World Fuel Services 2002 Annual Report Download - page 29

of a leasehold property and a $1.0 million insurance settlement recovery related to a product theft off the coast of Nigeria in
1999. The remaining variance of $1.1 million was primarily related to lower net interest income of $333 thousand and an
unrealized foreign currency translation loss recorded during the nine months ended December 31, 2002 as compared to an
unrealized foreign currency translation gain for the corresponding period of the prior year. Unrealized foreign currency
translation losses and gains result from the translation of monetary assets and liabilities of our non-U.S. entities at the
prevailing exchange rates at year-end. Partially offsetting were lower net realized foreign currency exchange losses on
transactions for the nine months ended December 31, 2002 as compared to the same period of the prior year.
For the nine months ended December 31, 2002, our effective tax rate was 16.0%, for an income tax provision of $1.9 million,
as compared to 23.8% and an income tax provision of $4.0 million for the nine months ended December 31, 2001. Reflected in
the income tax provision for the nine months ended December 31, 2002 were additional taxes provided for our global tax
restructuring and income tax benefit totaling approximately $2.3 million for the executive severance charges and the non-recurring
charge in connection with the settlement of the remaining balance due on the Moorehead judgment. In addition, the effective tax
rate for the nine months ended December 31, 2001 reflects the non-taxable insurance settlement recovery.
Net income and diluted earnings per share for the nine months ended December 31, 2002 were $9.9 million and $0.91,
respectively, as compared to $12.8 million and $1.20 during the same period of the prior year. Net income for the nine months
ended December 31, 2002 was impacted by two non-recurring, after-tax charges totaling $3.7 million, or $0.34 per diluted share:
the charge of $2.8 million, or $0.25 per diluted share, related to executive severance, and the charge of $970 thousand, or $0.09
per diluted share, related to the settlement of the remaining balance due on the Moorehead judgment. In addition, net income for
the nine months ended December 31, 2001 included a non-recurring credit of $1.0 million, or $0.09 per diluted share, from the
insurance settlement recovery related to a product theft off the coast of Nigeria in 1999.
Year ended March 31, 2002 compared to Year ended March 31, 2001
Our revenue for the year ended March 31, 2002 was $1.37 billion, a decrease of $164.2 million, or 10.7%, as compared
to revenue of $1.53 billion for the year ended March 31, 2001. Our revenue decrease was primarily due to a decrease in
world oil prices for the year ended March 31, 2002, partially offset by increases in sales resulting from our various marine
segment acquisitions. Our revenue during these periods was attributable to the following segments (in thousands):
For the Year Ended March 31,
2002 2001
Marine fuel services 983,986$ 1,004,572$
Aviation fuel services 381,079 524,670
Total 1,365,065$ 1,529,242$
Our marine fuel services segment contributed $984.0 million in revenue for the year ended March 31, 2002, a decrease
of $20.6 million, or 2.0%, over the prior year. The decrease in revenue was due to an 18.7% decline in the average price per
metric ton sold, partially offset by a 20.2% increase in the volume of metric tons sold. The increase in marine sales volume
was due, in part, to sales from our February and April 2001 acquisitions. Our aviation fuel services segment contributed
$381.1 million in revenue for the year ended March 31, 2002. This represented a decrease in revenue of $143.6 million or
27.4%, as compared to the prior year. The decrease in revenue was due to a 15.7% decrease in the volume of gallons sold
and a 13.8% decrease in the average price per gallon sold. The decrease in aviation sales volume reflects management’s
decision to reduce our credit exposure and increase margins, which began during the quarter ended December 31, 2000.
Sales volume also decreased during the year ended March 31, 2002 because of a general slowdown in economic activity.
During the latter part of the quarter ended March 31, 2002 and thereafter, we have begun to experience increased volumes in
aviation.
Our gross profit of $76.2 million for the year ended March 31, 2002 increased $4.4 million, or 6.2%, as compared to the
prior year. Our gross margin also increased from 4.7% for the year ended March 31, 2001 to 5.6% for the year ended March
31, 2002. Our marine fueling segment achieved a 3.9% gross margin for the year ended March 31, 2002, as compared to a
3.7% gross margin for the prior year. This gross margin increase resulted from a drop in the average price per metric ton
traded, which offset a lower gross profit per metric ton traded. The narrower gross profit per metric ton traded was caused
by competitive pressures, and by the marine acquisitions which resulted in the addition of lower margin trading business. By
integrating the acquisitions into our existing global network, we expect to gain from synergies in purchasing and value-added
services, and thereby maximize the gross profit of our acquired companies. Our aviation fueling business achieved a 9.9%
Page 21 of 70