World Fuel Services 2004 Annual Report Download - page 81

Included in Accounts and notes receivable, as of December 31, 2004, were net receivables due from Signature, a related
party, of $768 thousand, net of certain accounts payable and minority interest payable. For the year ended December 31,
2004, sales to Signature from PAFCO amounted to $131.1 million for the year ended December 31, 2004. In addition to
PAFCO’ s sales to Signature, in the normal course of business, we utilize Signature and Aircraft Service International Group
(“ASIG”), a sister company of Signature, as subcontractors to provide various services to customers, including into-plane
fueling at airports, and transportation and storage of fuel and fuel products. These activities with Signature and ASIG were not
considered to be significant.
8. Settlement Charge Related to the Sale of Business
In February 2000, we sold the stock of our oil-recycling subsidiaries, the International Petroleum Corporation group
("IPC"), to EarthCare Company (“EarthCare”), for $33.0 million, of which we received $28.0 million in cash and $5.0 million
in EarthCare common stock, subject to lock-up and price protection agreements. In addition, after the sale, EarthCare was to
pay us the value of certain assets employed in the oil-recycling business through the collection of our accounts receivable by
EarthCare and the sale of inventory, prepaid expenses and other assets to EarthCare. EarthCare failed to pay us the amounts
due after closing of the sale, and we commenced legal proceedings to collect these amounts. In March 2001, we entered into a
settlement agreement with EarthCare (the “Settlement Agreement”). Pursuant to this settlement, in April 2001, we received
$1.75 million from EarthCare in settlement of amounts due to us. The Settlement Agreement also released us from all
indemnifications previously provided to EarthCare, including environmental indemnifications, as stated in the original
purchase agreement for the IPC companies. The settlement resulted in a reduction in the amount of assets we ultimately
realized in connection with the discontinuance of our used oil-recycling business, which amounted to an after-tax charge of
$656 thousand. In addition, we also recorded additional income taxes of $496 thousand associated with the discontinued
operations based on the actual income tax returns filed. The after-tax settlement charge and the additional income taxes was
recorded in 2001.
As part of the Settlement Agreement, Donald F. Moorehead, Jr., Chairman of EarthCare on the closing of the sale, agreed
to purchase the EarthCare stock owned by us for approximately $5.0 million. In May 2001, Mr. Moorehead defaulted on his
agreement to purchase those shares. We sought enforcement of the purchase obligation and received principal and interest
payments totaling $1.1 million from Mr. Moorehead from August 2001 to August 2002. Then, in October 2002, we received
$3.0 million as a final payment to settle the remaining balance due us. Accordingly, in connection with the settlement, we
recorded a charge of approximately $1.6 million for the nine months and year ended December 31, 2002.
9. Business Segments, Geographic Information, and Major Customers
Business Segments
We market fuel and related services, and have two reportable operating segments: marine and aviation fuel services.
Performance measurement and resource allocation for the reportable operating segments are based on many factors. Corporate
expenses are allocated to the segments based on usage, where possible, or on other factors according to the nature of the
activity. The accounting policies of the reportable operating segments are the same as those described in the Summary of
Significant Accounting Policies (see Note 1).
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