WORLD FUEL SERVICES CORP - FORM 10-Q

Attached files

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EX-31.1 - EX-31.1 - WORLD FUEL SERVICES CORP	int-20150630ex311682e74.htm
EX-31.2 - EX-31.2 - WORLD FUEL SERVICES CORP	int-20150630ex3128c79a4.htm
EX-10.1 - EX-10.1 - WORLD FUEL SERVICES CORP	int-20150630ex1015b0497.htm
EX-32.1 - EX-32.1 - WORLD FUEL SERVICES CORP	int-20150630ex321239874.htm

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 JUNE 30, 2015


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-9533

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WORLD FUEL SERVICES CORPORATION

(Exact name of registrant as specified in its charter)


Florida (State or other jurisdiction of incorporation or organization)		59-2459427 (I.R.S. Employer Identification No.)

9800 N.W. 41st Street Miami, Florida (Address of Principal Executive Offices)		33178 (Zip Code)

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 ☒ 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 ☒ 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”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had a total of 71,778,000 shares of common stock, par value $0.01 per share, issued and outstanding as of July 23, 2015.

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Part I.	Financial Information
	General		1

	Item 1.	Financial Statements (Unaudited)
		Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014	2
		Consolidated Statements of Income and Comprehensive Income for the Three and Six Months ended June 30, 2015 and 2014	3
		Consolidated Statements of Shareholders’ Equity for the Six Months ended June 30, 2015 and 2014	4
		Consolidated Statements of Cash Flows for the Six Months ended June 30, 2015 and 2014	5
		Notes to the Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

	Item 4.	Controls and Procedures	32

Part II.	Other Information

	Item 1.	Legal Proceedings	33

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

	Item 6.	Exhibits	36

Signatures			37

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Part I — Financial Information

General

The following unaudited consolidated financial statements and notes thereto of World Fuel Services Corporation and its subsidiaries have been prepared in accordance with the instructions to Quarterly Reports on Form 10-Q and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States. In the opinion of management, all adjustments necessary for a fair presentation of the financial information, which are of a normal and recurring nature, have been made for the interim periods reported. Results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results for the entire fiscal year. The unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015 (“10-Q Report”) should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (“2014 10-K Report”). World Fuel Services Corporation (the “Company”) and its subsidiaries are collectively referred to in this 10-Q Report as “World Fuel,” “we,” “our” and “us.”

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Item 1.Financial Statements

World Fuel Services Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited - In millions, except per share data)


	As of
	June 30,		December 31,
	2015		2014
Assets:
Current assets:
Cash and cash equivalents	$	489.7	$	302.3
Accounts receivable, net		2,358.2		2,307.4
Inventories		450.8		437.6
Prepaid expenses		62.0		76.9
Short-term derivative assets, net		129.3		303.6
Other current assets		392.5		246.6
Total current assets		3,882.5		3,674.4

Property and equipment, net		212.4		203.4
Goodwill		650.3		651.9
Identifiable intangible and other non-current assets		357.3		350.4
Total assets	$	5,102.5	$	4,880.1

Liabilities:
Current liabilities:
Short-term debt	$	22.2	$	17.9
Accounts payable		1,897.4		1,850.1
Customer deposits		94.3		138.8
Accrued expenses and other current liabilities		302.2		232.6
Total current liabilities		2,316.1		2,239.4

Long-term debt		751.6		672.0
Non-current income tax liabilities, net		112.5		84.5
Other long-term liabilities		22.2		19.3
Total liabilities		3,202.4		3,015.2

Commitments and contingencies

Equity:
World Fuel shareholders' equity:
Preferred stock, $1.00 par value; 0.1 shares authorized, none issued		—		—
Common stock, $0.01 par value; 100 shares authorized, 71.8 and 72.1 issued and outstanding as of June 30, 2015 and December 31, 2014, respectively		0.7		0.7
Capital in excess of par value		468.9		496.4
Retained earnings		1,495.5		1,418.5
Accumulated other comprehensive loss		(74.5)		(60.2)
Total World Fuel shareholders' equity		1,890.6		1,855.4
Noncontrolling interest equity		9.5		9.5
Total equity		1,900.1		1,864.9
Total liabilities and equity	$	5,102.5	$	4,880.1

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

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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 Six Months ended
	June 30,				June 30,
	2015		2014		2015		2014
Revenue	$	8,496.4	$	11,342.5	$	15,837.1	$	21,893.4
Cost of revenue		8,306.0		11,151.0		15,431.3		21,513.9
Gross profit		190.4		191.5		405.8		379.5
Operating expenses:
Compensation and employee benefits		87.5		77.4		176.2		148.4
Provision for bad debt		2.3		1.2		3.6		2.3
General and administrative		59.0		53.1		113.0		104.7
		148.8		131.7		292.8		255.4
Income from operations		41.6		59.8		113.0		124.1
Non-operating expenses, net:
Interest expense and other financing costs, net		(6.4)		(4.7)		(13.7)		(9.0)
Other (expense) income, net		(1.6)		1.5		(1.3)		3.3
		(8.0)		(3.2)		(15.0)		(5.7)
Income before income taxes		33.6		56.6		98.0		118.4
Provision for income taxes		5.2		10.2		15.1		21.5
Net income including noncontrolling interest		28.4		46.4		82.9		96.9
Net loss attributable to noncontrolling interest		(1.5)		(1.8)		(2.6)		(2.1)
Net income attributable to World Fuel	$	29.9	$	48.2	$	85.5	$	99.0

Basic earnings per common share	$	0.42	$	0.68	$	1.21	$	1.40

Basic weighted average common shares		70.7		70.8		70.7		70.8

Diluted earnings per common share	$	0.42	$	0.68	$	1.20	$	1.39

Diluted weighted average common shares		71.2		71.4		71.3		71.4

Comprehensive income:
Net income including noncontrolling interest	$	28.4	$	46.4	$	82.9	$	96.9
Other comprehensive income (loss):
Foreign currency translation adjustments		22.0		5.4		(11.8)		8.9
Other comprehensive income (loss)		22.0		5.4		(11.8)		8.9
Comprehensive income including noncontrolling interest		50.4		51.8		71.1		105.8
Comprehensive loss attributable to noncontrolling interest		(1.2)		(1.8)		(0.1)		(2.1)
Comprehensive income attributable to World Fuel	$	51.6	$	53.6	$	71.2	$	107.9

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

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World Fuel Services Corporation and Subsidiaries

Consolidated Statements of Shareholders’ Equity

(Unaudited - In millions)




								Accumulated		Total
				Capital in				Other		World Fuel		Noncontrolling
	Common Stock			Excess of		Retained		Comprehensive		Shareholders'		Interest
	Shares	Amount		ParValue		Earnings		Loss		Equity		Equity		Total Equity
Balance as of December 31, 2014	72.1	$	0.7	$	496.4	$	1,418.5	$	(60.2)	$	1,855.4	$	9.5	$	1,864.9
Net income (loss)	—		—		—		85.5		—		85.5		(2.6)		82.9
Cash dividends declared	—		—		—		(8.5)		—		(8.5)		—		(8.5)
Amortization of share-based payment awards	—		—		8.1		—		—		8.1		—		8.1
Issuance of common stock related to share-based payment awards including income tax benefit of $1.5	0.3		—		1.5		—		—		1.5		—		1.5
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards	(0.1)		—		(7.0)		—		—		(7.0)		—		(7.0)
Purchases of common stock	(0.5)		—		(30.0)		—		—		(30.0)		—		(30.0)
Other comprehensive (loss) income	—		—		—		—		(14.3)		(14.3)		2.5		(11.8)
Other	—		—		(0.1)		—		—		(0.1)		0.1		—
Balance as of June 30, 2015	71.8	$	0.7	$	468.9	$	1,495.5	$	(74.5)	$	1,890.6	$	9.5	$	1,900.1




								Accumulated		Total
				Capital in				Other		World Fuel		Noncontrolling
	Common Stock			Excess of		Retained		Comprehensive		Shareholders'		Interest
	Shares	Amount		Par Value		Earnings		Loss		Equity		Equity		Total Equity
Balance as of December 31, 2013	71.9	$	0.7	$	495.2	$	1,207.3	$	(29.3)	$	1,673.9	$	5.0	$	1,678.9
Net income (loss)	—		—		—		99.0		—		99.0		(2.1)		96.9
Cash dividends declared	—		—		—		(5.3)		—		(5.3)		—		(5.3)
Initial noncontrolling interest upon acquisition of joint venture	—		—		—		—		—		—		2.0		2.0
Amortization of share-based payment awards	—		—		6.9		—		—		6.9		—		6.9
Issuance of common stock related to share-based payment awards, including income tax benefit of $0.8	0.4		—		0.8		—		—		0.8		—		0.8
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards	—		—		(4.3)		—		—		(4.3)		—		(4.3)
Other comprehensive income	—		—		—		—		8.9		8.9		—		8.9
Balance as of June 30, 2014	72.3	$	0.7	$	498.6	$	1,301.0	$	(20.4)	$	1,779.9	$	4.9	$	1,784.8

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

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World Fuel Services Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited - In millions)



	For the Six Months ended
	June 30,
	2015		2014
Cash flows from operating activities:
Net income including noncontrolling interest	$	82.9	$	96.9
Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities:
Depreciation and amortization		28.5		27.1
Provision for bad debt		3.6		2.3
Share-based payment award compensation costs		8.4		7.7
Deferred income tax (benefit) provision		(0.4)		8.9
Extinguishment of liabilities		(5.3)		(2.9)
Foreign currency losses, net		14.6		2.8
Other		1.4		(4.4)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable, net		(51.9)		(159.6)
Inventories		(17.2)		(25.2)
Prepaid expenses		6.6		13.8
Short-term derivative assets, net		165.5		(15.1)
Other current assets		(117.8)		(32.9)
Cash collateral with financial counterparties		149.2		(1.2)
Other non-current assets		7.9		(2.5)
Accounts payable		50.8		121.5
Customer deposits		(42.0)		61.0
Accrued expenses and other current liabilities		(91.0)		3.8
Non-current income tax, net and other long-term liabilities		(16.0)		—
Total adjustments		94.9		5.1
Net cash provided by operating activities		177.8		102.0
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired and other investments		(6.5)		(164.2)
Capital expenditures		(21.9)		(20.0)
Proceeds from the sale of fixed assets		5.3		—
Escrow payment related to an assumed obligation of an acquired business		—		(21.7)
Purchase of investments		(0.9)		(1.1)
Repayment of notes receivable		—		0.2
Net cash used in investing activities		(24.0)		(206.8)
Cash flows from financing activities:
Borrowings of debt		2,601.0		2,977.3
Repayments of debt		(2,520.5)		(2,760.4)
Payments of senior revolving credit facility and senior term loan facility loan costs		(3.4)		—
Dividends paid on common stock		(6.9)		(5.3)
Purchases of common stock		(30.0)		—
Federal and state tax benefits resulting from tax deductions in excess of the compensation cost recognized for share-based payment awards		1.5		0.8
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to share-based payment awards		(7.0)		(4.2)
Net cash provided by financing activities		34.7		208.2
Effect of exchange rate changes on cash and cash equivalents		(1.1)		1.1
Net increase in cash and cash equivalents		187.4		104.5
Cash and cash equivalents, as of beginning of period		302.3		292.1
Cash and cash equivalents, as of end of period	$	489.7	$	396.6

The accompanying notes are an integral part of these unaudited consolidated financial statements

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Supplemental Schedule of Noncash Investing and Financing Activities:

Cash dividends declared, but not yet paid, were $4.2 million as of June 30, 2015 and $2.7 million as of June 30, 2014.

The proceeds from the sale of fixed assets for the six months ended June 30, 2015 were in connection with a sale-leaseback arrangement.

In connection with our acquisitions, the following table presents the assets acquired, net of cash and liabilities assumed (in millions):



			For the Six Months ended
	June 30, 2014
Assets acquired, net of cash	$	454.5

Liabilities assumed	$	297.4

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

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World Fuel Services Corporation and Subsidiaries

Notes to the Consolidated Financial Statements

(Unaudited)

1.Acquisitions and Significant Accounting Policies

Acquisitions

2014 Acquisitions

On March 7, 2014, we completed the acquisition of all of the outstanding stock of Watson Petroleum Limited (now known as WFL (UK) Limited) (“Watson Petroleum”) a leading distributor of gasoline, diesel, heating oil, lubricants and other products and related services. Watson Petroleum is headquartered in Brinkworth, England and is one of the largest fuel distributors in the United Kingdom.

The following presents the unaudited pro forma results for 2014 as if the 2014 acquisitions had been completed on January 1, 2013 (in thousands, except per share data):



		For the Six Months ended
	June 30, 2014
	(pro forma)

Revenue	$	22,320.9

Net income attributable to World Fuel	$	100.9

Earnings per common share:
Basic	$	1.43
Diluted	$	1.41

Significant Accounting Policies

The significant accounting policies we use for quarterly financial reporting are the same as those disclosed in Note 1 of the “Notes to the Consolidated Financial Statements” included in our 2014 10‑K Report.

Goodwill

During the first six months of 2015, we increased land segment goodwill by $1.0 million as a result of a reduction in identifiable intangible assets and an increase in property and equipment and reduced aviation segment goodwill by $5.2 million as a result of an increase in identifiable intangible assets and deferred tax liabilities and a reduction in purchase price based on our ongoing fair value assessment of certain of our 2014 acquisitions. Additionally, we had a goodwill increase of $0.6 million and goodwill decreases of $1.5 million and $0.7 million as a result of foreign currency translation adjustments of our non-U.S. dollar functional currency subsidiaries in our land, aviation and marine segments, respectively.

Recent Accounting Pronouncements

Inventory: Simplifying the Measurement of Inventory. In July 2015, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) which simplifies the guidance on the subsequent measurement of inventory by requiring inventory within the scope of this update to be measured at the lower of cost and net realizable value rather than the lower of cost or market. This update is effective at the beginning of our 2017 fiscal year. We are currently evaluating whether the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.

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Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. In April 2015, the FASB issued an ASU which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. This update is effective at the beginning of our 2016 fiscal year. We do not believe the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.

Consolidation: Amendments to the Consolidation Analysis. In February 2015, the FASB issued an ASU which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures. This update is effective at the beginning of our 2016 fiscal year. We do not believe the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.

Income Statement-Extraordinary and Unusual Items: Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. In January 2015, the FASB issued an ASU which eliminates from generally accepted accounting principles in the United States the concept of extraordinary items. This update is effective at the beginning of our 2016 fiscal year. We do not believe the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.

Derivatives and Hedging: Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. In November 2014, the FASB issued an ASU which clarifies how current generally accepted accounting principles in the United States should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. This update is effective at the beginning of our 2016 fiscal year. We do not believe the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.

Presentation of Financial Statements-Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. In August 2014, the FASB issued an ASU which requires management of the Company to evaluate whether there is substantial doubt about the Company’s ability to continue as a going concern. This update is effective at the beginning of our 2017 fiscal year. We do not believe the adoption of this new guidance will have an impact on our financial statement disclosures.

Compensation-Stock Compensation. Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. In June 2014, the FASB issued an ASU which includes guidance that requires a performance target that affects vesting and that could be achieved after the requisite service period to be treated as a performance condition. This update is effective at the beginning of our 2016 fiscal year. We do not believe the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.

Transfers and Servicing: Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. In June 2014, the FASB issued an ASU which changes the accounting for repurchase-to-maturity transactions and repurchase financing arrangements. It also requires additional disclosures about repurchase agreements and other similar transactions. This update became effective at the beginning of our 2015 fiscal year. The adoption of this ASU did not have a significant impact on our consolidated financial statements and disclosures.

Revenue from Contracts with Customers. In May 2014, the FASB issued an ASU which provides guidance for revenue recognition for any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets. The ASU will replace most existing revenue recognition guidance in generally accepted accounting principles in the United States when it becomes effective. This update is effective at the beginning of our 2018 fiscal year. We are currently evaluating whether the adoption of this new guidance will have a significant impact on our consolidated financial statements and disclosures.

Presentation of Financial Statements and Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. In April 2014, the FASB issued an ASU which changes the criteria for reporting discontinued operations and enhances disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance. This update became effective at the beginning of our 2015 fiscal year. The adoption of this ASU did not have a significant impact on our consolidated financial statements and disclosures.

Reclassifications

Certain amounts in prior periods have been reclassified to conform to the current period’s presentation.

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2.Fair Value Measurements

The carrying amounts of cash and cash equivalents, accounts receivable, net, accounts payable and accrued expenses and other current liabilities approximate fair value based on the short-term maturities of these instruments. Fair value for our debt and notes receivable is derived using a discounted cash flow valuation methodology. The carrying values of these instruments approximate fair value since these instruments bear interest either at variable rates or fixed rates which are not significantly different than market rates. Based on the fair value hierarchy, our debt of $773.8 million and $689.9 million as of June 30, 2015 and December 31, 2014, respectively, and our notes receivable of $8.5 million and $7.0 million as of June 30, 2015 and December 31, 2014, respectively, are categorized in Level 3.

The following table presents information about our financial assets and liabilities that are measured at estimated fair value on a recurring basis (in millions):



									Netting
									and
	Level 1		Level 2		Level 3		Sub-Total		Collateral		Total
As of June 30, 2015
Assets:
Commodity contracts	$	97.2	$	393.2	$	0.5	$	490.9	$	(355.1)	$	135.8
Foreign currency contracts		—		6.0		—		6.0		(5.6)		0.4
Cash surrender value of life insurance		—		2.5		—		2.5		—		2.5
Total	$	97.2	$	401.7	$	0.5	$	499.4	$	(360.7)	$	138.7
Liabilities:
Commodity contracts	$	168.0	$	296.4	$	0.4	$	464.8	$	(433.8)	$	31.0
Foreign currency contracts		—		8.6		—		8.6		(5.6)		3.0
Inventories		—		3.1		—		3.1		—		3.1
Total	$	168.0	$	308.1	$	0.4	$	476.5	$	(439.4)	$	37.1

As of December 31, 2014
Assets:
Commodity contracts	$	173.7	$	495.6	$	4.2	$	673.5	$	(368.0)	$	305.5
Foreign currency contracts		—		21.8		—		21.8		(12.0)		9.8
Cash surrender value of life insurance		—		2.2		—		2.2		—		2.2
Total	$	173.7	$	519.6	$	4.2	$	697.5	$	(380.0)	$	317.5
Liabilities:
Commodity contracts	$	306.4	$	329.9	$	1.3	$	637.6	$	(595.6)	$	42.0
Foreign currency contracts		—		12.0		—		12.0		(12.0)		—
Inventories		—		22.9		—		22.9		—		22.9
Total	$	306.4	$	364.8	$	1.3	$	672.5	$	(607.6)	$	64.9

The cash surrender value of life insurance is in connection with the non-qualified deferred compensation plan and was included in identifiable intangible and other non-current assets in the accompanying consolidated balance sheets.

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The following table presents information regarding the balance sheet location of our commodity and foreign currency contracts net assets and liabilities (in millions):


	As of
	June 30, 2015		December 31, 2014
Commodity Contracts
Assets:
Short-term derivative assets, net	$	129.0	$	294.3
Identifiable intangible and other non-current assets		6.8		11.2
Total net assets	$	135.8	$	305.5

Liabilities:
Accrued expenses and other current liabilities	$	29.4	$	41.3
Other long-term liabilities		1.6		0.7
Total net liabilities	$	31.0	$	42.0

Foreign Currency Contracts
Assets:
Short-term derivative assets, net	$	0.3	$	9.3
Identifiable intangible and other non-current assets		0.1		0.5
Total net assets	$	0.4	$	9.8

Liabilities:
Accrued expenses and other current liabilities	$	2.7	$	—
Other long-term liabilities		0.3		—
Total net liabilities	$	3.0	$	—

For our derivative contracts, we may enter into master netting, collateral and offset agreements with counterparties. These agreements provide us the ability to offset a counterparty’s rights and obligations, request additional collateral when necessary or liquidate the collateral in the event of counterparty default. We net fair value of cash collateral paid or received against fair value amounts recognized for net derivative positions executed with the same counterparty under the same master netting or offset agreement.

As of June 30, 2015, we had $151.8 million of cash collateral deposits held by financial counterparties, of which $96.9 million have been offset against the total amount of commodity fair value liabilities in the above table and the remaining $54.9 million is included in other current assets in the accompanying consolidated balance sheets. In addition, as of June 30, 2015, we have offset $18.2 million of cash collateral deposits received from customers against the total amount of commodity fair value assets in the above table. As of December 31, 2014, we had $301.0 million of cash collateral deposits held by financial counterparties, of which $274.3 million have been offset against the total amount of commodity fair value liabilities in the above table and the remaining $26.7 million is included in other current assets in the accompanying consolidated balance sheets. In addition, as of December 31, 2014, we have offset $46.7 million of cash collateral deposits received from customers against the total amount of commodity fair value assets in the above table.

Table of Contents

The following table presents information about our assets and liabilities that are measured at fair value on a recurring basis that utilized Level 3 inputs for the periods presented (in millions):


	Beginning of Period		Realized and Unrealized Gains (Losses) Included in Earnings		Settlements		End of Period		Change in Unrealized Gains (Losses) Relating to Assets and Liabilities that are Held at end of Period		Location of Realized and Unrealized Gains (Losses)Included in Earnings
Three months ended June 30, 2015
Assets:
Commodity contracts	$	1.3	$	—	$	0.8	$	0.5	$	0.4	Revenue
Liabilities:
Commodity contracts	$	0.3	$	(0.1)	$	—	$	0.4	$	(0.1)	Cost of revenue
Three months ended June 30, 2014
Assets:

WORLD FUEL SERVICES CORP - FORM 10-Q - July 30, 2015

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