.3%84%, as compared to the thirdsecond quarter of 2016. The increase was attributable to2019. Results in our aviation segment which benefitedprimarily drove the decrease in operating income.

Income from increased activity fromoperations in our aviation segment for the second quarter of 2020 was $9.0 million, a decrease of $64.5 million, or 88% as compared to the second quarter of 2019. Our aviation segment was principally impacted by lower volumes and the correspondingly reduced profit contribution as a consequence of the significant decline in air travel due to the COVID-19 pandemic, together with a reduction in our government-related business.activity in Afghanistan as a result of the ongoing drawdown of troops. Aviation segment operating income was also reduced by increased expenses resulting from a higher provision for bad debt principally due to the effects of the pandemic on the aviation industry, as well as the global office footprint rationalization impairment charge.

In our land segment, income from operations for the second quarter of 2020 was $9.7 million, a decrease of $2.1 million, or 18% as compared to the second quarter of 2019. The decrease in land segment operating profit was primarily attributable to lower volumes as a result of the pandemic, particularly in our retail, commercial and industrial activities in North America, and our government-related activities in Afghanistan, as well as the global office footprint rationalization impairment charge. The decreases were partly offset by continued strength in the U.K and lower general and administrative expenses and compensation costs during the second quarter.

31

Our marine segment income from operations for the second quarter of 2020 was $13.3 million, an increase of $3.2 million, or 32% as compared to the second quarter of 2019. The increase in aviationoperating income was primarily related to improved performance in our core resale business as well as decreases in compensation costs, partially offset by the marine segment and, to a lesser extent our land segment. Within our marine segment, we experienced lower volumes in our core business, primarily in Asia, and a further decline in profits from our price risk management product activities globally. Within our land segment, we experienced lower profitability related to our supply and trading activities in the U.S. as compared to the comparable prior year period. In addition, the aviation and land segments were both negatively impacted by hurricane-related disruptions, which adversely impacted fuel costs.global office footprint rationalization impairment charge.

Corporate overhead costs not charged to the business segments for the thirdsecond quarter of 20172020 were $17.8$20.1 million, a decrease of $0.8$0.1 million, or 4.2%0.5%, as compared to the thirdsecond quarter of 2016. 2019, primarily attributable to a decrease in compensation costs.


Non-Operating Expenses, net. For the thirdsecond quarter of 2017,2020, we had non-operating expenses net of $16.7$14.9 million, an increasea decrease of $6.8$2.7 million as compared to the thirdsecond quarter of 2016,2019, driven principally by higher finance costsa reduction in interest expenses and fees associated with outstanding borrowings.our receivable purchase programs partly offset by foreign currency transaction loss.

Income Taxes. For the thirdsecond quarter of 2017,2020, our income tax provision was $7.7 million and our effective income tax rate was 185.0% and our(258%), as compared to an income tax provision was $82.6of $20.0 million as compared to and an effective income tax rate of 11.1% and an income35% for the second quarter of 2019. The lower tax provision was a result of $5.4 million forlower income before income taxes while the third quarter of 2016. The higher effective income tax rate for the third quarter of 2017 was attributable to our recording of a valuation allowance against the net U.S. deferred tax assets in the amount of $76.9 million, due to the Company's U.S. operations generating a three-year cumulative loss during the quarter. The valuation allowance is comprised of $24.0 million of deferred tax assets generated during 2017 and $52.9 million related to deferred tax assets generated in previous years. In addition, the provision also includes other net discrete items totaling $1.7 million, primarily related to changesdifferences in estimatesthe results of our subsidiaries in uncertain tax positionsjurisdictions with different tax rates and an adjustmentcertain one-time discrete items. See Note 8. Income Taxes within this 10-Q Report for stock based compensation. Without the $76.9 million valuation adjustment and other discrete items, the effective income tax rate for the third quarter of 2017 would have been 12.5%.additional information.

Net Income Attributable to Noncontrolling Interest. For the thirdsecond quarter of 2017,2020, net incomeloss attributable to noncontrolling interest was $0.4 million compared to net income of $0.6 million an increase of $0.3 million as compared tofor the thirdsecond quarter of 2016.2019.

Net Income Attributable to World Fuel and Diluted Earnings per Common Share. For the thirdsecond quarter of 2017,2020, we had a net loss attributable to World Fuel of $38.5$10.2 million and a diluted loss per common share of $0.57$0.16 as compared to net income attributable to World Fuel of $42.7$37.0 million and diluted earnings per common share of $0.61 per common share$0.55 for the thirdsecond quarter of 2016.2019.

32

NineSix Months Ended SeptemberJune 30, 20172020 Compared to NineSix Months Ended SeptemberJune 30, 20162019
 
Revenue. Our revenue for the first ninesix months of 20172020 was $24.8$11.2 billion, an increasea decrease of $5.6$7.0 billion, or 29.1%38%, as compared to the first ninesix months of 2016.2019. Our revenue during these periods was attributable to the following segments (in millions):
 
 For the Nine Months Ended   For the Six Months Ended
 September 30,   June 30,
 2017
 2016
 $ Change
20202019$ Change
Aviation segment $10,531.6
 $7,810.2
 $2,721.4
Aviation segment$4,784.8  $9,037.7  $(4,253.0) 
Land segment 8,117.9
 6,375.9
 1,742.0
Land segment3,303.6  5,156.6  (1,853.0) 
Marine segment 6,173.9
 5,037.5
 1,136.4
Marine segment3,085.2  3,943.9  (858.7) 
 $24,823.4
 $19,223.6
 $5,599.8
$11,173.5  $18,138.2  $(6,964.7) 
 
Revenues in our aviation segment were $10.5$4.8 billion for the first ninesix months of 2017, an increase2020, a decrease of $2.7$4.3 billion, or 34.8%47%, as compared to the first ninesix months of 2016.  The increase in aviation revenues was driven by higher2019. Lower average jet fuel prices, per gallon soldcombined with a significant volume decline associated with the COVID-19 pandemic, drove the decrease in aviation revenue in the first ninesix months of 2017, where2020. Specifically, the average price per gallon sold during the first six months of 2020 was $1.67,$1.59, as compared to $1.49$2.08 for the comparable period in 2016.  The overall increase was also attributable to increased2019. Total volumes which for the first ninesix months of 20172020 were 5.92.5 billion gallons, an increasea decrease of 13.0%38%, as compared to the comparable prior year period, driven principally by higherprior-year period. The decline in volumes was attributable to a significant decrease in activity within U.S. and foreign military-related activity andin our commercial aviation business, resulting from our international fueling operations. the impact of the COVID-19 pandemic on air travel.
 
Revenues in our land segment were $8.1$3.3 billion for the first ninesix months of 2017, an increase2020, a decrease of $1.7$1.9 billion, or 27.3%36%, as compared to the first ninesix months of 2016.2019. The increaseoverall decrease in land revenues primarily resulted from a higherrevenue was influenced by lower average fuel price per gallon sold duringin the first ninesix months of 2017,2020, where the average price per gallon or gallon equivalent sold was $1.28, as compared to $1.91 in the first six months of 2019. Volumes in our land segment declined moderately to 2.5 billion, a 5% decrease in the first six months of 2020, as compared to the first ninesix months of 2016.  The overall increase was also attributable to an increase in volumes from acquired businesses, where volumes for the first nine months of 2017 were 4.5 billion gallons, an increase of 15.2%, as compared to the first nine months of 2016.2019.
 
Revenues in our marine segment were $6.2$3.1 billion for the first ninesix months of 2017, an increase2020, a decrease of $1.1 billion,$858.7 million, or 22.6%22%, as compared to the first ninesix months of 2016.2019. The increasedecrease in revenues was driven primarily byattributable to a 42.4% increasedecrease in the average price per metric ton of bunker fuel sold to $302.5from $382.6 in the first ninesix months of 2017 as compared2019 to $212.3$346.9 in the first nine monthshalf of 2016. Volumes in our marine segment for the first nine months2020. Revenues also fell as a result of 2017 were 20.4a 14% volume decrease, from 10.3 to 8.9 million metric tons a decreasein the first six months of 14.0%,2019 as compared to the first ninesix months of 2016, driven principally by lower volumes2020. The volume decline was a result of the effects of the pandemic on demand, combined with a continuing effort to exit activities that generate a low economic return, particularly in Asia and further deteriorationlight of the elevated credit risk environment in the overall maritime industry.wake of the pandemic.

Gross Profit. Our gross profit for the first ninesix months of 20172020 was $702.3$472.6 million, an increasea decrease of $25.6$47.0 million, or 3.8%9%, as compared to the first ninesix months of 2016.  2019.  

Our gross profit during these periods was attributable to the following segments (in millions): 

 
 For the Nine Months Ended   For the Six Months Ended
 September 30,   June 30,
 2017
 2016
 $ Change
20202019$ Change
Aviation segment $334.8
 $298.9
 $35.8
Aviation segment$185.0  $254.8  $(69.8) 
Land segment 270.5
 261.7
 8.8
Land segment191.0  193.2  (2.2) 
Marine segment 97.0
 116.0
 (19.0)Marine segment96.6  71.6  25.0  
 $702.3
 $676.7
 $25.6
$472.6  $519.7  $(47.0) 
 
Our aviation segment gross profit for the first ninesix months of 20172020 was $334.8$185.0 million, an increasea decrease of $35.8$69.8 million, or 12.0%27%, as compared to the first ninesix months of 2016.2019. The increasedecrease in aviation gross profit was primarily due to increased activity froma 38% decline in volume as a consequence of the significant decline passenger air travel due to the pandemic, together with a reduction in our government-related business, includingactivity in Afghanistan as a result of the ongoing drawdown of troops. Partially offsetting the volume-related impact on gross profit were certain spot governmentsituation-specific, nontraditional activity arising from the pandemic, such as repatriation flights and the repositioning of aircraft, as well as physical supply opportunities and increased volumes from our international fueling operations. These increases were partially offset by disruptionsgains associated with hurricanes Harvey and Irma, which negatively impactedthe historic volatility in jet fuel prices.prices during the period.
 


Our land segment gross profit for the first ninesix months of 20172020 was $270.5$191.0 million, an increasea decrease of $8.8$2.2 million, or 3.4%1%, as compared to the first ninesix months of 2016.2019. The increasedecrease in land segment gross profit wasis primarily driven by recently acquired businessesattributable to a decline in profitability in our retail, commercial and andindustrial activities in North America primarily attributable to lower volumes due to the pandemic, as well as a decrease in our government-related activities in Afghanistan. These decreases were partiallypartly offset by continued lower profits from our supply and trading activitieshigher profitability in the U.S.,U.K. and hurricane-related disruptions.growth in our World Kinect global energy management brand.
 
Our marine segment gross profit for the first ninesix months of 20172020 was $97.0$96.6 million, a decreasean increase of $19.0$25.0 million, or 16.4%35%, as compared to the first ninesix months of 2016.2019. The marine segment continuesgross profit increase was attributable to be adversely impacted by the prolonged weakness in the overall maritime industry, leading to lower volumes and profitabilityimproved performance in our core resale business, primarily in Asia, combined with a further decline in profitsprincipally driven by higher average fuel prices during the first two months of 2020 resulting from the sale of price risk management products globally.shift to very low-sulfur fuel oil as mandated by the IMO 2020 regulations that went into effect on January 1, 2020.

Operating Expenses. Total operating expenses for the first ninesix months of 2017 were $539.52020 was $389.9 million, an increase of $27.6$15.8 million, or 5.4%4%, as compared to the first ninesix months of 2016.  The2019. As part of our cost-reduction initiatives, we significantly reduced certain general and administrative expenses during the first six months of 2020, which were effectively offset by a higher provision for bad debt, principally due to the effects of the pandemic on the aviation industry. Furthermore, despite lower compensation costs, including lower incentive compensation, total increase in operating expenses was primarilywere higher as a result of an impairment charge of $18.6 million during the second quarter of 2020, associated with acquired businesses.our decision to rationalize our global office footprint. The following table sets forth our expense categories (in millions):
 
For the Six Months Ended
June 30,
20202019$ Change
Compensation and employee benefits$198.3  $220.3  $(22.0) 
General and administrative168.2  $150.1  18.1  
Asset impairments18.6  —  18.6  
Restructuring charges4.8  3.7  1.1  
$389.9  $374.1  $15.8  
  For the Nine Months Ended   
  September 30,   
  2017
 2016
 $ Change
Compensation and employee benefits $314.5
 $306.2
 $8.3
Provision for bad debt 6.3
 5.4
 0.9
General and administrative 218.7
 200.2
 18.4
  $539.5
 $511.9
 $27.6

Income from Operations.  Our income from operations, excluding unallocated corporate overhead, for the first nine months of 2017 was $218.4 million, a decrease of $2.2 million, or 1.0%, as compared to the first nine months of 2016.  Income from operations during these periods was attributable to the following segments (in millions):
For the Six Months Ended
June 30,
20202019$ Change
Aviation segment$38.1  $129.1  $(91.0) 
Land segment35.3  32.8  2.5  
Marine Segment47.2  23.6  23.6  
120.6  185.5  (64.9) 
Corporate overhead - unallocated(37.9) (40.0) 2.0  
$82.7  $145.6  $(62.9) 
 
  For the Nine Months Ended   
  September 30,   
  2017
 2016
 $ Change
Aviation segment $151.7
 $123.8
 $28.0
Land segment 46.7
 64.0
 (17.3)
Marine Segment 19.9
 32.8
 (12.9)
  218.4
 220.5
 (2.2)
Corporate overhead - unallocated (55.5) (55.7) 0.2
  $162.8
 $164.8
 $(2.0)

Our income from operations including unallocated corporate overhead, for the first ninesix months of 20172020 was $162.8$82.7 million, a decrease of $2.0$62.9 million, or 1.2%43%, as compared to the first ninesix months of 2016.2019.  The decrease was primarily attributable to our landaviation segment.

Our aviation segment income from operations for the first six months of 2020 was $38.1 million, a decrease of $91.0 million, as compared to the first six months of 2019. Aviation operating income for the first six months of 2020 was principally impacted by lower volumes and marine segments. Inthe correspondingly reduced profit contribution from our commercial aviation operations as a result of the pandemic, as well as a reduction in government-related activity in Afghanistan. Aviation segment operating income was also reduced by increased expenses resulting from a higher provision for bad debt as a consequence of the impact of the pandemic on the aviation industry, as well as the global office footprint rationalization impairment charge.



Our land segment income from operations for the first ninesix months of 20172020 was $46.7 million a decrease35.3, an increase of $17.3 million or 27.0%,2.5, as compared to the first ninesix months of 2016.2019. Within our land segment, we experienced continuedhigher profitability primarily attributable to improved performance in the U.K. together with growth in our World Kinect global energy management brand, offset by lower profits fromvolumes as a result of the pandemic, particularly in our supplyretail, commercial and tradingindustrial activities in the U.S., hurricane-related disruptions,North America, as well as increased acquisition-relateda decrease in our government-related activities in Afghanistan. Land segment operating income also benefited from a reduction in compensation costs that were directly attributable to our acquired businesses. In ourand general and administrative expenses, partly offset by the global office footprint rationalization impairment charge.

Our marine segment income from operations for the first ninesix months of 20172020 was $19.9$47.2 million, a decreasean increase of $12.9$23.6 million, or 39.3%, as compared to the first ninesix months of 2016.  Our2019. The increase in marine segment operating income was adversely impactedrelated to higher profitability in our core resale business, principally driven by higher fuel prices during the first two months of 2020 resulting from the shift to very low sulfur fuel oil, as mandated by the prolonged weaknessIMO 2020 regulations that went into effect on January 1, 2020. The increase in the overall maritime industry. The declines in our land and marine segments wereprofitability was partially offset by increases in our aviation segment, where we experienced increased volumes from our international fueling operations, and increased activity in our government-related business.the global office footprint rationalization impairment charge, as well as a higher provision for bad debt, as compared to 2019.

Corporate overhead costs not charged to the business segments for the first ninesix months of 20172020 were $55.5$37.9 million, a decrease of $0.2$2.0 million, or 0.3%5%, as compared to the first ninesix months of 2016, principally driven by additional costs related2019, primarily attributable to overall corporate enterprise activities that are not charged to the business segments and are designed to support our growing global business.a reduction in compensation costs.
 
Non-Operating Expenses, net. WeFor the first six months of 2020, we had non-operating expenses, net of $47.3$28.1 million, for the first nine monthsa decrease of 2017, an increase of $22.5$8.5 million as compared to the first ninesix months of 20162019 driven principally by higher finance costs.a reduction in interest expenses and fees associated with our receivable purchase programs partly offset by foreign currency transaction loss.
 
Income Taxes.  For the first ninesix months of 2017,2020, our income tax provision was $23.7 million and our effective income tax rate was 79.8% and our43%, as compared to an income tax provision was $92.2of $34.0 million as compared toand an effective income tax rate of 11.2% and an income tax provision of $15.7 million31% for the first ninesix months of 2016. Our higher2019. The lower tax provision forwas a result of our lower income before income taxes, forwhile the first nine months of 2017 was attributable to the Company recording a valuation allowance against the net U.S. deferred tax assets in the amount of $76.9 million, which is comprised of $24.0 million of deferred tax assets generated during 2017 and $52.9 million related to deferred tax assets generated in previous years. In addition, the provision also includes other net discrete items totaling $5.6 million, primarily related to changes in estimates in uncertain tax positions and an adjustment for stock based compensation. Without the valuation allowance of $76.9 million and other discrete items, thehigher effective income tax rate forwas primarily related to differences in certain one-time discrete items and the first nine monthsresults of 2017 would have been 8.3%.our subsidiaries in tax jurisdictions with different tax rates.
 
Net Income Attributable to Noncontrolling Interest.  For the first ninesix months of 2017,2020, net incomeloss attributable to noncontrolling interest was $0.6$0.2 million, an increase of $0.5 million as compared to net income of $0.7 million for the first ninesix months of 2016.2019.
 
Net Income Attributable to World Fuel and Diluted Earnings per Common Share.  OurFor the first six months of 2020, we had a net income for the first nine months of 2017 was $22.8$31.2 million a decrease of $101.5 million as compared to the first nine months of 2016. Dilutedand diluted earnings per common share of $0.48 as compared to net income of $74.2 million and diluted earnings per common share of $1.10 for the first ninesix months of 2017 was $0.33 per common share, a decrease of $1.45 per common share, as compared to the first nine months of 2016.2019.



Liquidity and Capital Resources
Cash Flows
The following table reflects the major categories of cash flows for the nine months ended September 30, 2017 and 2016 (in millions). For additional details, please see the consolidated statements of cash flows. 
   For the Nine Months Ended 
  September 30, 
  2017
 2016
Net cash provided by operating activities $45.2
 $220.3
Net cash (used in) investing activities (133.0) (259.2)
Net cash (used in) provided by financing activities (72.7) 325.7
Operating Activities. For the first nine months of 2017, net cash provided by operating activities was $45.2 million as compared to $220.3 million for the first nine months of 2016. The $175.1 million decrease in operating cash flows was primarily due to year-over-year changes in assets and liabilities, net of acquisitions. Cash flows from short-term derivative assets, net and the associated cash collateral we are required to post with our financial counterparties declined, as a result of reduced hedging activities. In addition, cash flows from accounts receivable, net declined as a result of increased volumes and higher average fuel prices per gallon sold. Offsetting these declines were increased cash flows from accounts payable primarily as a result of increased average fuel prices.

Investing Activities. For the first nine months of 2017, net cash used in investing activities was $133.0 million as compared to $259.2 million for the first nine months of 2016. The $126.2 million decrease in cash used in investing activities was primarily due to decreased cash used for the acquisition of businesses of $171.8 million partially offset by an $8.9 million increase in capital expenditures and $29.3 million related to the proceeds from the sale of a business in 2016.
Financing Activities. For the first nine months of 2017, net cash used in financing activities was $72.7 million as compared to $325.7 million net cash provided by financing activities for the first nine months of 2016. The $398.4 million change was principally due to a $351.9 million decrease in net borrowings under our credit facility in the first nine months of 2017 as compared to the first nine months of 2016 and a $43.5 million increase in cash used for common stock repurchases in the first nine months of 2017 as compared to the first nine months of 2016. 
Other Liquidity Measures
Cash and Cash Equivalents. As of September 30, 2017 and December 31, 2016, we had cash and cash equivalents of $546.0 million and $698.6 million, respectively. Our primary use of cash and cash equivalents are to fund working capital and strategic investments. We are usually extended unsecured trade credit from our suppliers for our fuel purchases. 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.
Credit Facility and Term Loans. We had $840.0 million in Term Loans outstanding as of September 30, 2017 and December 31, 2016.  We also have a Credit Facility which permits borrowing up to $1.26 billion with a sublimit of $400.0 million for the issuance of letters of credit and bankers' acceptances. Under the Credit Facility, we have the right to request increases in available borrowings up to an additional $200.0 million, subject to the satisfaction of certain conditions. The credit facility matures in October 2021. We had outstanding borrowings under our Credit Facility totaling $297.0 million and $325.2 million as of September 30, 2017 and December 31, 2016, respectively. Our issued letters of credit under the Credit Facility totaled $6.5 million and $8.3 million as of September 30, 2017 and December 31, 2016, respectively. As of September 30, 2017 and December 31, 2016, the unused portion of our Credit Facility was $956.5 million and $926.5 million, respectively.     
Our liquidity, consisting of cash, and cash equivalents and availability under the Credit Facility fluctuates based on a number of factors, including the timing of receipts from our customers, and payments to our suppliers, changes in fuel prices, as well as commodity prices. Availabilityour financial performance, which drives availability under our Credit Facility. Our availability under our Credit Facility, for example, is also limited by, among other things, our financialconsolidated total leverage ratio, which limits the total amount of indebtedness we may incur, and may therefore fluctuate from period to period.
Our Credit Facility and our Term Loans contain certain financial and other covenants with which we are required to comply. Our failure to comply with the covenants containedis defined in our Credit Facility and our Term Loans could result in an event of default. An event of default, if not cured or waived, would permit acceleration of any outstanding indebtedness under the Credit Facility and is based in part on our Term Loans, trigger cross‑defaults under certain other agreementsadjusted consolidated earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) for the four immediately preceding fiscal quarters. Accordingly, significant fluctuations in our Adjusted EBITDA for a particular quarter can impact our availability to the extent it significantly alters our Adjusted EBITDA for the applicable preceding four quarters. See Item 1A. Risk Factors in Part II of this 10-Q Report for additional information.
Cash and liquidity are significant priorities for us and our primary use of cash and liquidity is to fund working capital and strategic investments. Increases in fuel prices can negatively affect liquidity by increasing the amount of cash required to fund fuel purchases. In addition, while we are usually extended unsecured trade credit from our suppliers for our fuel purchases, higher fuel prices may reduce the amount of fuel which we are a partycan purchase on an unsecured basis, and impair our abilityin certain cases, we may be required to obtain working capital advances and issue letters of credit,prepay fuel purchases, which would negatively impact our liquidity. Fuel price increases may also negatively impact our customers, in that they may not be able to purchase as much fuel from us because of their credit limits with us and the resulting adverse impact on their business could cause them to be unable to make payments owed to us for fuel purchased on credit. They may also choose to reduce the amount of fuel they consume in their operations to reduce costs. In any such event, the volume of orders from our customers may thereafter decrease and we may not be able to replace lost volumes with new or existing customers.

As described in greater detail above, the COVID-19 pandemic is expected to continue to have an adverse impact on our customers, and therefore our own operating results for the balance of 2020, which could have a material adverse effectnegative impact on our business, financial condition, results of operations and cash flows. As of September 30, 2017,liquidity. However, based on the information currently available, we were in compliance with all financial covenants contained in our Credit Facility and our Term Loans.

Other Agreements. Additionally, we have other uncommitted credit lines primarily for the issuance of letters of credit, bank guarantees and bankers’ acceptances. These credit lines are renewable on an annual basis and are subject to fees at market rates. As of September 30, 2017 and December 31, 2016, our outstanding letters of credit and bank guarantees under these credit lines totaled $169.4 million and $176.5 million, respectively. We also have Receivables Purchase Agreements (“RPAs”) that allow for the sale of up to an aggregate of $600.0 million of our accounts receivable. As of September 30, 2017, we had sold accounts receivable of $381.0 million under the RPAs.
Short-Term Debt. As of September 30, 2017, our short-term debt of $23.6 million primarily represents the current maturities (within the next twelve months) of Term Loan borrowings, certain promissory notes related to acquisitions and capital lease obligations.
We previously 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 in part by a global design and deployment of an upgrade to our existing ERP platform. We are currently in the planning phase and the cost incurred during the first nine months of 2017 was not material. We expect the total cost of the project over the next three years to range between $30.0 million and $40.0 million.


We believe that our cash and cash equivalents as of SeptemberJune 30, 2017 (of which approximately $27.6 million was available for use by our U.S. subsidiaries without incurring additional costs)2020 and available funds from our Credit Facility, together with cash flows generated by operations, remainare sufficient to fund our working capital and capital expenditure requirements for at least the next twelve months. In general, our foreign cash balances of approximately $518.4 million are not availableWe may choose to fund our U.S. operations unless theraise additional funds are repatriated or used to repay certain foreign intercompany loans, which could expose us to tax obligations we currently have not made a tax provision for in our results of operations. As of September 30, 2017, we intend to retain our foreign cash balances outside of the U.S., as we believe that our U.S. liquidity is sufficient to meet the anticipated cash requirements of our U.S. operations.

In addition, to further enhance our liquidity profile, we may choose to raise additional funds which may or may not be neededused 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, orand if circumstances change significantly, whether as a result of the COVID-19 pandemic or otherwise, the 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.

Cash Flows

The following table reflects the major categories of cash flows for the six months ended June 30, 2020 and 2019 (in millions). For additional details, please see the Consolidated Statements of Cash Flows in this Quarterly Report on Form 10-Q.
For the Six Months Ended
June 30,
20202019
Net cash provided by operating activities$245.1  $135.8  
Net cash used in investing activities(168.7) (33.6) 
Net cash provided by (used in) financing activities394.9  (97.1) 

Operating Activities. For the first six months of 2020, net cash provided by operating activities was $245.1 million as compared to net cash provided by operating activities of $135.8 million for the first six months of 2019.  The $109.3 million change in operating cash flows was principally due to favorable year-over-year changes in working capital of $97.3 million, excluding cash, and net other long term assets and liabilities of $41.9 million, offset by a $44.0 million decrease in net income. The changes in working capital, excluding cash, reflect a $1.6 billion net decrease in accounts receivable, inventories, and short-term derivatives, offset by a $1.5 billion net decrease in accounts payable, customer deposits and accrued expenses and other current liabilities. Changes in non-cash items were principally associated with higher provision for bad debt, offset by changes in share-based payment amortization and deferred taxes.

Investing Activities. For the first six months of 2020, net cash used in investing activities was $168.7 million as compared to net cash used in investing activities of $33.6 million for the first six months of 2019. The $135.2 million change in investing activities cash flows was principally due to the acquisition of a business.
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Financing Activities. For the first six months of 2020, net cash provided by financing activities was $394.9 million as compared to net cash used in financing activities of $97.1 million for the first six months of 2019. The $492.0 million change was principally due to $487.4 million in net borrowings of debt under our credit facility.

Other Liquidity Measures

Cash and Cash Equivalents. As of June 30, 2020 and December 31, 2019, we had cash and cash equivalents of $645.7 million and $186.1 million, respectively.
Credit Facility and Term Loans. We had $509.5 million and $515.6 million in Term Loans outstanding as of June 30, 2020 and December 31, 2019, respectively. Our Credit Agreement, as amended through June 30, 2020, consists of a revolving loan under which up to $1.3 billion aggregate principal amount could be borrowed, repaid and redrawn, based upon specific financial ratios and subject to the satisfaction of other customary conditions to borrowing. Our Credit Facility includes a sublimit of $400.0 million for the issuance of letters of credit and bankers' acceptances. Under the Credit Facility, we have the right to request increases in available borrowings up to an additional $400.0 million, subject to the satisfaction of certain conditions and we have the right to request increases in available borrowings up to an additional $200.0 million, subject to the satisfaction of certain conditions. The credit facility matures July 2024.
As of June 30, 2020 and December 31, 2019, we had outstanding borrowings under our Credit Facility totaling $530.0 million and $55.0 million, respectively. Our issued letters of credit under the Credit Facility totaled $6.7 million and $4.3 million as of June 30, 2020 and December 31, 2019, respectively. As of June 30, 2020 and December 31, 2019, the unused portion of our Credit Facility was $738.3 million and $1.2 billion. The unused portion of our Credit Facility is limited by, among other things, our financial leverage ratio, which limits the total amount of indebtedness we may incur, and may, therefore, fluctuate from period to period.
        Our Credit Facility and Term Loans contain certain financial and other covenants with which we are required to comply. Our failure to comply with the covenants contained in our Credit Facility and our Term Loans could result in an event of default. An event of default, if not cured or waived, would permit acceleration of any outstanding indebtedness under the Credit Facility and our Term Loans, trigger cross-defaults under certain other agreements to which we are a party and impair our ability to obtain working capital advances and issue letters of credit, which would have a material, adverse effect on our business, financial condition, results of operations and cash flows. As of June 30, 2020, we were in compliance with all financial covenants contained in our Credit Facility and our Term Loans.

Other Agreements. Additionally, we have other uncommitted credit lines primarily for the issuance of letters of credit, bank guarantees and bankers’ acceptances. These credit lines are renewable on an annual basis and are subject to fees at market rates. As of June 30, 2020 and December 31, 2019, our outstanding letters of credit and bank guarantees under these credit lines totaled $334.8 million and $375.2 million, respectively.

We also have accounts receivable financing programs under receivables purchase agreements (“RPAs”) with Wells Fargo Bank, N.A. and Citibank, N.A. that allow for the sale of our accounts receivable in an amount up to 100% of our outstanding qualifying accounts receivable balances and receive cash consideration equal to the total balance, less a discount margin equal to LIBOR plus 1% to 3%. The RPA agreements provide the banks with the ability to add or remove customers from these programs based on, among other things, the level of risk exposure the bank is willing to accept with respect to any customer. The fees the banks charge us to purchase the receivables from these customers can also be impacted for these reasons. Under the RPAs, accounts receivable sold, which remained outstanding at June 30, 2020 and December 31, 2019 were $92.6 million and $405.9 million, respectively. The reduction in accounts receivable sold for the second quarter of 2020 was driven primarilyby lower fuel prices and the decline in activity in our commercial aviation and marine businesses as a result of the impact of the pandemic on airlines and cruise lines.

Short-Term Debt. As of June 30, 2020, our short-term debt of $53.8 million primarily represents the current maturities (within the next twelve months) of Term Loan borrowings, finance lease obligations and a secured borrowing associated with the transfer of tax receivables.

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Contractual Obligations and Off-Balance Sheet Arrangements

Except for changes in the contractual obligations and off-balance sheet arrangements described below, there were no other material changes from December 31, 20162019 to SeptemberJune 30, 2017.2020.  For a discussion of these matters, refer to “ContractualItem 7. Contractual Obligations and Off-Balance Sheet Arrangements” in Item 7Arrangements of our 20162019 Form 10-K Report.

Contractual Obligations

Derivative Obligations. As of SeptemberJune 30, 2017,2020, our net derivative obligations were $41.9$111.4 million, principally due within one year.

Purchase Commitment Obligations. As of SeptemberJune 30, 2017,2020, fixed purchase commitments under our derivative programs amounted to $278.4$83.7 million, principally due within one year.

Off-Balance Sheet Arrangements

Letters of Credit and Bank Guarantees. In the normal course of business, we are required to provide letters of credit to certain suppliers. A majority of these letters of credit expire within one year from their issuance, and expired letters of credit are renewed as needed. As of SeptemberJune 30, 2017,2020, we had issued letters of credit and bank guarantees totaling $175.9$341.5 million under our Credit Facility and other uncommitted credit lines. For additional information on our Credit Facility and other credit lines, see the discussion in “LiquidityLiquidity and Capital Resources”Resources above.
 
Recent Accounting Pronouncements 
Information regarding new accounting pronouncements is included in Note 1 -1. Basis of Presentation and Significant Accounting Policies in the “Notes toaccompanying the Consolidated Financial Statements”Statements in this 10-Q Report.

Item 3.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Derivatives
 
Derivative Instruments
In March 2020, we entered into a $300 million, one-month LIBOR, floating-for-fixed interest rate non-amortizing swap with a maturity date in March 2025. The swap agreement effectively locks in the variable interest cash flows we will pay for a portion of our Eurodollar rate loans at 0.55%. The fair value of the interest rate swap contract as of June 30, 2020, was a liability of $4.9 million.

There have been no material changes to our exposures to commodity price or foreign currency risk since December 31, 2019. Please refer to our 2019 10-K Report for a complete discussion of our exposure to these risks.

For information about our derivative instruments at their respective fair value positions as of SeptemberJune 30, 2017,2020, see Notes toNote 4. Derivative Instruments accompanying the Consolidated Financial Statements – Note 3. Derivativeswithin this 10-Q report.
 
There have been no material changes to our exposures to interest rate or foreign currency risk since December 31, 2016. Please refer to our 2016 10-K Report for a complete discussion of our exposure to these risks.
Item 4.Controls and Procedures
Item 4. Controls and Procedures
 
Management’s Evaluation of Disclosure Controls and Procedures
 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required financial disclosure.

As of the end of the period covered by this 10-Q Report, we evaluated, under the supervision and with the participation of our CEO and CFO, the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e). Based upon this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of SeptemberJune 30, 2017.2020.
 
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Changes in Internal Control over Financial Reporting
 
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 quarterthree months ended SeptemberJune 30, 2017.2020.
 
It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there is only the reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions.

Part II — Other Information

Item 1.Legal Proceedings
Item 1.  Legal Proceedings
 
On July 20, 2016, the Company was informed that the U.S. Department of Justice (the "DOJ") is conducting an investigation into the aviation fuel supply industry, including certain activities of the Company and other industry participants at an airport in Central America. In connection therewith, the Company was served with formal requests by the DOJ about its activities at that airport and its aviation fuel supply business more broadly. The Company continues to cooperate with the investigation.

From time to time, we are under review by the Internal Revenue ServiceIRS and various other domestic and foreign tax authorities with regards to income tax and indirect tax matters and are involved in various inquiries, audits, challenges and litigation in a number of countries, including, in particular, Brazil, Denmark, South Korea and the U.S., Brazil and South Korea, where the amounts under controversy may be significant.material. See notes 7Note 8. Income Taxes and 10 ofNote 12. Commitments and Contingencies within this 10-Q Report as well as refer to Note 9. Commitments and Contingencies and Note 11. Income Taxes within Part IV. Item 15. Notes to the accompanying consolidated financial statementsConsolidated Financial Statements included in our 2019 10-K Report for additional details regarding certain tax matters.

We are also a party to various claims, complaints and proceedings arising in the ordinary course of our business including, but not limited to, environmental claims, commercial and governmental contract claims, such as property damage, demurrage, personal injury, billing and fuel quality claims, as well as bankruptcy preference claims and administrative claims. We are not currently a party to any such claim, complaint or proceeding that we expect to have a material adverse effect on our business or financial condition. However, any adverse resolution of one or more such claims, complaints or proceedings during a particular reporting period could have a material adverse effect on our consolidated financial statementsConsolidated Financial Statements or disclosures for that period.

Item 1A.  Risk Factors
 
We are supplementing the risk factors described under Part I, Item 1A, Risk Factors of our 2019 10-K Report (the “2019 10-K Risk Factors”) with the additional information and risk factor set forth below, which supplements, and to the extent inconsistent, supersedes the 2019 10-K Risk Factors. The following should be read in conjunction with the 2019 10-K Risk Factors and the information contained in this 10-Q Report, as well as our other reports filed with the SEC. The developments relating to the COVID-19 pandemic described below have heightened, and in certain cases, may exacerbate the risks disclosed in the 2019 10-K Risk Factors, and such risk factors are further qualified by the information relating to the pandemic that is described in this 10-Q Report. Except as updated herein, there have been no material changes with respect to the 2019 10-K Risk Factors and they are incorporated by reference herein.

Adverse conditions or events affecting the aviation, marine and land transportation industries may have a material adverse effect on our business.

Our business is focused on the marketing of fuel and other related products and services primarily to the aviation, marine and land transportation industries, which are generally affected by economic cycles. Therefore, weak economic conditions can have a negative impact on the business of our customers which may, in turn, have an adverse effect on our business. For example, the current coronavirus (COVID-19) pandemic has had a significant impact on the global economy generally, as well as the aviation, land and marine transportation industries, where companies operating in these sectors have been experiencing sharp declines in demand arising from the various measures enacted by governments around the world to contain the spread of the virus. Commercial passenger airlines and cruise lines have been particularly impacted by the travel restrictions and stay-at-home orders, and various other customers in each of our segments have also been adversely affected by such restrictions, as well as the extended shutdown of various businesses in affected regions. As a result, we have experienced a decline in sales volume and profitability across our aviation, land and marine segments. Furthermore, if the pandemic continues for an extended period of time, the financial condition of our customers may further deteriorate such that there is a greater risk of customer bankruptcies and credit losses, either of which could lead to significant increases in our bad debt expense. For example, during the second quarter of 2020, our provision for bad debt was materially higher, principally in the aviation segment due to the effects of the pandemic on the aviation industry in connection to the global restrictions on air travel. The ultimate magnitude and duration of these adverse impacts on our business will depend on the timing and extent to which the global economy, and our customers in the aviation, land and marine transportation industries in particular, recover from the current crisis.
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Additionally, our business and that of our customers can be adversely impacted by political instability, terrorist activity, piracy, military action, transportation, terminal or pipeline capacity constraints, natural disasters and other weather-related events that disrupt shipping, flight operations, land transportation or the availability of fuel, which may negatively impact sales of our products and services. Any additional political or governmental developments or otherglobal health concerns or crises in the countries in which we or our customers operate, could also result in further social, economic or labor instability. Accordingly, the effects of any of the foregoing risks and uncertainties on us or our customers could have a material adverse effect on our business, results of operations and financial condition.

Lastly, our business could also be adversely affected by merger activity in the aviation, marine or land transportation industries, which may reduce the number of customers that purchase our products and services, as well as the prices we are able to charge for such products and services. For example, the shipping and aviation industries have gone through a period of significant consolidation, which has created a concentration of volume among a limited number of larger shipping companies and commercial airlines. Larger shipping companies and airlines often have greater leverage, are more sophisticated purchasers of fuel and have a greater ability to buy directly from major oil companies and suppliers. Accordingly, this can negatively impact our value proposition to these types of customers and increases the risk of disintermediation.

The COVID-19 pandemic and related global economic slowdown have recently had an adverse impact on our business and, depending on the duration of the pandemic, could have a material adverse effect on our business, results of operations, financial condition, liquidity and cash flows.

The outbreak of the novel coronavirus (COVID-19), which was declared a pandemic by the World Health Organization in March 2020, has created significant volatility, uncertainty and disruption in the global economy. The rapid spread of COVID-19 has caused governments around the world to implement stringent measures to help control the spread of the virus, including quarantines, “stay-at-home” or “shelter-in-place” orders, social-distancing mandates, travel restrictions, and closures or reduced operations for businesses, governmental agencies, schools and other institutions, among others. While, governments and central banks in several parts of the world have enacted fiscal and monetary stimulus policies to counteract the adverse effects of the pandemic, the effectiveness of such actions are still uncertain. Furthermore, the restrictions on travel, “stay-at-home” or “shelter-in-place” orders and business closures led to a precipitous decline in fuel prices during the first half of 2020 in response to concerns about demand for fuel, further exacerbated by disagreements regarding crude oil production levels between the OPEC members and other oil producing countries such as Russia, as well as related global storage considerations.

In response to the pandemic and measures taken by applicable governmental authorities, we took prompt action to ensure the safety of our employees and other stakeholders, as well as commenced a number of initiatives relating to cost reduction, liquidity and operating efficiencies. While the pandemic and associated impacts on economic activity had a limited adverse effect on our results of operations and financial condition during the first quarter of 2020, we began to see a sharp decline in demand and related sales volume during the second quarter of 2020, as large sectors of the global economy were adversely impacted by the crisis. As the number of coronavirus cases have significantly increased recently in various parts of the world, the duration of the pandemic and the ultimate impact on the global economy continues to be uncertain. Accordingly, the extent of the impact of the pandemic on our results of operations for the balance of the year will be dependent on the duration of the pandemic and the extent of the eventual recovery.

Although we are unable to predict the ultimate impact of the COVID-19 pandemic at this time or enumerate all potential risks to our business, given the nature and significance of the crisis, we believe that in addition to the impacts described above, other current or potential impacts of this unprecedented event include, but are not limited to:

•disruptions in our supply chains due to transportation delays, travel restrictions, cost increases, and closures of businesses or facilities;
•extended periods of reduced demand and low fuel prices that impact our sales volume and related profitability;
•impacts related to delayed customer payments and payment defaults associated with customer liquidity issues and bankruptcies, as well as other liquidity challenges, such as reduced availability under our senior credit facility due to financial covenant restrictions tied to our financial performance;
•losses on hedging transactions with customers arising from the sharp decline in fuel prices and their inability to benefit from the reduced cost of fuel due to substantial reductions in their operations;
•disruptions resulting from office and facility closures, reductions in operating hours, and changes in operating procedures, including additional cleaning and disinfecting procedures;
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•possible infections or quarantining of our employees which could impact our ability to service our customers or operate our business;
•increased costs associated with rationalization of our portfolio of businesses and other restructuring activities;
•asset impairments, including an impairment of the carrying value of our goodwill, along with other accounting charges if expected future demand for our products and services materially decreases;
•volatility in the global financial markets, which could have a negative impact on our ability to access capital and additional sources of financing in the future;
•notices from customers, suppliers and other third parties asserting force majeure or other bases for their non-performance;
•reduction of our global workforce to adjust to market conditions, including increased costs associated with severance payments, retention issues, and an inability to hire employees when market conditions improve;
•litigation risk and possible loss contingencies related to COVID-19 and its impact, including with respect to commercial contracts, employee matters and insurance arrangements;
•heightened risk of cybersecurity issues, as digital technologies may become more vulnerable and experience a higher rate of cyber attacks in a remote connectivity environment;
•a need to preserve liquidity, which could result in actions such as a reduction or suspension of our quarterly dividend or stock repurchases; and
•a structural shift in the global economy and its demand for fuel and related products and services as a result of changes in the way people work, travel and interact, or in connection with a global recession.
We are monitoring and continue to assess the ongoing effects of the COVID-19 pandemic on our businesses and operations. Developments related to the pandemic have been rapidly changing, and additional impacts and risks may arise that we may not currently foresee. Furthermore, the full extent to which the pandemic may adversely impact us or our results is currently uncertain and difficult to assess or predict with meaningful precision. We are similarly unable to predict the degree to which the pandemic may ultimately impact our customers, suppliers, and other business partners’ financial condition, but a material effect on these parties could also adversely affect us.

The extent to which the pandemic will ultimately impact us will depend on numerous future developments that are highly uncertain, including the severity and duration of the crisis and the extent of any further actions taken by governments in response, the ultimate impact on global economic activity and how quickly, and to what extent, normal economic and operating conditions can resume on a sustainable basis globally, as well as the extent and duration of the effect of the crisis on consumer confidence and spending.

Finally, the effects of COVID-19 may remain prevalent for a significant period of time and may continue to adversely affect our business, results of operations and financial condition even after the outbreak has subsided. The pandemic may also have the effect of exacerbating many of the other risks discussed in our 10-K Risk Factors and this 10-Q Report, which could in turn have a material adverse effect on us. Accordingly, the occurrence of one or more the foregoing factors could increase our costs and/or reduce the demand for our products, which could therefore have a material adverse effect on our business, financial condition, results of operations, liquidity and cash flows. For additional information on the impact of the pandemic, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Business Overview” and for a discussion of the impact of changes in fuel prices on our business, see the 2019 10-K Risk Factors.


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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table presents information with respect to repurchases of common stock made by us during the quarterly period ended SeptemberJune 30, 20172020 (in thousands, except average price paid per share):


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) (3)

7/1/2017 - 7/31/2017 —
 $—
 —
 $45,321
8/1/2017 - 8/31/2017 886
 33.99
 882
 15,330
9/1/2017 - 9/30/2017 —
 —
 —
 15,330
Total 886
 $33.99
 882
 $15,330
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)
4/1/2020 - 4/30/2020—  $—  —  $258,944  
5/1/2020 - 5/31/20203  23.20  —  258,944  
6/1/2020 - 6/30/2020—  —  —  258,944  
Total3  $23.20  —  $258,944  
(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 September 2016,October 2017, our Board of Directors (the "Board") approved a new common stock repurchase program (the “Repurchase Program”), which replaced the remainder of the prior authorization and authorized the purchase of up toprogram in place at that time, authorizing $100.0 million in common stock (the “2016-2017repurchases. In May 2019, the Board authorized an increase to the October 2017 repurchase authorization by $100.0 million, bringing the authorized repurchases at that time to $200.0 million. In March 2020, the Board approved a new stock repurchase program authorizing $200.0 million in common stock repurchases to begin upon the completion of the October 2017 Repurchase Program”). The 2016-2017 Repurchase Program doesProgram. Our repurchase programs do not require a minimum number of shares of common stock to be purchased, hashave no expiration date and may be suspended or discontinued at any time. As of SeptemberJune 30, 2017, $15.32020, approximately $258.9 million remains available for purchase under the 2016-2017 Repurchase Program.our repurchase programs. The timing and amount of shares of common stock to be repurchased under the 2016-2017 Repurchase Programrepurchase programs will depend on market conditions, share price, securities law and other legal requirements and factors.
(3) In October 2017, our Board of Directors approved a new common stock repurchase program which replaced the remainder of the 2016-2017 Repurchase Program and authorized the purchase of up to $100.0 million in common stock (the “2017-2018 Repurchase Program”). The 2017-2018 Repurchase Program does not require a minimum number of shares of common stock to be purchased, has no expiration date and may be suspended or discontinued at any time. The timing and amount of shares of common stock to be repurchased under the 2017-2018 Repurchase Program will depend on market conditions, share price, securities law and other legal requirements and factors.
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Item 6.Exhibits
Item 6.  Exhibits
 
The exhibits set forth in the following index of exhibits are filed as part of this 10-Q Report:
 
Exhibit No.Description
Exhibit No.Description
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
Certification of Chief Executive Officer and Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
101The following materials from World Fuel Services Corporation’s Quarterly Report on Form 10-Q for the quarter ended SeptemberJune 30, 2017,2020, formatted in XBRL (Extensible Business Reporting Language); (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income and Comprehensive Income, (iii) Consolidated Statements of Shareholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to the Consolidated Financial Statements.

43


Signatures
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Date: August 3, 2020
Date: October 31, 2017World Fuel Services Corporation
/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


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